The red line shows the boundary of Tax Incremental District (TID) # 5 within the city of Sturgeon Bay. Two different residential buildings with a total of 36 units were proposed for the area: one on the former site of the Sunset School, the other on the parking lot opposite. The TID would help the city fund incentives for the developers, public improvements, and fix-up grants for the property owners. Source: City of Sturgeon Bay.
Sturgeon Bay is creating another zone to help fund housing developments
The state legislature created Tax Incremental Financing Districts in 1974, and the city of Sturgeon Bay has created four of them since then. The city is currently working on creating a fifth to provide development incentives to encourage and encourage residential development on the Sunset School property.
A Tax Incremental District (TID) is the area of land associated with development and redevelopment projects, and the funding portion refers to how a city or village funds improvement and redevelopment projects. “In a nutshell, supplementary tax funding is a way that cities and villages support development projects by using the property taxes to pay for the development development costs,” said Marty Olejniczak, director of community development.
TIDs pass all property taxes from the new development to the community instead of splitting tax collections with the other tax jurisdictions – in this case, Door County, NWTC, and the Sturgeon Bay School District. The city then uses the property tax profits to retrospectively pay off any debt or incentive that has been borrowed or paid to promote development.
“It is one of the few tools cities have to stimulate economic development,” said Olejniczak.
In the past, the Chairman of the Planning Commission and Mayor of Sturgeon Bay, David Ward, has stated that he is not a fan of TIDs. During the Sturgeon Bay Plan Commission’s meeting on Aug. 18 when commissioners recommended approval of TID # 5, Ward offered a reassuring status review of the city’s existing TIDs.
“No. 4 is what we worry about, but No. 2 and No. 3 are going to pay off, and No. 1 is fine, and this one [#5] is sure to pay off, ”said Ward.
TID # 1 was created in 1991 to aid in the construction of the industrial park and is expected to close in 2028. TID No. 2 was created in 1994 and is expected to close in 2027. TID # 3 is the former Wire Tech property on the east side of 6th Avenue, which is expected to close in 2032. TID # 4 is the Westside Waterfront, which is expected to close in 2040.
TID # 5
TID # 5 would cover the Sunset School’s 2.76 acre lot bordering Delaware Street, North 8th Avenue, and Erie Streets, as well as the 1.81 acre parking lot across from Erie Street. SC Swiderski is planning a residential complex with 26 residential units on the former school premises and Doreen Phillips from Maritime Heights is planning a townhouse complex with 10 residential units on the 0.81 hectare parking lot.
The city has agreed to pay Sviderski to demolish the school building and pay the developer about $ 200,200 for the construction costs, or $ 7,700 for each of the 26 units built. The project is expected to be completed by the end of 2023.
The city’s contribution to Phillips for the 10-unit townhouse on Erie Street would be approximately $ 15,000 in housing costs if the units needed a fire sprinkler system. The project is expected to be completed by the end of 2022.
The two housing developments are expected to add $ 3.9 million in land and improvement values by the end of 2023. A cash flow analysis shows that the difference between the base value and the forecast value will mean $ 1.94 million in tax increases for the city.
Public improvements planned for the new TID neighborhood
The city also expects to make $ 975,316 worth of public improvements to the TID neighborhood. This includes new sidewalks on the streets of Erie and Florida, as well as road improvements for the streets of Delaware and Erie.
Another $ 150,000 would be reserved for property owners within a block of the TID who would be eligible for low or zero interest loans or grants for minor repairs and upgrades such as roof repairs, paint jobs, or window replacements.
“We did that with TID # 3,” said Olejniczak during the Sturgeon Bay Plan Commission meeting on August 18. “We gave some money for repair grants for roofs and driveways, and that was well received. This helps to maintain the property values of the TID itself. “
With the Sunset School playground equipment being removed, the city has also reserved $ 100,000 to replace those equipment at a location yet to be determined.
“We’re going to take some of this money and set up a playground in another location within walking distance,” said Alder Helen Bacon, a member of the Planning Commission and Common Council, during the Planning Commission meeting on August 18.
The filing of the establishment of the TID stated that the tax revenue that the TID would generate during its legal 20-year term would cover the cost of public improvements and the city’s contributions to developers. By 2042, the final year of the revenue collection, TID is expected to have paid back all expenses and end in a surplus of nearly $ 1 million. The cash flow analysis shows that the positive balance will not start until 2034.
Because the cost of this TID is lower and some of the expenses will come after the increase, Olejniczak said the city will likely pay for the incentives and improvements with a combination of cash, property tax revenue, and a state trust fund loan.
Joint Examination Board must approve TID
The Planning Commission recommended approval of TID # 5 on August 18, but there is still a month to go to completion.
The state law provides for a Joint Review Board (JRB), which includes representatives of the tax jurisdictions that do not receive any taxes from the district during the term of the TID. This includes representatives from Door County, NWTC, and the Sturgeon Bay School District. This also includes a member representative from the city and one from the public.
The JRB is authorized to approve or reject the TID on the basis of three criteria set out in national law. An important criterion is the “but for” test, as in “This development would not happen” but for the financial support of the TID. ”The JRB also reviews the performance of the TID annually.
The first meeting of the JRB took place on August 17th, followed by the public hearing of the Sturgeon Bay Plan Commission on August 18th, when that body also recommended the adoption of the TID. It will now go to the Joint Council on September 7th, with the JRB to make a final decision on September 14th.