A tax-increment financing district that will provide about $1.6 million toward development costs for a major residential project in Onalaska’s downtown waterfront district won unanimous approval Tuesday from the Onalaska Common Council.
In addition to providing assistance for the developer of the Great River Residences project, the TIF district would generate funding that could be used for several other uses not directly related to the Great River Residences, including $2 million for a downtown parking ramp and street/infrastructure improvements, $500,000 for waterfront improvements and $500,000 for use by the city’s Community Development Authority to assist in redevelopment projects within a half-mile radius of the TIF district boundaries.
Proceeds from the TIF district also will provide $175,000 for a sanitary sewer lift station that is needed before the Great River Residences project can proceed.
The TIF district boundaries surround strictly city-owned land to be sold to Three Sixty Real Estate Solutions for the residential/commercial project that include the 200 and 300 blocks of Court Street and most of the 400 block.
With a TIF district, the property assessment is frozen at the start and the taxes on all the increased value of the property that comes from new development — the “increment” — goes into a fund that can be used for a variety of purposes determined in the establishment of the TIF district. The taxes captured include not only the city levy but the amount that would go to all the other taxing jurisdictions, too, including school district, county and technical college district.
There can be some risk involved in TIF districts if the municipality makes big investments in infrastructure to encourage development and then that development doesn’t happen as quickly as expected. That leaves the municipality having to pay off bonds issued to pay for the infrastructure out of its general fund instead of the TIF district proceeds.
Onalaska’s new TIF district is less risky because the developer is paying the $1.6 million for site preparation and utility work upfront and getting repaid over the course of nine to 11 years from the proceeds of the TIF district. The city is not out anything if the development doesn’t happen as scheduled.
“The pay-as-you-go option is for the council’s benefit,” said Sean Lentz of Ehlers, the consultant that helped the city with the TIF district plan. “If the revenue isn’t there, you’re not obligated to make those payments.”
The council in December approved a general development plan for the $16.4 million Great River Residences project that would involve four buildings with 98 housing units, including a four-story, 60-unit apartment building, two townhome buildings and a two-story building that would have retail on the lower level and studio apartments on top. A development agreement for the project is expected to come before the council in April.
While the Great River Residences developer is expected to be paid off within 11 years at most, the city’s plan for the TIF district calls for the capture of taxes on the increment for 27 years, through 2047. Ehlers estimates that the district would generate a little more than $6.7 million in 27 years, with annual increment starting at about $200,000 in the second year and ending at $322,608.
Although the city has approved no specific projects to be paid for by the TIF district after Three Sixty is fully reimbursed for its investment, the TIF district plan includes $2 million that could be used for a downtown parking ramp and other street work and $500,000 for enhancement of the Great River Landing waterfront recreational area.
The plan also envisions giving $500,000 to the city’s Community Development Authority. That money could be used for grants and/or a revolving loan fund to encourage redevelopment projects or new businesses within a half-mile of the TIF district boundaries.
Final approval for the TIF district is required from a Joint Review Board made up of representatives from all the taxing jurisdictions that will meet Feb. 27.