Redevelopment Authority - Regular Meeting

You

ready, Jeff? Yep. Okay. I I see it's 06:00. It's time to call the redevelopment authority meeting, to order. All of our members are present, So we can move on to public comment. Not seeing any public here. Dispatch of that. We move on to number four, approval of the minutes. So move. Seeing no objection.

Is there a second?

Second. Second. Okay, Nina. All in favor? Aye. Aye. It's been unanimously approved. That brings us up to our business items. Number five, item number 2500666, update on redevelopment authority loans.

I'm gonna put all the updated sheets for this month. Not a whole lot of change since last month. The exception being we did do one storefront activation loan and one rental rehab loan since last meeting. Kind of across the board, about 320 in their rental rehab, one seventy in affordable housing rehab, one point almost $1,500,000 in uncommitted funds in the development fund, then surfer and activation, couple of 42,000. And that's every month we have, it's around 8,000 or so in payments coming back to that one.

So every month, that's gonna go up that we don't issue. Any month we don't issue on, it's gonna go up a little bit. We had spent the initial initial block of that money was spent by the end of last year allocated because it was without ARPA funds. So now the new loan we're making are based off of repayment stuff. So there's any questions on this? Any questions?

Seeing none, we can move on to ID25DashO2023, review and act on a request for Habitat for Humanity, Waukesha for some structural agreement.

So as you're all aware, we've had habitat coming here over the last three years doing these short term construction loans. First one was on Main Street, and the rest have been for for the work at Domenica Park, a former site. And I apologize in the cover sheet that I submitted this. I had something wrong with what they're requesting. Right now, we have three loans out, $200,000 each at the RDA meeting in April.

I think we had they already had allowed them approved a couple more loans, but the condition was in order for them to get those funds, they would have to pay off one moment in order to issue another one. So now they're kind of ramping up. They have to finish the project by the end of next year. So we had a 2026. So what they're requesting is kind of a it's more of a proposal instead of coming to the redevelopment authority meeting whenever they need a new loan.

What they'd like to do is allow up to four loans at any any given time. So it'd be a maximum of $800,000 out to them at any given time. Still a 3% interest, but what they wanna do, they have seven houses left that don't have billing towards yet that would need construction loans. I'd like to have staff be able to approve those loans. And, again, it kinda be the same thing.

No instead of no more than $600,000, they'd have no more than $800,000 in any given time. And this would only be for Dominica Park. And, again, that's looking to be completed by the 2026 and for those seven home sites. So looking back at our development fund, do have another item on the meeting tonight that's requesting 720,000 from the development fund. But there'd still be funding left because we have, like, $1,500,000 in there.

So it really just be adding another $200,000 to the outstanding funds. So that's that was we kinda had a little discussion on them. That was their kind of proposal. What they're doing now is they're kinda doing a few at a time. Now they're trying to do as many as they can and just get them get it done by the next year. Typically, these loans now have been out. They usually go out for about a

year or maybe a little

bit more and then get it back with interest. So in the last couple of loans, we made, like, $4,000 each in interest payments. So it's a to way put the money to work and then get some more money.

Any questions?

No. So just to be clear, we're we've already approved the 600 at these terms.

We're just going up another two. Yeah. And then once it's all serious, like, we're just making so that staff would just kind of approve the loan. So if they had four four loans out, one got paid off, we could issue another one Yep. Without them coming back here. Because the terms are always the same. It's always 3% interest, 20 thou or $200,000 per loan, and then it's paid back as soon as that half debt family hits the house.

I don't see an issue with it. Does anybody here have a comment? No.

You need a motion?

Yes. Motion

to approve the recommendation. Mister Tucker? All

in favor? Aye. Aye. Everyone approved. So that motion passes.

That brings us to item number 25DashO2024. We view and act on a request, for new five construction for 36 residential development on Meadow Lane in SilverNeil.

So for this one, we do have a RDA member that says I'm safe from this and stepping on. He's he's acting as developer here, Mike Dufek. So what we're gonna do have a slide that explains it at the end of my presentation, but what we do is do the presentation, have a q and a with Mike, we, again, respond to questions as developer. And then what we'll probably do is ask Mike to maybe go in the hall where we deliberate if the terms of this, then bring him back in if there's more questions or we make a motion on that. Sounds good. For everybody. That's just a proposal we kinda came up with.

So Yep. Okay. So

I'll kinda go over overview this. Mike, if you wanna chime in or add anything, feel free to do

Sure.

So or just respond to questions afterward. So this is, again, using the Fort Lawson Development Fund. There's a site up here that's on Silvernail, just West Of Grandview, off of South Of Silvernail and Grandview. It's on technically, it's on Meadow Lane. So up at the so this is Good Harvest Market.

I'm not familiar with that. This is the Avid Hotel and then CBS is here, and then I-ninety 4 runs on the top here. And so there's this lot here in between these two properties. And the city had seen a proposal from Good Harvest a while ago to maybe develop something here and they abandoned that and slip it up for sale. It hasn't really moved for probably a couple of reasons. One, the high cost doing development there. I'll get into it in a bit of presentation. The other thing is too, if it was it's right now zoned commercial, and we're talking about rezoning it to, like, to plan development for residential. There's residential nearby kind of down this area here. So there's some there's already some residential in the general vicinity.

But for commercial property, there's no visibility from the street. So if you're any commercial entities aren't really gonna be looking at this because there's no visibility whatsoever. So we thought it'd probably be a good site for something like this for some multifamily housing. Here's kind

of more

of a bird's eye view. All the way in kind of this area, there's a bunch of wetlands over here. And what the proposal would be, it'd be accessed through easements that already exist through here right now. And then just some conceptual sketches the developer has done. So you can see that parking lot is gonna kinda line up with kinda line up with this road here.

The parking will be out here. And then building would be kind of off to the Southwest. It'd be so there'd be a mix of bet a mix of units in here. You'd have a mix of one bedroom, one bedroom affordable, mark two bedroom market rates. So just a mix of incomes with the whole goal of kind of these units being targeted to people at or below the county median income level and which is the qualification for the use of our program funds.

And then here's kind of a 2nd Floor fully out. You can kinda see just an idea of this. These are just kinda preliminary, but so you have idea what this is gonna be. This is kind of the first use of our development fund that hasn't been for a habitat construction loan. So this one the only thing about this is there'd be 36 units in the building, so it'd be a much bigger impact.

And then here's some conceptual elevations of the three story building. And then there's just some inspiration here of, like, what that what that's gonna look like as far as materials. So it'd be similar to other multi family developments in the city in terms of meeting our plan commission commission standards for for architectural features and materials. So there's a couple of challenges with the site. Obviously, we talked before about getting commercial users kind of tough in here.

There's a lot of main loops that needs to which also has been entering some development proposals and other interests we've had in this. It has to go from right here, which is right by the entrance to Good Harvest, all the way to another property, all the way through here and then connect to this point here, which is in the hotel. So it's a high cost. It's a public meeting, so it's a high cost associated with that. Doing their soil testings, there's been some unstable soil conditions, so there's to be some additional work for stability.

And then, again, whenever we're looking at these affordable developments, workforce housing, is your rental income there is is challenging to make a project just to be able to stand on its own without needing some sort of financial assistance. So those are kinda what they're working against with this property. And again, the reason for our fund to help with that gap that's needed to make the project go forward. So the request would be $720,000. That'd be $20,000 per unit.

They're proposing a thirty year repayment. That was the updated sheet that I sent out today at 1% interest. And that loan will be distributed in two installments. We have building permits groundbreaking, so they're not getting up any money until they're actually ready to start the project. And then ninety days later will be the second installment of the funding. Kinda hard targeting how hard some of these are to make work. They're also using other assistance in addition to ours to try to close that gap. So that'd be the Waukesha County Center for Growth has that growth fund. So it'd be a loan to that, and then home funds of $1,100,000. So we're just part of that equation of assistance in their capital stack.

I didn't put those little box up there just to kinda to show how much money is in there. So we did do the habitat increase, which is the second box. So even so with this, we have $1,200,000 available to blend out in this program. So this would we'd we could do this. We'd still have, like, little over 500,000 left for other projects.

So kind of here, we had to Mike, if want to make make some comments, the question and answers, then obviously, he's so he has to leave room then. Or he could discuss and possibly take action if it says proposal. If there's any changes to the proposal, we'll call Mike back in and have that further discussion. But I don't if you wanna talk a little bit about your projects and

Yes. So briefly, mean, I guess, again, think part of the reason why I was excited about being part of this committee is I think there's funds available in projects and programs like this. But then as a developer, we're not we haven't developed anything on our own. We work with developers every day as a construction company. And quite honestly, I've we've done in the last three years over $40,000,000 for the multifamily work, and none of it's ever been affordable. So I we build them. We love building them. We've gone to developers that this is how we can value engineer it. You know, every product is over budget, we value engineer it. We take price out of it.

You know, we we we know how to build them affordably. And then when we talk to developers about doing affordable projects, they say it just doesn't pencil out. It doesn't work. And so being a part of this group and seeing month after month that there's funds available and nobody's ever willing to use them, We just thought we'd try to get as creative as possible and try to find a way to bring affordable units to Waukesha in using some of these funds. And it's been a little bit of a learning curve. I've actually I've I've got a snapshot performing here. Can show you even at even with $7.20 at one percent and 1,000,000 1,100,000.0 from HUD at 1%, it's still barely cash flows. So we have to do value engineering to get projects money out of it. We've gotta find a way to save costs everywhere we can. But, again, everything that we do from a construction standpoint, we understand.

We need to find land that's under $20,000 a unit. We found this site that's we have it under contract right now for 440 for 36 units. So we're at about $13,000 per unit, which is really good. We've got these different loans that are available to us, which helps. The the only one big thing that I've talked to three different development partners now on this, no matter what, even with the loans, we still have debt service, which is what is causing us to be difficult

to get

it to work. These are market rate. We probably would have no problem. But when you start talking about renting apartments at $970 for a one bedroom or $1,100 for a two bedroom, it just pushes it just pushes things to a real small margin. So, I grew up in house with my mom. I a social worker, I'm passionate about trying to create affordable housing. I sit on the I'm the chair of the construction leadership council for Washington Business Alliance. I'm actually monitoring. I'm gonna be the moderator for a affordable housing project discussion tomorrow morning at Washington Business Alliance. It starts at eight. We've done we've come up with our

own floor

plans and delivered it to developers saying, hey. This is an affordable way to build them. The developers just don't ever wanna mess with affordable housing. So I don't see a whole lot of people doing it. I think we all know there's a huge need for it. And then when I see these funds available and the only really person that can take afford of the only real group that's able to use it is a group that gets a lot of donated materials, donated labor, donated everything else. And so, well, there's only so much that donations can do in a community as far as affordable housing. It's great that they wanna do six or seven or eight of these homes, but you're right. When you start talking about bringing 36 to the market, you're not gonna do that through donations and and and volunteer time. So, the other big piece that I think is really neat about this project is it's I was reading an article on a different development.

It's a mixed income project is what other cities refer to it as. You have 11 affordable units, which is between sixty and eighty of the household income in Washington County, and then the other 25 units are under a 100. So if you are in need of affordable housing or workforce housing, you don't get subjected to, I have to go live in that building over there. That's all affordable. Obviously, hurts your pride.

It hurts, you know, if you're raising a family in an affordable housing, the stigma that's associated with that. Here, you're gonna have different income levels of people walking in through the same door with the same hallways, the same elevators as everybody else. So, again, I think that part of that is just getting rid of the stigma of affordable housing. Nobody wants it to be built in their neighborhood. And quite honestly, the people that qualify to live there don't wanna live in it. And this is hopefully a plan. I'm trying to fix that.

So just so I understand because I'm not slow, but I I'm I'm cautious. There's gonna be 36 units built. 11 of them are gonna be characterized as affordable housing at reduced subsidized rates. And the three different funding sources, 720,000 from the city of Waukesha, and then the other two is gonna allow all of the units to be built at affordable at a lower rate, or is it is it pretty much only allowing those 11 units to be?

So to quote

it's a good question. All of the units will come in at a 100% of the median household income of Waukesha County. So you'll be less.

Under that

or less. Okay. But 11 will be under between will be be under 80% of the household income. So that that first 11 will be between 6080% of the household income in Washington County. So those 11 are the hardest one to get to, but we can't even qualify for the HUD program, the the 1,100,000 without having it in that 60 to 80% range. So that's Yeah. We're trying a couple a couple different programs. We've worked up with these different programs on multiple different projects for developers, and they've never gone forward. So even if you talk to Theresa Hill at the Center for Growth or you talk to Kristen Silva about home funds, they're gonna be on the at least Theresa's gonna be on the panel tomorrow that was discussing it. But there's even funds available, but nobody's able to use them because they can't get it to work.

Everybody's got different they've got different rules and regulations and different limitations on what they will and will not loan you. So this is one of the first projects that we've been able to actually put together and say, hey. This is something we we think is feasible. It's not feasible. Mean, it's we're asking for the we're asking for the loan today for the simple fact that in the next sixty days, we need to figure out whether the project's feasible or not. So even if it is approved today, there's not a 100% chance this project moves forward. We still have to figure out some things on that side of it. But without it, it definitely doesn't move forward.

Any questions for me? I'm add to that too. When we started our programs, both the affordable housing rehab program and this one, one of our things was that, you know, there wasn't there's really no programs that 80 to a 100%. So when we did our program, we made sure we had a lot of a 100% because that still is you know, for someone to be able to afford something, it's still a challenging area. But all these, like like Mike said, the home funds, you have to be that they have that 80% or lower range. So that's kind of our reason for this program to kinda help fill gaps in areas so you can do a little bit more of a mixed housing type mixed income.

Any more questions for Mike?

Thirty years seems like a long time.

It's a long time of 1%.

Yeah. I I just thought it was twenty years in the that was the first

I had something I'll do today. Yeah. I I apologize. It was my I met with well, it won't be a secret. Mina Mina, met with Mina too to help me figure out how this is gonna work. But every every when we first started looking at numbers at twenty years, they've really didn't pencil out. So even in the upper form a now, and we can we can make some tweaks to it, but it's showing our costs of about $445,000 annually. Our after our expenses, our income is about 400. So we're still we're at 432 in net operating income. So we're still at $12,000 deficit annually.

I think we can get rid of that with some construction reductions and possibly even taking out fees or whatever we need to take out of it. But overall, the project itself is over an $8,000,000 project. So when you're talking about, one point one and seven twenty, double 1.8 of it's $8,400,000 project all in land and construction costs and everything else.

I'm gonna abstain from voting as Mike mentioned. But even at the bank level, we will be looking at doing a thirty year amort on this. The project, unfortunately, I think, would struggle from a cash flow perspective to meet, what our debt service requirements would be, if we were to go the traditional route of '25. So, that's just the reality of doing a project of this nature. You have to have that additional amort in order to make the numbers work.

One one last question, Mike. Do you feel that it would be hard to keep this unit, 36 units rented, above 90%, 95% of the time? I mean

No. I think there's a huge demand for it. I mean There

there is a huge demand. I I'm just from a from an economic standpoint, when Nina said that it it's gonna be hard to cash flow out, obviously, for the first couple of years until the median growth goes up. It it'll be it'll be hard, but it it would be even harder if you if you had some vacant units in there.

Yeah. We're we're figuring in our pro form a figures. I mean, obviously, in the first year, it'll probably we would bring it to market. We would start construction next spring, so you'd bring it to market in '27. In the first year, we figured a 25% vacancy rate till the '27 and then a five percent vacancy rate thereafter.

Okay.

So we're figuring that all the way through. If you talked and I forget her name at Habitat, but I know I was talking to her once. When they go for applications for people that can afford to buy the the housing that they're building, it is I forgot what income level they'd require at Habitat. It needs to be under 60, I think, or something along that.

At least under 80. I can't remember.

Yeah. Think that's usually even I'm saying I think you're right. That's kinda around 60 or so.

I asked her. I said, so what if what if it's between 80 and a 100 so that they don't qualify? And I said, well, how many people do you think you'd have at an open house if you had it between 80 and a 100? How many people how long of a line would you have of people that wanted to buy this house? And she's like, honestly, I haven't thought about it, but I'm sure it'd be hundreds of people that could that would try to apply for these app towers. She said, we're full already with with real small income levels. So I do think there's a huge need for it. Like I said, we know Vanguard's gonna do a project across the street here. Those aren't gonna be affordable. We know any the projects that we've built down here recently aren't affordable.

Right. Again, it's I'm not I hope this just doesn't it doesn't look like it's there is a huge need for it. We've tried to do other things with other developers for affordable housing. It hasn't ever worked in the eight years that we've been in business at Dufek. We're contractors, so we know how to build them affordably. And I don't think anybody has a real passion for using these funds and creating affordable housing. I haven't seen it anywhere that I've done it. And I don't know when the last time an affordable product was built in Waukesha.

Yeah. The Bear development, which is up on Moreland and Lake Rock, probably six. Five on six. Yeah. Yeah. Six. Maybe five. Yeah.

Okay.

And that's a that's a 9% tax credit project. So different.

Yeah. If there was TIF available on this, mean, I most of these projects need to go forward with TIF, and it's not a TIF district.

Yeah. That one had that one had tax credits at TIF.

Yeah. And then you develop it that I talked to, and we have a consultant that we're working with. The consultant say you're an affordable housing that doesn't have TIF, they typically don't cash flow for the first several years. You see, because you it's usually people that are doing it for a purpose or a mission, whether it be a nonprofit or or whatever. It's trying to build these affordable houses or affordable units so that they can get it. It doesn't cash flow for the first couple of years, but you're a 100% right. As you can increase the rates, of these rental units, they'll stay the same or you'll start to cash flow. It'll be more viable project. Any

other questions before Mike steps off? No. Thank you, Mike. Yep. Yeah.

I guess I'll I'll start first. I was pretty much in favor at 700,000 for twenty years, But I am seeing for the last many years that we've been trying to give away the affordable housing development fund. There hasn't been any takers for all the time I've been here except for Habitat for Humanity. So while thirty year repayment is a long term, I think that it's a good thing because we'll get 36 units of under a 100% of the median income with 11 of them being under 60. And the affordable housing development fund was funded by TIF.

We're not using any TIF in this particular project. And I think the idea is good to have some rental and residential in a commercial district, much like we have over at the Old Fox area there, right there where the where the hardware store was and the Chase. And in that area, it was it was developed some commercial and some residential, much like they have at the corners, some residential, some retail and and commercial in there. So I think a 36 unit building in there would fit. So those are my comments.

I have a question maybe more about the administration of the loan. So if we were to do this and there's other loans on the properties as the total developed cost about 8,700,000.0. Are are we on parity by way of of payment back? How does how do you write that in along with other financing?

Yeah. We're usually second in line. Okay. Financing. And so in the past, when people want to refinance, we make a decision if we're gonna require them to repay the loan or post subordinate. But we're usually second in line.

Okay. K.

Any other two funding sources from the low income, those were, like, grants, or were they also loan? The 1,100,000.0 and the 1,000,000. Were they

the The GroFund is a loan.

Yeah. They're both loans.

They're both loans. So so they basically be three loans plus then conventional, Nina? Yes. So would we be fourth in line, third in line, second in line?

I've never worked at the Grow Fund before. There I think that's just a construction loan, probably a short term loan. For which piece? For the Grow

Fund. I'm not aware of it being short term. Okay.

I I was just concerned, I think Jerry is too. It's a thirty year repayment, and you go five years in, and the project goes belly up, and the whole thing goes back to the bank. And everybody's out because second, third, and fourth aren't gonna end up taking over the first. So how does that work? If you can maybe just explain that to us a little bit.

Yeah. You know, to be honest with you, I'm not sure how the mezz debt would be structured and who's second, third, or fourth in the capital stack. Sometimes you can do a pair of pursue and everybody shares that lean position, but I'm not as far as specifics go on the order of the mezz debt, as far as I'm concerned for the bank's interest as long as we're first, that's Well That's the honest answer. I'm not sure.

I don't

want to speak out of terms.

With the growth fund, I think that they'll probably require to be second. So we would be third, and HUD would be fourth. HUD is always willing to take the last position, which is the home funds thing. So you'd have the bank, you'd have the Waukesha girl fund, and then you'd have the city, and then you'd have HUD. It's how I'm guessing it would be structured.

Jerry, did you have some comments?

No. I it's just it just seems so hard to to comprehend that it won't cash flow. $20,000 per unit is a reasonable price. That's very reasonable. 13,000 to build it per unit. So what I thought I heard.

It's 13,000 for the land per unit.

Jeff, what type of water table is there? Do you know? You said there's a

There's wetlands kinda off to the south.

Is that developable at all?

A lot of it isn't. I know the previous things had some a little bit of wetland mitigation. I don't think they're planning on it where they've kinda do a little bit of transfer. But even space wise, if you look at the property.

First, my app was a good one

on there. Well, it's kinda it's kinda a lot of this back here is all wetlands. So I wanna say it kinda comes like this and bumps like that.

Is that gonna be a water table problem for them?

They're I don't they're not building, like, underground park or anything, so I think that they should be fine

with us.

And when they go through our due diligence, include plan commission review, they go through our engineering department who So

the parking is on top? Surface.

It's gonna be all surface parking. Our engineering department will do a real thorough review of this, look at the wetlands, look at degrading storm water. Because left use of that land that you're seeing there, some of this some of the land here

is gonna Who's taking care of the water? Is that developer?

Yep. That's why they got a little bit of a better deal on on the the price of it, that 13,000 that we're referring to per unit. That's partially because there's a huge cost in putting that public main through there.

And surface parking is one of the ways to cut costs in a project like this since we don't often see surface parking on the.

So, Jennifer, we never like to see the bad in any situation. But let's say this this gets built, and two years from now, the project goes belly up. The developer loses it back to the bank. Is there still a requirement for the affordable housing units in those 11 spots, or does that just completely get reset?

We write a requirement as part of the mortgage. We haven't done a deed restriction in the past. We could explore that if you're interested in doing that. Like, it the deed re usually, we would require it to run concurrently with the length of the loan. So in this case, that would be thirty years. We would deed restrict it for affordable housing.

Okay. And, again, I'm always wanting to think of the worst case scenario. If the worst case scenario is this gets built and it does go belly up, it's not gonna get billed, there's still gonna be a nice 36 unit development there, and and the city would basically lose out the remainder or could potentially lose out remainder of the 720,000. But what's the value of the property when it's done for tax purposes? $100,108,000,000. Yeah. It's gonna

cost them 8 and a half million to build it. The assessments have been coming in a little lower than construction costs. It's just a weird time right now. So I would guess maybe around 7.

So $7,000,000 in assessed value. What does that bring into the city?

That would for the city, it would be about $70,000 a year.

So in ten years, you know, some of the developers could say, we wanna pay as you go KIF for ten years, which is a pretty short period of time. You know, they're not asking for one of those. They're asking for the the best case scenario for a 1% loan for thirty years to pay us back. I don't know. I I think it kinda is, like, is a yay on my on my part, but I I I don't wanna

We can look at the repayment on this too, so it'd be about 2,300 a month back to the program. It's about $27 a year back into the so there's still be money kind of trickling back into the programs along with the habitat money. So it's not like it's gonna deplete the fund permanently. And then in the future, there's also as we close TIF districts, we're gonna look at each one and see if it makes sense to extend for affordable housing, which could also

have Yeah. The city of Waukesha would have to give up their tax revenue for a year to increase that. But Waukesha, WCTC, Waukesha County, and all of those are contributing a share to us where we don't have to pay for that part of it. So it's it's not as bad as soaking the Waukesha taxpayers for the whole amount. Not to they're not soaking. You're you're making an investment into, for example, projects like this.

Yeah. So you'll see you leave open the district for an additional year as long as that money goes to benefit affordable housing. We distribute 25% of the affordable housing rehab program and the other 75% to the development fund.

Is there an interest only component that'll be offered through the city's financing?

That would be up to the redevelopment authority if you wanted to do that.

I I don't understand what you mean by that.

Typically, a construction like this, for example, probably at the bank's level, we'd be looking at eighteen months of interest only while Mike goes through the construction period since he's not earning any income. Right.

And there's not wouldn't think that would be a problem on my point.

Yeah. I wouldn't have any concerns about that for that short of a period. So the document that you sent today, it says repayment terms for thirty years or upon refinancing or sale. So I just heard you say that you can consider that at the time of refinancing. That's not a certain thing at that point.

Yeah. I mean, think what usually in the past, this would be our big first big loan with this program. But in our other programs, we look at how much of the loan is outstanding and if they've been regular payers and and also, like, what goals we're trying to achieve if the money came back. Was there an opportunity to reuse that for something else? And so then we'll make a decision on that. And so if somebody's been a bad payer or the loan's been out there a very long time or, you know, something we may not subordinate, if it's if his building's only been up for five years and he wants to refinance because interest rates come down, we'd probably subordinate just in good faith kind of that we had said, you know, he could have that financing for thirty years.

A commercial note is typically only for a five year term anyway, so he'll have to do something at the end of that term regardless.

We don't have a cover sheet for this. So does staff have an official recommendation in favor or against this? Or

I'll speak, and then Jeff can chime in. We've been try like Rick said, we've been trying to use these funds for a long time, and this is our first real viable project. And it's much longer than we had hoped for. But I think there's a lot of complexity in making these projects work, and we kinda heard about that today. So we're supporting it because we think it's a good use of the property, and it brings tax base instant instantly to the city and provides affordable housing right away.

Mhmm. And we haven't been able to bring a deal to you yet to use the funds. And so we think that this is a good kind of first project for us to move ahead with. And we've talked to Mike quite a bit about higher interest rates, shorter terms. Like, we've run that whole gamut, and we ended up here.

I think one of the other things that we really like about this project is, like he said, there's the piece that's 60% to 80% of median income and then there's the 80% to 100%. And no programs cover that 80% to 100% accounting median income. Think of your nurse or a teacher, they might be in that gap and the housing is still too expensive for them. So they're still struggling to find something affordable. We really love that there are quite a few units in that 80% to 100% of median income because we see a real need for that period. Actually up to 120 is really the kind of blind spot in terms of housing.

Yeah. Think looking at since this was created, I believe the first funding came in at '21 or '22, kind of around there. We've talked to a lot of developers either about doing stand alone projects or, like, a market rate developer saying, hey. If you we'll give you some additional funding for your building if you set aside units for affordability. So, I mean, we tried that across street.

We tried all kinds of places, and it just hasn't been any developer interest. Some developers have talked about doing this, but they haven't been able to put together or the site. We've mentioned last time there's site control issue where they were trying to use this fund along with tax credits, and that property is in end up being sold. So that didn't go forward. So, Jefferson, it's really hard to get we've talked to, I don't know, pretty much any developer that talks to us about multifamily housing. Even with those who may be doing single family, we brought it up to them. So it's we're out there marketing it. You know, probably a couple times a week, people ask about it. Also use this funding source. You know, trying to the whole intention of this was to be able to do things like this outside of TIF districts.

I mean, there may be a situation in the future where it's in a TIF district, but in addition to it for affordable housing, but in, you know, a case like this, you know, we're not gonna create TIP district. There's one parcel up there. So that's that's what this fund is kind of designed for.

Well, the total project cost of, over $8,000,000, so this loan is ten percent and one third of the units are the affordable housing. I I I would just be in favor of that. I think the math works for me.

You can make an emotion.

Any emotions out there or thoughts? Any other thoughts, Jerry? Just hate the thirty

I just hate that thirty years. It just seems so long so darn long.

Is there such a thing that there could

be a minor tiff along with twenty years from us?

The You

what I'm saying?

If the council was interested

Because we're talking what? $7,000 worth of interest? Mhmm.

Oh, over the course of it? Pardon? Over the course of

the loan? Oh, yeah. No. Not over the course

of loan. Each year.

Well Each year each year be 20 yeah. It'd be 7,000, but yeah. You're right. Over the course of loan, it'd be a 113,000 in interest over the thirty years. Alright.

It'd be a how much?

113,000. Over 13? Over the course of thirty years.

On the interest.

Yeah. We don't do tip districts for No. I know. Incentives that are

I'm just trying to be creative.

Yeah. Less than 1,000,000 or more creative district. So that's also kind of where we fall. I think yeah. Well, I said that before. Like, with it not being in a district, the taxes are collected right at well, we always collect taxes, they go straight to the general fund meaning there is also a little tax. I mean, this case, it is small, but little tax relief to everybody else, you know, instead of waiting for that at the end of the TIFF district.

Are you

saying the tax on this could be about 70,000?

Yes.

Each year for thirty years?

Yep.

Yeah. That makes it pretty nice, doesn't it?

That's that's why I I said even if the project goes belly up in here too Mhmm. And we lose all $7,700,000. In ten years, just on tax revenue alone, we got our money back. Right. Yeah. And I don't think police and fire are gonna be called to this place where there's gonna be a lot of extra city services needed. There's not gonna be any plowing, because it's in a PUD. So I think the cost to the city relatively is going to be less. Maybe some schools, you know, that's gonna be in there. You know?

But I think that even if we lost our 700,000, if it wasn't a TIF district, they'd want $700,000 paid over twenty years, you know, in in in reduction of TIF. Mhmm. So I think even in the worst case scenario, the the unit is built where we would get tax revenue from it from whoever whatever bank or whatever new developer would buy it as long as they had to keep that affordable under a 100% median for the rents. You know?

Okay. Yeah. I know. And and would would that be a condition of the loan is to maintain the affordable housing those ways?

Yeah. We always make it a condition of the loan and say that we'll call the loan if they're not doing that. It's up to you if you want to put that extra layer of a deed restriction on it as well. I'll leave that up to the redevelopment authority. That and the interest only payments.

Nina, the other two financing sources are gonna put something in also that it has to be affordable. Is that not correct?

I presume. Yes. Yeah. And HUD will for sure.

Yes.

And I can't speak for girl fund. That's the one I'm the least familiar with, but I can't imagine they wouldn't.

Yeah. So I I would think that that would pretty much be covered.

Who's making the motion? Any further discussion, sir? No. I think I'm

I don't like it when

I'm there.

I agree.

Mister chair, I'll make the motion to to approve the loan as as stated. I maybe maybe we could ask him on the interest only thing or do we just approve that as part of the motion, do think? Or

I I would I would think the interest only during construction would be would be acceptable to me.

Yeah. And the deed restriction for affordable keeping it affordable while our financing is

Yes. Here.

I will make the motion with those provisions, sir. Do I need to restate them all?

No. Think we got that.

Is there a second?

Awesome.

Reluctantly.

I think I just I think Rick's right in his idea that seven years will recover it in tax dollars. You know? So one way or another, we're getting it back.

I'm just looking at it from the standpoint of thirty years is long time. I'd like to take this money and make it work quicker.

Yeah. I hear you.

That's all.

Yeah. We we feel feeling the same way, but Yep. It's kinda where

we are. I don't know if have a tad. Those habitat ones are a year and a half. We're getting the money back. Right.

I would just add that as a city council and staff, we've spent a lot of time dedicated to the discussion around affordable housing. And we haven't really made those discussions turn into anything, at least not on a grand scale. Yeah. And, you know, I think Jeff said this is a a good project as a a beginning or a starter. And I agree with that. I think I think this is a good use of this money and a good potential project to see, hopefully, come to fruition quickly and deliver on that. So

Okay. Well, we can start a vote. Rick has an aye.

Aye. Tell me yes. Aye.

I abstain in

front of

Aye or yes. Whichever Jeff

and Jeff.

Aye. So we have one abstention and five To approve. Pick up the two two abstentions. Yes. That's correct. 502. Let me call him back in the room. Can I hold your mic now? Yes. Can

you ask him to

never mind.

He's gonna

be a smart aleck.

We have to state the reason for the abstention or just abstain is okay. Okay.

Alright. Took a little while, so I'm sure there was a healthy debate. It was.

Passed five to zero to two abstentions.

Okay. Well,

great. Thank you very much. Okay.

I totally appreciate it. The actual

Yes. We did that. I know we also did interest only payments through construction.

Interest only payments through Construction. Thirty years, 1%. And then

The increase of strength.

That that that For mortgage. Affordable housing until it's paid off. How long that may take.

Okay. Thank you. I did Emmanuel, I've worked with Jeff and Jennifer quite a while, but there's a I think that, hopefully, this project is a model for mixed income housing that we can hopefully do throughout Waukesha County or throughout the state eventually if it if it all works out and and we can get it to work. So thank you. I really appreciate it. We have put a lot of time and effort into trying to make something work, and and this is this is what I think we can actually make

make up decisions and stuff.

This is

not something.

So thank you. So we can move on to item number 25 dash o two zero four zero, which is review and act on a temporary change to property eligibility requirements for central city storefront activation loans to assist with flood related repairs?

So right now, our central city storefront activation loan program doesn't have a lot of funds in it. It's kinda based on what we get back. Prohibits tax exempt properties from accessing those loans because the idea is to build up increased property values. That's one of the goals of that program. So with the flooding, we've had a few tax exempt nonprofit owned buildings that that suffered flood damage.

And our thought was to kinda maybe temporarily suspend those that that restriction on it through the end of the year so people could I mean, obviously, loans that go longer than that. So and then they could use that money for any sort of flood restoration, areas damage, flood proofing work, site work, any building work that was deemed necessary by by our building inspectors. Or as they're going through the other project. It may trigger other things. So just able to use those funds.

It would everything else with the parameter remain the same. It'd be if it's $50,000 loan, it'd be a five year payback at 1%. If it's over 50, it would come to RDA where you would determine what those what the interest would be. You know, the RDA has done a mix of some of them maybe, like, done larger or higher interest rates. Other ones, we've done 1% for five years, 2% thereafter.

But so that that's really what we're asking to do because we don't really have any other assistance programs that could do it, that could assist with this, and there's some significant damage to some of these buildings downtown. And it's still kinda be in our out in our eligibility area, which is kinda central city. So that that's just we're proposing because that just as a way to assist these business. We're still gonna get paid back in the same terms as if from regular business. Obviously, we're not gonna see the, you know, the improvement added under the tax rolls, but we think it's still a good use of these funds.

Yeah. And so one of the nonprofits affected is the Sports Civic Theater. And the theater is an economic driver to other businesses. So that's one of the reasons we felt it was still appropriate maybe to use that to get them stable and back up on their needs.

Which program are you talking about just

going on? Storefront. Yes. So

k. It's a storefront activation. Like I said, we don't have a lot of money in there right now. We've got 42,000. Obviously, it goes up every month.

And you said earlier that your cash inflow there is about 8,000 a month?

Yeah. And it's actually yeah. We've got couple more loans that are entering every payment period, so that's gonna go up. We have a few that are one that actually just that they're lasting with today. They'll add a little bit more money because they didn't use their full 50 So there'll be some additional funding coming in here.

Do they have damage there?

At the theater? Yeah. Yeah. Their basement flooded, and that's where they store all their props. So they lost a lot of their props, but then they have a lot of restoration work to do in the basement.

I see.

Is the Waukesha Civic Theater tax property tax exempt? Yes. I thought that was for churches and universities. No. Know that it was for nonprofit.

Yeah. Other nonprofits are tax exempt as well.

Yeah. Like, like, something like the YMCA or all those tax exempt. Got a similar thing. I'll I'll give you my thoughts.

I'm a supporter of the Waukesha Civic Theater. Been there, and and it's a great organization. But the purpose of the storefront activation program is to increase the tax base by making improvements. And so we only have $42,000 in there. I would hate to see someone for example, a tavern downtown that gets flooded, that is paying taxes from whatever calamity or whatever and doesn't have any money left to be able to serve the tax base improvement of the fund.

So while I support the Walkersha Civic Theater or another tax exempt charity church or what have you, I think the purpose, in my opinion, for the storefront activation program is to increase the property value by making improvements. And increasing the property value of the theater doesn't help the city that way. It may help because it's a a good business downtown, but that's you know, I would unless convinced otherwise, would be not in favor. So I'd like to hear from the rest of the committee, maybe

they can change my mind.

I wonder if you could just remind me, we're located in Central City. So how how far off Main Street does that go? I'm wondering how many other not for profits are you then making eligible for this one?

I'll tell you at this point, we've only had about a half a dozen businesses affected that we've been able to document. Actually, one of them was on that picture. Which one? On which one? On the aerial that you had up there. Oh, I'll go back up. Yeah. There's discount liquor is one of them. And then this building here right along the river, building, the that one was affected. And then also on the West End of Main Street, Life's Connection, which I think may also be tax exempt.

Those are the ones I can think of off the top of my head.

Yes, sir.

Go. We go.

This is

our eligibility map. A part of it. This is, like, the main central city. So, basically, from Moron all the way down to, like, Washington. It's a little, like, Tribe River. Is there ever going through there? Close down to Sunset. So now we have these those new areas we had last year, which would be these kinda smaller little commercial nodes throughout the city. Mhmm. Not aware if there's any issues in these areas.

If anything popped up

in those.

There isn't Yeah. I'm not no flooding on businesses outside of really like me, the main street area.

Yeah. This area down here, like there's one. East here. There's a lot of flood mitigation that was done as part of 10/22. So that's really it's helped that area. That was an area that was kinda prone to flooding.

Is it safe to say that they don't have flood insurance?

They have some insurance, but it sounds like it's going to be far less than what their damage is.

I guess I've torn because I've seen some of the people that have that are outside of a floodplain that don't have flood insurance and then have to cover this out of pocket. And in some cases, it's it's financially devastating to families or to businesses. So we we wanna be able to help them. I don't want them taking these funds in lieu of filing an insurance claim, I guess, is my point. But if they don't have insurance, can cover it. I would be in favor of helping support it. Because, again, this, I think the Civic Theater is

an important part of

downtown. And if it does struggle or has issues, it's gonna affect other buildings and businesses around it. And the community just in general, I I know I had a niece there that did a drama camp all week. It just was in a play there last weekend. And I I think there's there's a lot of people that that utilize that space, and I think it's these funds, if they're going to sit, we see these funds again, and, like, these funds are you are are are there to be activated in

the community, and I'd

like to see us use them if we can, if it's gonna help somebody out. You can try

to form something as another condition about flood insurance. I don't know how that get worded in there. But Yeah.

It's it's the only thing is if you can go if you want, just like I said, if you're gonna avoid an insurance claim to keep your premiums low by taking this money, you don't wanna have that. But

Jennifer, did the Water Pacific Theater get storefront activation loans already? And then when they rebuilt their their facades and things, did they apply for any storefront activation loans?

They used I'm sorry? Oh, they

used the facade grant, which is funded through federal HUD money. Okay. For just and that was just for those the kinda storefront doors and windows in the front. They did we applied as a pass through for state of Wisconsin Community Development Investment Grant. So it was funded through state of Wisconsin. We were the just the pass through, and they got $250,000 through that program for their you know, for connecting those buildings and doing a lot of that work inside of there. And that was a that's a match. That's they had to match $750,000 to get that 250.

So give given the balance that's in that loan for that that fund, do you have an idea of the magnitude of what that particular organization may be asking for?

Not exactly. So I think we wouldn't cover, like, all the props and things that they lost. So we would have to really whittle that down to really what just the building damages and the mitigation. And so I don't have a good number for that quite yet.

Could we, like, put a cap of $10,000 per applicant so that one applicant wouldn't get it all? Okay.

Yeah. Part of the rules for this program is it has to be something that's fixing the building. So you can't change it for, like, furniture. You can't it for shelving. You just gotta be something that's permanent part

of the building.

And just to be clear, they haven't asked for the funds. This is just something Jeff and I were talking about. So Yeah. We just thought we would bring it forward kind of in anticipation of them having them. And we're not sure if there's others that may need a little assistance. Of course, the business is already qualified. So this would this is just a nonprofit piece.

Anybody else have any ideas or

comments? No.

Can any of these programs loan to the other program?

No. They're all

specific that apps. Yeah.

I think I knew the answer.

Mean, there's there can be some crossover. If someone owns a duplex, they can tap into rental rehab and if they if they live in, they can kinda combine two programs. But for our downtown, the only other program we have is facade grants, and that's really for fixing up the outside of your building, like, from the street side Right. Or signs. And with CDBG right now, we still don't know if we're even getting funding for that.

So but that could potentially if we do end up if they if we do get contracts for that, that could end up other businesses could use that that facade grant program if they're gonna do exterior work to their building as opposed to taking out a loan, know, obviously, if funds get low. In that case, they there's a 50% match requirement on that. So if they spend 10, we can give them 10.

So I guess I'd just like to to ask you. So under $25,000 can be approved by stat? Yeah. Okay. So given there might be $50,000 in there if you get another rate in this month. If you have three or four requests, how do you evaluate this against the end?

We kind of have been doing first come first serve. So unless they all came in the exact same day, then we'd have to kinda yeah. But usually, it's the first come first serve.

I guess I'll be honest with you. I don't even I didn't even realize that nonprofits didn't qualify for this program. We won't just quite a few nonprofits. I don't I get the fact that they're not being property tax, but at the same time, if it's funds being used to improve the buildings.

And there's some situation where you have a nonprofit in a building that's taxable too. They're just renting in that case. The building owners are applying for the funds anyway, so they could use it. Because, yeah, it's when they own the when they own the building, there's tax exempt. And that's just one of the components of this problem. The biggest thing is trying to get you know, rehab these storefronts, make them attractive to tenants, we're pretty successful with that. If you look at, like, some of the things we funded North Pillar Brewing, you know, former Edward Jones building, which, you know, has a tenant that's starting to finish up and move in there. But let it be the the bar. So we had we had a glass again. We got on a space on Gaspar in Maine.

It used to be a part of the Western way of thing. Now there's a a tenant that's moved into there. So that part of it has been really successful as well in addition to obviously, hopefully, increasing property values. It's also just getting more vitality downtown.

Out of the 1.1 that's outstanding, is there a lot that's on an extended amount of time?

The longest that any of them are is ten years. Most are on five years. The ten year ones are the bigger ones like the North Pillar. So let North Pillar, let it be and I think the Edward Jones billing

So there's there's a substantial amount

of money that's gonna come back in this.

Yeah. And we're getting and, again, we're getting to the point where almost all of our initial loans are entering repayment. We've got maybe three or four that haven't gone into repayment yet

Mhmm.

Because they're finishing up work. But within the next month, I know I have three more that are coming to repayment.

I I would be in favor of allowing the nonprofits that were hurt by flooding through the end of the year to get a

$15,000 max loan

for

five years.

At 11% interest. So

Most of the ones we have done have been 1% for five years.

Everyone's had five years at 1%. Percent. Yes.

I'm making a motion.

Yes.

I'll second that.

One quick question, Rick. Yes. Is this for building or for contents

or both?

For the building. It has to be for building because we don't do contacts. It it has to improve the building. Great. Just one Yes. Alright. Any other thoughts? Great. Well, we can pull

And shouldn't

there be a cabin on there? If they do have insurance, that that should be the first usage. Yes.

Yeah. Put

that

in writing.

So am I amending your No. No. It's

a friendly amendment. Friendly amendment. Yes.

We're we're good with her. Not a

swarm like her. So we can vote. Reck would say hi.

Hi.

Hi. Hi.

Hi.

Seeing no objections, that passed unanimously.

K.

And any communications and referrals? Item number six?

Yeah. Just to follow-up on the conversation we had last month about purchasing property, and Jeff and I are tasked with creating a draft policy to bring back to you. It's not ready yet, so we're hoping to have that in September. Been A little preoccupied with flooding and other things. So we just didn't get it done. So hopefully in September, we'll have that for you.

Which one of these funds were we proposing to use for that?

Actually, the finance director is going we're gonna meet with him. He's got some ideas about funding that are outside of those programs. So I'm hoping to bring both of those pieces back at the same time.

Yes, please.

Seeing no other business or any objections, we're adjourned. Thank you.