VILLAGE OF MT. HOREB, WISCONSIN TAX INCREMENTAL FINANCE DISTRICT #5 PROJECT PLAN. April 8, Prepared By: MSA Professional Services, Inc.

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1 VILLAGE OF MT. HOREB, WISCONSIN TAX INCREMENTAL FINANCE DISTRICT #5 PROJECT PLAN April 8, 2009 Prepared By: MSA Professional Services, Inc.

2 TABLE OF CONTENTS Page I. INTRODUCTION AND PURPOSE 3 II. STATEMENT OF KIND, NUMBER AND LOCATION OF PROPOSED PUBLIC WORKS 4 III. BOUNDARY DESCRIPTION 7 IV. EXISTING USES AND CONDITIONS 7 Map 1 Location of TID Boundary 9 Map 2 Zoning 10 Map 3 Existing Land Use 11 Map 4 Project Locations 12 V. ECONOMIC FEASIBILITY 13 Table 1 Projected Income 14 Table 2 Annual Performance 15 VI. FINANCING 16 VII. PROPOSED ZONING CHANGES 17 VIII. PROPOSED CHANGES IN THE COMMUNITY DEVELOPMENT PLAN, MAP, BUILDING CODES AND ORDINANCES 17 IX. LIST OF NON-PROJECT COSTS 17 X. RELOCATION 18 XI. STATEMENT INDICATING HOW CREATION OF THE TID PROMOTES THE ORDERLY DEVELOPMENT OF THE MUNICIPALITY 18 XII. LEGAL OPINION 18 APPENDIX 19

3 I.INTRODUCTION AND PURPOSE The Village of Mt. Horeb has identified a need to expand its economic base through mixed-use business development. In order to promote development, the Village is seeking to designate a geographic area lying within its current corporate limits as Mixed-Use Tax Incremental Finance District (TID) #5. The creation of TID #5 will allow the Village to make certain public improvements to the designated area so that business redevelopment activity can occur. Anticipated growth, combined with the Village s commitment toward development, will ensure sufficient tax increment to retire all debt issued by the District for improvements. These improvements will allow the Village to attract and retain potential development, and encourage further private investment in local businesses and residences. The business and residential development that is anticipated to occur will provide long-term tax benefits to both the Village and all other overlying taxing jurisdictions. In creating TID #5, the Village of Mt. Horeb has made the following findings, consistent with Section of Wisconsin Statutes: Activities and improvements to TID #5 are intended to encourage and attract mixed-use development growth or redevelopment in the Village. The improvement to the area is likely to encourage, develop, and maintain a strong growth pattern in the Village, taking advantage of major transportation routes through the Village. The improvement to the area is likely to maximize private investment within TID #5 and significantly enhance the value of substantially all other real estate in the District. The improvement to the area is likely to make currently underdeveloped areas of the Village more attractive by providing necessary and desired public improvements, which are compatible and feasible with existing systems. The improvement to the area is likely to encourage and promote conformity with the Village s planning and development policies. At least 50% of the land in TID #5 is suitable for a combination of industrial, commercial or residential development and newly platted residential areas will not exceed 35% of the total area of the TID. The equalized value of the taxable property of the District plus the aggregate value increment of all existing districts within the Village does not exceed 12% of the total value of equalized taxable property within the Village. The development in TID #5 would not take place in the absence of the improvements - 3 -

4 stated in the project plan

5 II.STATEMENT OF KIND, NUMBER AND LOCATION OF PROPOSED PUBLIC WORKS The Village of Mt. Horeb intends to implement a number of public works projects that will positively impact business and residential related development in TID #5. These projects will be undertaken within the first 15 years of the TID s existence, subject to change based upon the relative needs of the Village and the ability of the District to recoup expenses through the generation of tax increment. These projects may be undertaken within TID #5 or within ½ mile of the TID #5 boundary, per Wisconsin Act 57. A brief description of each project is provided below. A.TID #5 Projects The Village Board shall review and approve all projects upon review and recommendation of the appropriate committees. Project #1 Overhead Electrical Line Relocation $350,000 Electrical line relocation and upgrades are required to service certain areas of the District. Only a portion of the costs related to the District will be considered a project cost. Project #2 Street Reconstruction $100,000 Some streets to service the developing properties will need to be reconstructed. To maintain good traffic flow inside the area and control ingress and egress, it may be necessary to provide new parking lanes, off-street parking, traffic control signs and signals, and other street amenities. It is expected that Front Street will be the primary target area for reconstruction efforts. Project #3 Water and Sewer Mains $100,000 The Village may need to make water and sewer main improvements/installation. Only the portion of the costs related to the District will be considered a project cost. Project #4 Environmental Audits and Remediation $15,000 It may become necessary to evaluate properties for environmental reasons. The costs related to all environmental audits and remediation will be considered eligible project costs

6 Project #5 Landscaping and Right-of-Way Improvements $50,000 The Village may provide landscaping, lighting, street furniture, pedestrian pathway improvements, and other general amenities to attract high quality development to the area. Project #6 Bike Trail Improvements $30,000 It may become necessary to install lighting and blacktop along the bike trail. Only a portion of the costs related to the District will be considered a project cost. Project #7 Parking Lot Improvements $20,000 The Village may need to make parking lot improvements to serve the District. Project #8 Revolving Loan/Low Interest Loan Program $150,000 To encourage private development and property maintenance consistent with the goals and objectives of the Village within the areas of the District, the Village may establish a revolving loan fund (RLF) and/or matching grant program using TID funds. Project #9 Economic Development Marketing & RFPs $15,000 Activities associated with Economic Development Marketing include but are not limited to: business recruitment, retention and expansion efforts, promotion, general planning and marketing. Funds may be used to create developer request for proposals (RFP) to attract potential redevelopment. Project #10 Developer Incentives (Cash Grants) $250,000 The Village may provide incentives to property owners and/or developers as a means of encouraging desired types of development within the District. Incentives may include, not are not limited to, cash subsidies, landscaping, facility construction, and other incentives that will assure an increased tax base

7 Project #11 Land Acquisition & Demolition $200,000 The Village may acquire land from willing landowners, which it could then redevelop and market to businesses intending to locate to the Village. The Village will not use its condemnation powers to force unwilling property landowners to sell their property within the boundaries of the TID. Project #12 Administration, Planning, Engineering, & Professional Services $25,000 To encourage development in the TID, the Village may be engaged in attaining professional services such as planning, engineering, and legal services. In addition, mapping and grantfunding seeking are also considered professional services. The Village will provide TID administration and reporting to the Department of Revenue including base packet submittals and annual eligibility evaluations. B.TID #5 Project Cost Summary All of the customary expenses are considered in these estimates, including but not limited to: legal fees, engineering fees, architectural fees, planning fees, surveying and mapping fees, inspection, construction costs, materials and apparatus, restoration work, permits, reports, judgments, claims for damages and other expenses. All TID/Village costs (estimated at $1,305,000) are stated in 2009 prices and are preliminary estimates. The Village reserves the right to increase the costs to reflect inflationary increases and other unforeseen or uncontrollable circumstances between 2009 and the time of construction/implementation. The Village reserves the right to increase particular project costs to the extent that others are reduced or not implemented, without amending this Plan. This allocation of increments is preliminary and is subject to adjustment based upon the implementation of the Plan.. If special assessments are needed for financing infrastructure improvements, the Village will continue following the current policy of doing special assessments, as attached to this document. TIF funds may be used for special assessments at the Board s discretion. Examples would be adding new infrastructure or improving a substandard condition or service. TIF funds could also be used to finance an improvement that benefited the entire TID. The Village Administrator is responsible for monitoring the overall financial progress of the TID and will report, orally and with written communications, no - 7 -

8 less often than quarterly to the Village Board at their regular monthly meeting. At these quarterly meetings the Village Board will either reaffirm continuation of the current plan for the TID or will make the appropriate modifications

9 III.BOUNDARY DESCRIPTION The boundary for TID #5 was established using the following criteria: A. The equalized value of the taxable property of the District plus the aggregate value increment of all existing districts within the Village does not exceed 12% of the total value of equalized taxable property within the Village. A map identifying the boundary for TID #5 is provided on the following page. TAX PARCELS The District includes the tax parcels listed in the public hearing notice and as listed on the map. IV. EXISTING USES AND CONDITIONS Maps that identify the zoning and existing land uses in TID #5 are provided on pages 10 and

10 MAP 1 LOCATION OF PROPOSED TID BOUNDARY

11 MAP 2 ZONING

12 MAP 3 EXISTING LAND USE

13 MAP 4 PROJECT LOCATIONS

14 V. ECONOMIC FEASIBILITY The economic feasibility of TID #5 depends on the tax incremental revenue generated from within the District. There are three critical components in determining the economic feasibility of a TID: New development increases in property value, inflation driven increases in property value, and the change in the full value tax rate. In projecting the future increment and income generated by TID #5, assumptions were made for each of the above-mentioned critical components. These assumptions are identified below. A.New Development Activities The TID is projected to realize $10,000,000 in new value over its anticipated 20- year life in mixed-use development. Village of Mt. Horeb TID #5 NUMBER PROJECT ESTIMATED VALUE PROJECT YEAR 1 Mixed-use 300, Mixed-use 600, Residential - 8 units 1,600, Mixed-use 600, Residential - 8 units 1,600, Mixed-use 600, Residential - 8 units 1,600, Mixed-use 600, Mixed-use 600, Industrial 500, Mixed-use 100, Industrial 500, Mixed-use 100, Mixed-use 650, Mixed-use 50, Total 10,000,000 B.Inflation Rate Inflation is assumed to be 2.0% over the life of the District. C.Full Value Tax Rate The full value tax rate is assumed to be $17.26 per thousand in 2009 and remain constant through The full value tax rate is assumed to be $18.30 per thousand from Table 1 presents the projected income for TID #5 commencing in 2009 and running over the 20-year life of the District to the year

15 Table 1: Projected Income TID #5 Village of Mt. Horeb 1 A B C D E F G H CUMULATIVE DEVELOPMENT ANNUAL TAX VALUE INFLATION DEVELOPMENT CONSTRUCTION VALUE INCREMENTS YEAR INCREMENT INCREMENT CONSTRUCTION INCREMENT INCREMENT TAX RATE (INCOME) $0.00 $0.00 $0.00 $0.00 $ $ $0.00 $0.00 $300, $0.00 $ $ $0.00 $0.00 $600, $0.00 $ $ $0.00 $0.00 $2,200, $300, $300, $5, $300, $6, $2,200, $600, $606, $15, $906, $18, $2,200, $2,200, $2,218, $54, $3,124, $62, $1,100, $2,200, $2,262, $93, $5,386, $107, $600, $2,200, $2,307, $140, $7,694, $153, $750, $1,100, $1,253, $163, $8,948, $178, $50, $600, $778, $178, $9,727, $194, $0.00 $750, $944, $195, $10,671, $213, $0.00 $50, $263, $200, $10,935, $218, $0.00 $0.00 $218, $204, $11,153, $223, $0.00 $0.00 $223, $208, $11,376, $227, $0.00 $0.00 $227, $212, $11,604, $232, $0.00 $0.00 $232, $216, $11,836, $236, $0.00 $0.00 $236, $220, $12,073, $241, $0.00 $0.00 $241, $225, $12,314, $246, $0.00 $0.00 $246, $229, $12,561, $251, $0.00 $0.00 $251, $234, TOTA L $10,000, $10,000, $12,812, $2,797, A SS UMP TIONS 1. 2% percent annual inflation of assessed values. 2. Tax increments determined using value increments from construction only. 3. A nalysis assum es the TIF expires at the end of the 20 year period (2028) 4. Annual Interest on debt = 4.50% 1The numbers presented in Table 1 are estimates subject to change based upon the actual performance of the District and the lending climate

16 Table 2: Annual Performance - TID #5 Village of Mt. Horeb 2 I J K L M N O P PUBLIC PROJECT ANNUAL OTHER JAN. 1ST TID ANNUAL DEC. 31ST YEAR COSTS BORROWING INCOME ACCT. BALANCE TRANSFERS DEBT SERVICE ACCT. BALANCE $50, $55, $5, $0.00 ($4,175.49) $ $100, $113, $0.00 $13, $0.00 ($13,033.81) $ $550, $612, $0.00 $62, $0.00 ($62,703.09) $ $425, $527, $0.00 $102, $0.00 ($107,113.22) $ $180, $298, $0.00 $118, $0.00 ($133,274.39) $ $0.00 $87, $0.00 $87, $0.00 ($141,260.92) $ $0.00 $53, $0.00 $53, $0.00 ($146,418.59) $ $0.00 $6, $0.00 $6, $0.00 ($147,029.06) $ $0.00 $0.00 $0.00 $ $0.00 ($147,029.06) $17, $0.00 $0.00 $0.00 $17, $0.00 ($147,029.06) $48, $0.00 $0.00 $0.00 $48, $0.00 ($147,029.06) $96, $0.00 $0.00 $0.00 $96, $0.00 ($147,029.06) $149, $0.00 $0.00 $0.00 $149, $0.00 ($147,029.06) $206, $0.00 $0.00 $0.00 $206, $0.00 ($147,029.06) $267, $0.00 $0.00 $0.00 $267, $0.00 ($147,029.06) $333, $0.00 $0.00 $0.00 $333, $0.00 ($147,029.06) $402, $0.00 $0.00 $0.00 $402, $0.00 ($147,029.06) $476, $0.00 $0.00 $0.00 $476, $0.00 ($147,029.06) $554, $0.00 $0.00 $0.00 $554, $0.00 ($147,029.06) $637, $0.00 $0.00 $0.00 $637, $0.00 ($147,029.06) $725, TOTA L $1,305, $1,751, $0.00 $0.00 ($2,519,357.26) TOTAL PAYMENTS ($2,519,357.26) 2The numbers presented in Table 2 are estimates subject to change based upon the actual performance of the District and the lending climate

17 VI. FINANCING Under Wisconsin law there are several methods of borrowing, some of which apply against a municipality s debt limit, and others that do not apply against the limit. The state sets this limit at five percent (5%) of the municipality s total equalized property valuation. The feasibility of financing specific projects at any given time using a particular method can be determined based on the municipality s current fiscal situation, anticipated non-tif related capital needs, the amount of money to be borrowed, interest rates, and lending terms. Possible funding sources include: A. General Obligation Borrowing General Obligation Borrowing includes all types of municipal borrowing from banks, the State Trust Fund, or other lending institutions. This method of borrowing requires little effort or legal expenditures and works particularly well for smaller projects. B. General Obligation Bonding General Obligation Bonds are a debt instrument backed by the full faith and credit of the municipality and its ability to raise revenue through taxation. In the case of default, the municipality is liable for repayment of the debt. As a result, this type of debt can often result in lower interest rates than regular General Obligation Borrowing. The high fees associated with the issuance of the bonds makes them more attractive for larger projects. C. Mortgage Revenue Bonds Revenue Bonds are a debt instrument backed by revenue generated from the project. These types of bonds are also mainly used for larger debt issuances due to their relatively high associated fees. They are typically issued by municipal bodies that raise revenues on a fee for service type basis, such as the Water & Sewer Utility. These types of bonds generally do not count against a municipality s five percent debt limit. D. Special Assessment B Bonds Special Assessment B Bonds are a debt instrument backed by the municipality s ability to raise revenue from special assessments charged to persons, organizations, or businesses receiving benefits from the project. These bonds also do not normally count against a municipality s debt limit

18 E. Federal/State Loan and Grant Programs The State and Federal Government often sponsor grant and loan programs that municipalities may potentially use to supplement TIF expenditures or provide financing for capital costs which positively impact the District. These programs include Wisconsin Community Development Block Grants, Rural Development Administration Community Facility Loan/Grants, Transportation Economic Assistance Grants, and Economic Development Administration Grants. These programs require local match funding to insure State and Federal participation in the project. VII. PROPOSED ZONING CHANGES The Village of Mt. Horeb is zoned in accordance with an ordinance formally adopted by the Village Board. Based on the current zoning classifications within TID #5, zoning changes may be necessary to accommodate planned redevelopment opportunity as a result of creating TID #5. VIII. PROPOSED CHANGES IN THE COMMUNITY DEVELOPMENT PLAN, MAP, BUILDING CODES AND ORDINANCES The creation of TID #5 will not require any changes to the existing community development plans or the Village s municipal codes or ordinances. The projects proposed in the Project Plan are consistent with the development policies of the municipality, as well as existing building codes, maps, and ordinances. IX. LIST OF NON-PROJECT COSTS No Non-project costs are expected to occur as a result of creating TID #5. Costs Attributable to Other Sources: $767,857 X. RELOCATION Relocation activities are not anticipated pursuant to the creation of TID #5. Should relocation become necessary, however, the Village will comply with statutes regarding relocation (Ch. 32 and Comm202), and file a relocation plan with the Wisconsin Department of Commerce (DOC). Any person or business to be displaced will be provided copies of information prepared by DOC on relocation benefits. No property owner or business will be displaced against their will

19 XI. STATEMENT INDICATING HOW CREATION OF THE TID PROMOTES THE ORDERLY DEVELOPMENT OF THE MUNICIPALITY TID #5 will promote orderly development in the Village of Mt. Horeb by marketing and attracting economic activity to a specified area. This allows the Village greater control over economic activity in order to ensure that development and/or growth is orderly, harmonious with adjoining land uses, and enhances the health and welfare of the community. XII. LEGAL OPINION An opinion from the Village legal counsel regarding the Project Plan for TID #5 and its compliance with s of Wisconsin Statutes is provided in the Appendix. TO BE PROVIDED

20 APPENDIX The Village Board included and adopted their Special Assessment Policy as a part of this project plan

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DESCRIPTION OF THE DISTRICT

DESCRIPTION OF THE DISTRICT The project plan for City of Wausau, Tax Increment District #11 has been prepared in compliance with Wisconsin Statutes Chapter 66.1105(4). The plan establishes the need for