Minutes of Evansville Redevelopment Authority meeting--1-19-2006

(Ed. note. These are the minutes of the RDA for January, 2006. This was posted on January 20th, 2006. This is background for tonight's meeting of the RDA.)

Evansville Redevelopment Authority

Regular Meeting

Thursday, January 19, 2006, 7:30 PM

City Hall, 31 S. Madison St., Evansville, WI

MINUTES
Chairperson Hagen called the meeting to order at 7:34 PM. Present were Chairperson Hagen, Vice-Chairperson Eager, Ald. Aikman, Ald. Anderson, Betsy Ahner, Dean Arnold, and John Decker. James Otterstein, Rock County Economic Development Manager, and Bill Connors, Executive Director, also was present.

At the start of the meeting, Executive Director Connors distributed corrected 11” X 17” maps of TID No. 5 to the commissioners and Mr. Otterstein and copies of email messages from Ald. Juergens expressing concern about the application of Nelson-Young Lumber Co. for financial assistance with the cost of constructing a decorative fence along USH 14.

The agenda was approved as presented by the executive director, except the date of the meeting was corrected to January 19, 2006.

Motion by Ahner, seconded by Decker, to approve the minutes of the December 20, 2005, regular meeting as presented by the executive director. Motion passed.

There were no citizen appearances on items not listed on the agenda, and no public hearings.

Unfinished Business
Executive Director Connors noted that he had distributed a spreadsheet from the amended project plan for TID No. 5 projecting possible cash flow for the district and a memorandum discussing the spreadsheet at the December 20, 2005, meeting. He said that, in his opinion, the most important message to take away from the memorandum and spreadsheet is that the financial plan for the district is predicated on the occurrence over the next few years of some large redevelopment projects that produce substantially more tax increment than they consume, to provide tax increment to cover the substantial cost of public infrastructure improvements. Mr. Decker said it appears construction work has begun on the site for the new First Community Bank building at the corner of the new Exchange St. and E. Main St. Mr. Connors said he believes the work that is occurring is clearing the site of remnants of the former improvements, and that the bank has submitted an amended site plan for review and approval by the Plan Commission at its February meeting, so he hopes these are signs that construction of the bank building will begin in the spring. There were no questions from the commissioners about the memorandum or spreadsheet.

Motion by Eager, seconded by Aikman, to approve the revised Redevelopment Authority policy and application form included in the meeting packet. Motion passed.

New Business
Brad Fahlgren presented the request of Nelson-Young Lumber Company for financial assistance with the cost of constructing a decorative fence along Union St. The fence would consist of brick columns every 20 feet with wrought iron in between. In response to a question, he said using all wrought iron would be less expensive, but was advised that because of the long span of the fence, using all wrought iron without brick columns would compromise the strength of the fence. The fence would be six feet high, and the pillars would be a few inches taller. The space under the fence will be a maximum of five inches. The cost of the fence is estimated to be $33,000. In response to a question, Mr. Fahlgren said he is not sure what the owners would do if the city decided not to contribute to the cost of the project. In response to a question, he said the state did not provide any compensation for removal of the wooden fence that used to boarder the property along Union St., nor has the state provided compensation for the cost of the temporary fencing that has replaced the wooden fence. In response to a question, he said David Wartenweiler, City Building Inspector, told him the new fence would not require a site plan review, and that the new fence was sufficiently open so as not to block the vision of drivers approaching the intersection of Union St. and E. Main St.

Motion by Decker, seconded by Arnold, to recommend to the Common Council approval of a grant to Nelson-Young Lumber Co. of one-third of the actual cost of the decorative fence or $11,000, whichever is less, with payment to be made after Nelson-Young Lumber Co. provides the city with documentation of costs actually incurred to construct the fence.

Mr. Decker said he supports providing assistance for this project because there has been lumber yard at this site for 100 years, the city would give incentives to attract a business like Nelson-Young if were not already here, the operation of the lumber yard is the only thing that kept the rail line to Evansville in operation, Nelson-Young suffered a loss as a result of the state’s USH 14 project, safety at the intersection would be improved by the decorative fence, and the appearance of this highly visible corner would be improved by the decorative fence. Vice-Chairperson Eager said he agreed with what Mr. Decker said, but he would feel more comfortable if the new fence were part of an application for assistance with the larger project Nelson-Young is contemplating, so he could see the full amount of assistance Nelson-Young will be requesting and the amount of tax increment their larger project will generate.

Motion passed.

Roger Berg presented the application of Roger Berg, Paul Brunsell, Jeff Farnsworth, Ed Francois, and Rick Francois for financial assistance with redevelopment of 7 E. Main St. Mr. Berg provided some history of the construction the Eager building, aka the Economy Store, at 7 E. Main St., and the Grange Store building during the first years of the last century. He observed that 100 years later, we have an opportunity to renovate one of these great buildings, and the task of doing so is much easier than the task of constructing 100 years ago. He said his group of investors need the city to commit to giving a grant of 25% of the cost of the project (site acquisition, professional fees, and construction costs), estimated to be $1.9 million, to make the project financially feasible. He said that the investors soon will have spent $20,000 on structural analysis, “as built” drawings of the current building, and sketches of possible new layouts within the building. The developers do not want to invest in construction drawings, which would cost about $55,000, without first getting a commitment from the city to pay 25% of the cost of the project. He said the bricks on the front of the building are bowing out, and they need to find out from the structural engineer whether this can be fixed without taking off all the bricks on the front of the building, which would make the project more expensive. In response to a question, he said their financial calculations are based on market-rate financing. They are working with Virchow Krause to see if there might be sources of less expensive financing, such as WHEDA, but they have been told they probably do not qualify because this project is mixed use. In response to a question, he said their financial calculations include a tax credit for historic restoration.

Mr. Berg said some of the big costs of the project include installing an elevator, which may need to have four stops (one of them at the level of the parking lot in the rear), and fire protection sprinklers. There would be office/retail in the basement, retail/office on the first floor, and probably eight apartments on the second floor. The apartments along the front would be “Chicago studios,” probably more attractive to young professionals rather than senior citizens, and the apartments in the rear, where there are more window openings, would be more conventional apartments. The apartments in the rear might include spiral staircases down to the mezzanine. The decks and railings in the rear, which were destroyed by the fire years ago, will be replaced. The investors have hired an appraiser to appraise the building in its current condition so they can show that they are not over-paying to acquire the site.

Mr. Berg said it is critical to the success of this project that the building reopens on the same day Main St. reopens at the end of the 2007 street reconstruction project. Construction on the front façade must begin in August or September 2006, so that phase of the project can be completed before street reconstruction begins in spring 2007.

Mr. Berg said the investors do not need to do this project—there are better investments available to them. But they want to do this for downtown Evansville and the city as a whole. He said even if the city now commits to paying 25% of the cost of the project, the investors might need to back out of the project if they discover significant additional costs they had not anticipated.

Jeff Bahrs, 15 S. 6th St., asked Mr. Berg to clarify that the developers want the city to commit to paying 25% of $1.9 million before they developers would go forward with incurring more costs. Mr. Berg said that is correct.

Mason Braunschweig, 590 W. Main St. asked if anyone is interested in leasing space in the building after it is renovated. Mr. Berg said they have received some inquiries, but that does not mean much at this point in time. They need detailed construction drawings in order to be able to market the space. He said the developers’ financial plan allows for taking three years after completion of the project to lease out all the space in the building. Jeff Farnsworth said he intends to move his insurance agency office into the building, and has had conversations with a woman who is preparing a detailed business plan for a new business that would be located in the building.

Kevin Sam, 122 Gunther Dr., asked why they are not considering condominiums rather than apartments in this building. Mr. Berg responded that there will be no parking other than using the municipal lot behind the building, and it would be difficult to market condominiums that do not included parking.

Wayne Steinlein, 243 E. Main St., said business in downtown Cambridge has not recovered from the street reconstruction project there, so he wonders if it make sense to invest in this project when many downtown businesses might fail and spaces become vacant as a result of Evansville’s 2007 Main St. reconstruction project. Mr. Berg acknowledged that some businesses might fail, but he said it is imperative that the business community pull together and plan what they will do to help each other make it through the street reconstruction project.

Dick Woulfe, 255 E. Main St., commented it appears this project will not be a tax increment “win” for TID No. 5, and worries this will increase the pressure to hit some tax increment “home runs” with projects in the near future, based on what Executive Director Connors said earlier about the development assumptions underlying the financial plan for TID No. 5.

Mr. Otterstein asked if some of the investors have a strategy for exiting the project a certain number of years after the renovation is complete. Mr. Berg responded “no.”

There was considerable discussion about what would happen if the after renovation, the city assessor decided the property had an equalized value of less than $1.9 million. Based on the limited amount of information the developers provided to Mr. Connors, the city assessor estimated that the value of the property might be between $890,000 and $1.2 million after renovation. Mr. Connors said the assessor might change her opinion once more information is available.

Vice-Chairperson Eager said he would be willing to commit to pay 25% of the cost of the project if he were sure that the project would generate enough tax increment so that other projects would not need to feed tax increment into this project. He would be willing to commit to paying 25% of the project cost even if that meant feeding tax increment from other projects into this project if that were justified by the financial projections for the project, because he believes this project is extremely important to the downtown. But at this time, he does not have any data in front of him to support either of those conclusions.

Ms. Ahner said she supports the project, but agrees with Mr. Eager that they need to receive financial data and projections about the project from the developers before making a hard, fast commitment.

Mr. Decker said he would be willing to commit to paying 25% of $1.9 million if the developers would agree that if the city assessor determines the equalized value is less than $1.9 million, they would pay on an annual basis the difference between the increment that would be generated by $1.9 million of equalized value and the increment actually generated by the value assigned by the assessor. Mr. Berg said the developers would be willing to make such an agreement, because the developers’ financial calculations assume they will pay property taxes on $1.9 million rather than on some lesser value. Mr. Decker said he also wants everyone to understand that this would be a rare exception to the Redevelopment Authority’s policy that the maximum contribution to a project is 20% of the cost.

Motion by Eager, seconded by Aikman, to recommend to Common Council that it commit to making a grant for 25% of the cost of acquiring and renovating the property at 7 E. Main St., estimated to be $1.9 million, subject to the following conditions: (1) the developers must provide the city with financial data and projections about the project to show there is need for the city to provide financial assistance, (2) David Wagner of Ehlers & Associates must provide projections of the tax increment that will be generated by the project, (3) the developers must provide financial data and renovation plans to the city assessor to allow her to refine her estimate of the equalized value of the property at completion, (4) the parties must enter into a written development agreement acceptable to the city, and (5) the developers must agree that if the city assessor determines the equalized value of the property at completion is less than $1.9 million, they would pay on an annual basis the difference between the increment that would be generated by $1.9 million of equalized value and the increment actually generated by the value assigned by the assessor. Motion passed.

Jeff Farnsworth presented the application Lewis B. and Marion A. Farnsworth for financial assistance with façade improvements to 12–14 E. Main St. Mr. Farnsworth said he wants to restore the storefronts to their historical appearance, when they were symmetrical, but he does not need to do that to keep the property rented. The estimated cost of the project is $30,000, which does not include the cost of painting the façade or any improvements above the storefronts. The reopening of the transom windows would require some modifications to the ceilings on the interior, as was done with the space currently occupied by the Mexican restaurant. In response to a question, Mr. Farnsworth said the historic restoration of the exterior of the buildings where the Mexican restaurant is located has not generated increased rents, but he does receive more inquiries for space, making it easier to keep space in the buildings fully leased.

Motion by Eager, seconded by Decker, to recommend to the Common Council approval of a grant to Lewis B. and Marion A. Farnsworth of 20% of the actual cost of the façade improvements or $6,000, whichever is less, with payment to be made after the applicants provide the city with documentation of costs actually incurred for façade improvements. Motion passed.

Professor Georgia Duerst-Lahti of Beloit introduced two of the students in her political leadership course, Tess Gruenstein and David Harriman. Tess is an Economics and Political Science major, and David is a Political Science major. Each will perform a practicum of 90 hours or 45 hours for this course. The idea is to give each of them a project that will produce a useful result for the city and to require them to create written records of their work that would allow someone else, possibly another student from Beloit College, to perform more work on the project in the future. Executive Director Connors will supervise their work for the city. Prof. Duerst-Lahti asked that the Economic Development Committee and Redevelopment Authority quickly communicate to Mr. Connors the projects they think should be the highest priority, so he can work with the students to develop a clear statement of the assignment for each of them, because they need to get started right away. Prof. Duerst-Lahti said one of the ideas she and others, such as Mayor Ringhand, are most interested in is how to bring a motel to Evansville. Some commissioners suggested that is too large a project to take on in such a short amount of time. Sandy Decker, 143 W. Main St., suggested a possible project would be to interview owners of Main St. businesses and commercial buildings to find out what they would like the city to do to help them survive the 2007 Main St. reconstruction project. Many commissioners liked that idea, and suggested that the project also include interviewing owners of businesses affected by the USH 14 project in 2005 to find out what worked and what did not and to interview owners of businesses in other communities, such as Stoughton, about how things worked during their street reconstruction projects.

Motion by Eager, seconded by Decker, to adjourn. Motion passed.

The meeting adjourned at 10:20 PM.

Prepared by

William E. Connors, Executive Director

The Minutes of meetings of the Redevelopment Authority are not official until approved by the Authority.