New development will improve downtown TIF, treasurer says
By Brandi Makuski
A new downtown hotel is expected to gain full council approval on Monday, which will bring a much-needed financial bump to the city’s worst-performing TIF district.
A proposed four-story, 61-unit proposed by the Neenah-based Cobblestone Hotels Development LLC, was unanimously approved by the city plan commission on July 5.
The linear hotel, which also has proposed a restaurant in the building’s northwest corner, will be constructed on what is currently parking lot space between Shopko and Mid-State Technical College.
“I think everyone is very excited about this project,” Mayor Mike Wiza said of the project.
Comptroller-Treasurer Corey Ladick is also pleased with the project, saying the increase in tax base alone will be an improvement for the Downtown TIF (tax incremental financing) district, which has been under financial strain for some time. Created in 2006 under Mayor Gary Wescott, the downtown area was deemed as a “Rehabilitation District” based upon a finding that at least 50 percent of the real property was in need of rehabilitation or conservation work.
While several downtown buildings have improved their exterior facades, and other projects are nearing completion — to include the restorative 1055 Main St. project — the district is still unable to pay off its debt.
“The only thing that has improved is, it was under its starting value for a while, and it’s not under its starting value anymore,” Ladick said of the Downtown TIF, known as TIF No. 6. “It was generating some increment due to recovering property values citywide; especially with the economy starting to turn around a little bit, property values have gone up citywide. But it’s just not enough to pay all its bills.”
The TIF was about $2.8 million in debt at the beginning of 2015, according to Ladick’s presentation to the finance committee in April, and ended the year with a negative balance of $4.2 million. At that time, the city was transferring available funds from other TIF’s to help pay off district’s $7.1 million debt, which comes largely in the form of the downtown square and mall redevelopment project, which was completed in 2011.
“We’re still having to levy tax dollars to support this TIF district,” Ladick said in April. According to current city records, taxpayers subsidize the TIF by $368,000 annually, with total debt repayment for the district totaling $830,525 for 2016.
The hotel project will alleviate some of that levy burden, he said, but about one-third. As part of the developer’s agreement, the new hotel has guaranteed a minimum tax payment of $102,500 for the first 11 years of its operation.
And that doesn’t include room tax, Ladick said. The city is estimating an annual payment of about $89,000 in room tax from the hotel. The city already takes in about $750,000 annually in room tax, 70 percent of which goes towards tourism promotion.
“It is the worst TIF based on financials,” Ladick said. “Hopefully, we could see some additional new development in that district to help it out.”
The city council meets at 7 PM on July 18 in the courthouse. The public is welcome to attend.