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TO:
Honorable Mayor and Members of the Common Council
FROM:
Kelly Nieforth, Director of Community Development
DATE:
September 24, 2024
SUBJECT:
Res 24-531 Approve TID No. 29 TIF Development Agreement and Lease Agreement with Boat Works LLC
BACKGROUND
The Oshkosh Common Council approved the creation of TID No. 29 on July 12, 2016 for the redevelopment of the former Morgan Door/Jeld-Wen wood manufacturing site at West 6th Avenue and Oregon Street as well as the former Boat Works Marina and city sanitation garage to the west along the Fox River. The city of Oshkosh purchased the sanitation garage in 1999 and the Oshkosh Redevelopment Authority purchased the former Boat Works property in 2005 with plans to redevelop both parcels as part of the Southshore Redevelopment Plan.
Boat Works LLC includes developers Chet Wesenberg and Tim Hess. The developers have received approvals to construct 56 multifamily units within two buildings (one building on each parcel) and have committed to keep the rental rates for all 56 units within the income range for workforce housing which is 80%-120% of the Area Median Income for the life of TIF assistance. Boat Works LLC will purchase the two parcels for $1 and will be responsible for any additional remediation work on site.
ANALYSIS
The developers have requested TIF assistance in order for the project to be financially feasible. The terms of the TIF Development Agreement are as follows:
TIF Paygo obligation until 2043 (the end TID #29’s statutory life).
Developers will receive 90% of the created increment for a total of approximately $2.7 million of TIF assistance based on the estimated value of the taxable portion of the development but shall not exceed $4 million.
City will retain 10% of the newly created increment for administrative costs.
The City will provide a loan for $360,000 at a 0% interest rate for seven (7) years. The City shall provide the loan on the completion date or earlier as the project is completed.
Developer shall diligently pursue completion of construction of the project by June 30, 2027.
The developers have requested that an “estimated” and “shall not exceed” figure be included in the Development Agreement in order to work with a lender to monetize the TIF in order to receive a loan. The “shall not exceed” figure accounts for future tax increases due to value increases, mill rate increases, and potential referendums.
Similar to previous redevelopment projects on contaminated sites along the river, the developers have requested that the City and RDA enter into a Lease Agreement during the construction of project in order to work with the Wisconsin Department Natural Resources to obtain a Case Closure for the site. The construction taking place with address specific contaminated sites and aspects of the buildings, parking lots, and landscaping will provide a cap for the contaminated areas. Once the Case Closure is received from the WNDR when the project is constructed, the parcels will be transferred to the developers for ownership.
FISCAL IMPACT
The City’s TIF obligation is a maximum of eighteen (18) years and it is estimated that the TIF payment would be approximately $2.7 million or the TIF payment will be terminated once TID #29 is required to close per state statutes. The maximum TIF assistance shall not exceed $4 million. The City’s exposure is limited because the TIF obligation is a Paygo which is dependent on the developer’s ability to pay their annual taxes and create additional increment.
RECOMMENDATION
The City Council approves the Resolution and authorizes staff to execute the development agreement and lease agreement.
Attachments
Res 24-531
TIF Development Agreement (Boat Works, LLC)
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