The Community And Economic Development met 04/27/2022. Most of the meeting was taken up with a presentation by City of Appleton Economic Development Specialist Matt Rehbein about development projects and opportunities in the City of Appleton. This was a presentation that the city gives to realtors, developers, investors, bankers, etc as well as community groups like the League of Women Voters and the Rotary Club.
Appleton has received some national notice as a great place to live, has appeared on several ranking lists, and is recognized as an affordable and safe city. [If you actually look at the slide, 4 out of the 5 ranking mentions come from a single publication called Smartasset, so the person who put the presentation together may have been overselling things a bit, much as I do think Appleton is a pretty good place to live.]
Appleton has seen significant growth in home values. In 2020, per the City Assessor’s Office, the median price of a single-family home was $183,000, and at the end of 2021 it was up to $201,000. Mr. Rehbein noted that the information on the slide was already dated because it was from the end of 2021. He said that he gave the presentation to a group of realtors that morning and they told him that price was now about $230,000. That was probable for the entire Appleton metro area, but he had no doubt the price of homes had increased since December.
Equalized value in the city went up 8% last year as compared to 7% across the state of Wisconsin.
Net new construction was 1.25% in Appleton as compared to 1.60% across the state.
The reason net new construction was important was because that was what limited how much a municipality could raise the tax levy. In Appleton, 1.25% net new construction worked out to a little over $70 million dollars. He said that one criticism of this measure was that a smaller community could pull in the same sized project as a larger community but it would make bigger impact on the percentage of equalized value for the smaller community than for the larger community. It was also easier to develop in newer communities where there are a lot of green field sites as compared to in established communities where one might be redeveloping in the downtown area for example.
It was hard to move that net new construction number for a mature city the size of Appleton. That said, the rules are what the rules are and the levy is based on that number, so Appleton always makes sure that it’s monitoring and keeping track of that number.
He showed a power point slide with the new housing permits for the last 10 years. “You’ll see last year we set a record with 98 new single family home permits. Despite the increases in construction prices, demand for homes is still very strong and the need for living options is still very strong. I don’t know where they are at this point in 2022, but you know that trend was going up since about 2018—2017 really. [Personally, when I look at that data, it doesn’t look like things have been trending up since 2017. It looks like there was a jump in 2020 and 2021, but things looked pretty flat from 2014-2019.]
The average value of a new home, for construction costs alone and not including the cost of land, in 2021 was about $383,000. He stressed that was the average; they took the total estimated cost to build all the homes that had permits taken out and then divided it by the number of permits. [I took his point in saying that to be that there would have been a number of homes that cost less than $383,000 to build.]
To build all of these homes, they needed lots and have been tracking the number of available lots in the city. Those lots may not yet have the infrastructure installed to allow them to be built upon because that’s up to the private market. But, in terms of the city’s planning process and the work done by the city, the number of approved, platted, vacant lots in the city was 394. That was a significant increase from previous years, which was good news for the city. They like to see that trend going up and that demand for housing was strong.
Director of Community And Economic Development Karen Harkness added that, often times, subdivisions are built in phases, so if there were 71 lots on the final plan, not all 71 of those lots would be being built on at the same time.
Alderperson Kristin Alfheim (District 11) said she had participated in a number of discussions where they talked about mapping out properties and condensing them so that they did not have massive yards and utilized space more wisely. She asked if that was something they took into account as new subdivisions were divided into lots. Was there any discussion in the early phases regarding things such as moving houses closer to the roads or creating different access to utilize the space better? Or was it up to developers to do whatever they wanted to do?
Director Harkness answered that it was a little bit of both. The city doesn’t set a maximum lot size, nor did most other communities. It would be hard to enforce that because the terrain of every subdivision is different. Some may have wetland issues or have navigable water streams where they need a bridge crossing of some sort.
The city did, however, have an internal policy that they follow. Subdivision and development agreements were done through the Department of Public Works, and they had many collaborative meetings with other departments where they tried to help subdivisions be able to cover the infrastructure costs based on the size of the lots. In that way, they were trying to incentivize smaller lots.
Alderperson Alfheim loved that they weren’t mandating anything but, rather, just incentivizing.
[I suppose it makes some sense to build houses closer to the roads so that sewer and water laterals don’t have to be so long, but some people like to have space. They don’t want to live downtown in tiny apartments one on top of the other. They want larger houses and larger yards so their kids and dogs and whatever can enjoy running around and everyone isn’t on top of each other. Maybe it’s not the role of the city to “incentivize” smaller lots.]
Matt added that the Council had approved some amendments to city code to allow for greater density in residential districts such as through accessory dwelling units which made it easier to provide additional housing without necessarily just spreading out. The city recognized that there was limited land use for them to spread out into.
Matt returned to the presentation and showed a slide of the TIF districts and Opportunity Zoning in downtown Appleton. He noted that in 2012, TIF 3 (the one in yellow) had been declared distressed as a result of the Department of Revenue changing the way that equalized value was calculated in TIF districts. That resulted in two things. (1) It gave the TIF district an extra 10 years to meet the obligations of the district, but (2) it also tied the city’s hands by not allowing them to create any new projects in that district.
Recognizing that they would not be able to provide any TIF-incentives in that large chunk of downtown, they created TIFs 11 and 12 to the east and west of TIF 3. They’ve had a number of projects in those districts. Director Harkness noted that TIFs could only be amended three times, and TIFs 11 and 12 had already been amended once, so they had to be very judicious and strategic in how they did amendments and what was included.
The slide also showed the Opportunity Zone. Back in 2017 wit the Tax Cuts and Jobs Act created Opportunity Zones. After submitting qualified census tracts to the Governor’s Office, Appleton was awarded an opportunity zone. Opportunity Zones could be used by investors for qualifying projects to defer the taxes on capital gains.
He then moved into a review of some of the individual projects that were built or in development, particularly in the downtown area.
320 E. COLLEGE AVENUE – [This is the location in between the History Museum and Heid Music.] Per the development agreement, they were going to create a minimum of $5 million in increments, but it looked like they were going to well exceed that. It would have 39 residential units, and the first floor would house two commercial tenants—All Tied Up Floral Café and Yoga3 which was a hot yoga studio.
BLOCK 800 (823-827 W. COLLEGE AVENUE) – [This is on College between Badger Avenue and Richmond Street] This was expected to generate a minimum of $4.6 million in increments. There were 20 residential units which 100% leased at this time. They have two commercial tenants announced—Coalesce Marketing and bubble tea establishment Uni Uni. [The prospect of a bubble tea shopped seemed to provoke some interest amongst the meeting participants. I can’t fault them for that. I perked up a bit myself at the prospect of Boba.]
CRESCENT LOFTS (306 W. WASHINGTON STREET) – This was located in the old Post Crescent building. There were two components to the project, the rehab of the existing building as well as some new construction on the northwest part of the parcel. The new construction was completed in August of 2021. The rehab was completed in September of 2021. There were 69 residential units, 58 of which were low to moderate income units. The developer used WHEDA tax credit financing to fund the project.
Director Harkness noted that they did not use TIF funding for the project but, in addition to the WHEDA tax credits, they had also received historic tax credits. This development was also 100% leased.
Alderperson Israel Del Toro (District 4) asked where they could find information on what the pricing ranges were for low to moderate housing.
Matt responded that that was all established by Housing and Urban Development (HUD). Director Harkness said that new guidelines had just come out the previous week. A family of four could make up to $79,000 and still be qualified for that housing. [Side note, that’s nearly 3 times the federal poverty level for a family of 4, and government assistance programs don’t typically include any money a family receives in tax credits at tax time so they could probably be pulling in more than $79,000 and still qualify for this housing.]
PARK CENTRAL (318 W. COLLEGE AVENUE) – This was right across from the Paper Valley Hotel. They were adding three floors and would be creating 39 new market-rate residential units with commercial space on the first floor. Construction was currently underway and was expected to be done by the end of the year. Matt had not heard anything about pre-leasing, but he expected it would fill right up as other developments had.
ZUELKE BUILDING (103 W. COLLEGE AVENUE) – This was the second group in recent memory to take a run a redoing the Zuelke Building. They were planning 66 market-rate residential units with commercial space on the first floor. Construction was currently underway, and they anticipated being done by the end of the year.
Like the developer rehabbing the former Post Crescent building, this developer was also using historic tax credits. There was a lot of work that needed to be done on the building. All the mechanicals in the building needed to be replaced. The elevators didn’t line up. There were a lot of limitations. Matt mentioned it would be nice to see the building utilized more fully than by the handful of office tenants who have been in it that last several years.
RISE APARTMENTS (300 AND 400 BLOCKS OF N. ONEIDA STREET) – This was just north of the Outer Edge and was composed of 3 currently vacant parcels. It would include 43 new residential units, 36 of which would be low-income Section 42 housing. They were estimating a value of just over $3 million.
The city was providing some TIF incentives to help move this project along, and the developer had also applied for WHEDA tax credits and were waiting to hear back about that. WHEDA usually announces who they have awarded credits to in the spring. If they do not receive those tax credits, it will be very difficult to move forward on the project.
Alderperson Alfheim confirmed with Director Harkness and Matt that this development included an assortment of 1-to-3-bedroom apartments.
Alderperson Vaya Jones (District 10) asked whose responsibility it was to ensure that there was parking for the residents.
Director Harkness said that was dealt with through the zoning code and the amount of parking a property had to provide was based on how a property was zoned. A property that was zoned Central Business District (CBD) did not have any parking requirements. Sometimes a developer will make the decision to include parking, and sometimes they will not if they were located near a parking ramp.
Alderperson Jones asked if there was a trend with lower income housing not including parking, and Director Harkness answered that there was not a trend.
Alderperson Maiyoua Thao (District 7) asked if projects needed to be located in specific areas in order to be approved for WHEDA tax credits.
Director Harkness said the answer was yes and now. The city doesn’t dictate where developers seeking WHEDA tax credits have to go. WHEDA also doesn’t dictate where they can be; however, WHEDA applications are scored on a matrix and could get a higher score depending on the proposed development’s proximity to transit and infrastructure projects. Ideally, WHEDA tax credit projects would be spread throughout a community, but oftentimes, they will end up congregating in one area due to the location of public transit or other services such as the Outagamie County building where low-income people receive services.
URBANE – MERGE URBAN DEVELOPMENT (100 BLOCK OF WASHINGTON STREET) – the Phase 1 of this project was going to be located at the site of the former Conway Hotel. They were looking at creating 56 residential units and were going to be hopefully starting construction in the next month or so.
The project’s Phase 2 building would be at the side of the former Blue Ramp and would include 75 residential units and commercial space on the first floor. The developer intended to finish the first building and then get started right away on the second building, so assuming it took 1 year to complete the first building, they hoped to see construction on the second building start in 2023.
Matt noted that Merge, LLC was a group that specifically invests in Opportunity Zones. The criteria they look for is a third-tier sized city with a university and a vibrant downtown with a lot of programming such as concerts, food venues, and farmers markets. They also like to be just off the main street. Appleton and this site checked all the boxes for them.
They also loved the proximity to the Yellow Parking Ramp and were planning to have their residents utilize that instead of building their own parking.
Alderperson Alfheim remarked that although the units were market rate, they were studio and one-bedroom apartments and so would be lower cost due to that and more attainable for more people. Director Harkness responded that the one caveat was how inflation and the cost of materials would affect prices.
Alderperson Nate Wolff (District 12) asked if they had made sure that, with all of these developments, there would be parking available in the ramps for people going downtown.
Matt responded that they had recently updated a parking study and these projects were all factored into that.
Director Harkness said that pre-pandemic, the city oversold their parking structures by 20-30% and never had an issue with the exception of maybe two days out of the year when there were events at the Paper Valley.
Matt moved back to the presentation. Across all projects, they were looking at 461 new residential units in the downtown. They wanted to make sure that they were hitting different price points across those and that they had a pretty broad range with low to moderate income units as well as some of the higher end units.
- The rental costs ranged from $.80-$1.75 per square foot per month.
- Of the 461 units, 94 (or about 20%) were low to moderate income units.
Additionally, back in 2016, the city had a real estate analysis completed for the downtown area, and that analysis identified that between 2016 and 2021 “there was a need for 385 multi-family units—a total of 435 residential units in the downtown. This is pretty darn close.”
Director Harkness noted they didn’t factor in a 2-year pandemic into the calculation.
Alderperson Del Toro asked with all of these residential units being developed, was there the possibility of bringing a grocer into downtown to make sure that it doesn’t turn into an urban food desert.
Matt responded that they are specifically asked about Trader Joes on an almost weekly basis. Trader Joes has very specific parameters that they look at in terms of density, income, education levels, habits, and household size when deciding where they want to open a new location. Appleton doesn’t meet those specifications.
Alderperson Del Toro asked where Appleton fell short.
Director Harkness said Appleton feel short on a lot of the metrics. The issue was how the region operated in practice versus how its Municipal Statistical Area was presented. Oshkosh and Neenah/Menasha were in a different MSA than Appleton was, which did not reflect how the Fox Cities actually operates as a region.
The Community and Economic Development Department’s job was to have dialogues with site selector, and although they had not been able to attract a Trader Joes or a Fresh Thyme there were stores with groceries available including the Dollar Tree, Walgreens, RxLink Pharmacy, [and I’ll add Kwik Trip]. Green Gecko had also had groceries. She said that downtown Appleton did not meet the definition of a food desert, but they do keep an eye on that.
Matt added that they’ve put together statistics for some of the larger, well-known grocers to consider, and the message they received back was that the statistics were probably right but those grocers knew that if they stayed within their criteria, they would be successful so they didn’t want to take a chance on Appleton even if the statistics presented were correct.
Alderperson Del Toro appreciated that the businesses they mentioned did provide some groceries but it didn’t feel like a comprehensive grocer option. He saw that as increasingly becoming a pressure topic.
Director Harkness said that it was interesting to see how the grocery industry was changing post-pandemic. They are losing their share of individuals walking into the grocery store because a lot of people have continued to order online either for delivery or pickup. They were seeing a phenomenal growth in warehousing across many sectors.
Matt also noted that a lot of these projects weren’t even built yet. He thought that once those residents were actually in downtown that grocers might give a second look at the data. When he was out talking to retail groups and giving presentations, the increased density in downtown was a topic.
He moved on with the presentation, mentioning the Library Project only in passing, given how familiar all the alderpersons were with it.
COLLEGE AVENUE NORTH SUB-AREA PLAN – Due to the library, Merge Development’s projects, and the Crescent Lofts development happening, there was some momentum starting in this area. There was also a number of under-utilized parcels and buildings in this area. Because of that, they wanted to put together a deliberate plan and gather input about what the city wanted this area to look like. Therefore, they hired RDG Planning and Design as a consultant to put together a sub-area plan. That process was well underway, and they had received over 3,000 responses on their interactive website, and there had been a couple open houses.
As part of that, they were also going to be updating the real estate analysis that they had done back in 2016 which had identified that they needed 385 multi-family units and 435 total residential units downtown. Seeing that those units were built of committed to at this point, where did the city go from here? Was downtown overbuilt? Should they still be marketing for that?
They were also expanding that real estate analysis to cover the entire city and do a deeper dive than the one completed in 2016 to help them identify what types of products should be out there.
Alderperson Jones asked, of the 3,000 engagements they had received on the website, how many of them provided good ideas and input.
Director Harkness answered that it was probably 1/3 to 1/2. She also noted that they held a public open house on 04/11/2022 and had over 70 participants. They were much busier than they thought they would be which was great.
They moved on in the presentation.
US VENTURE – Matt said that unfortunately this slide hadn’t changed much in the last few years, but he would love to have an announcement about US Venture. The Mayor’s Office and the Attorney’s Office continued to work with US Venture to bring this project downtown.
There had been some changes to the area. The YMCA was rebuilding the Soldier’s Square parking ramp. US Venture built a temporary parking lot to accommodate the YMCA during the transition while the new ramp was going up. The city was beginning some utilities and road work around the YMCA and would be straightening out Lawrence Street now that they had taken out the curve on Oneida Street when coming off the Oneida Street bridge.
RIVERHEATH – POPLAR HALL – Down in River Health, Poplar Hall was built during Covid and Matt didn’t know if many people saw it unless they walked the trails down by the river. It was a beautiful event space available for corporate and private events and music. He thought it would be a great space now that people were starting to come out again post-pandemic. It had room for 180 people.
SOUTHPOINT COMMERCE PARK – They had been keeping busy with the commerce park and just sold a parcel to Romenesko Developments Inc. The week after the meeting, they would be closing on a parcel for Farrell Investments to expand their building.
APPLETON REDVELOPMENT AUTHORITY BUSINESS ENHANCEMENT GRANTS – The Common Council had approved allocation some money to the Appleton Redevelopment Authority to provide business enhancement grants to commercial properties outside of TIF Districts 11 and 12. These were matching grants up to $7,000 for façade improvements to commercial properties in the city. The city already had this program available in TIFs 11 and 12 which was why it wasn’t available there.
The city recognized that a lot of businesses needed just a little bit of help to do some façade improvements that may not rise to the level of a full TIF agreement, so they created this program. It was available to any commercial property and had been well-received. They had provided a number of grants all over the city, and interest in the program continued to increase There was about $30,000 left which would cover a few more businesses.
And that was the end of the presentation. The committee members had asked questions throughout the presentation, so did not have any questions once it was completed.
View full meeting details and video here: https://cityofappleton.legistar.com/MeetingDetail.aspx?ID=958448&GUID=EECF28C5-6548-4260-A7F3-98FDD792A796
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