The Community and Economic Development Committee and the Common Council met 03/20/2024 and each voted to approve a development incentive agreement with US Venture to redevelop the property at 222 W College Avenue and receive $2.1 million in tax incremental financing incentives paid out over a period of years once the project is completed.
The agreement also included terms incentivizing US Venture to market and develop 5 small and 2 large nearby lots (most of which were currently surface parking lots) as a way to secure guaranteed parking permits in city parking ramps.
Finally, the agreement terminated the development agreement that currently existed regarding the “bluff site” site that US Venture owns and was considering building its headquarters on.
The agreement started out being described as a “win/win” for the city and US Venture. Not too long into the discussion, it was bumped up to being a “win/win/win”. By the end of the evening, it was described as a “win/win/win/win/win/win”.
Representatives from US Venture spoke positively about the agreement and expressed excitement to be moving to Appleton. Jennifer Stephany of Appleton Downtown Inc also expressed excitement for the project and how it would invigorate downtown Appleton.
The agreement was approved unanimously by the Community and Economic Development Committee and by a vote of 14-1 by the Common Council. Alderperson Chad Doran (District 15) cast the lone dissenting vote. He expressed the view that, rather than provide TIF incentives, the city could have looked into purchasing the 7 out lots that US Venture owned.
I’ve prepared transcripts of both discussions for download:
Community and Economic Development Director Kara Homan provided an overview of the agreement to the Community and Economic Development Committee. The city was proposing to provide Pay As You Go TIF incentives which was the typical method by which Appleton provides fiscal incentives for development deals. When the development project was completed and the agreed upon assessment value of the property was attained, property taxes would be collected. 90% of the increase in property taxes will be paid back to the developer. These payments are scheduled to end on August 15, 2045 or when total payments reached $2.108,905 which comes first.
Additionally, US Venture owns 5 small lots and 2 larger lots near the 222 building. The development agreement included incentives for US Venture to develop those parcels by tying their development with US Venture’s ability to secure 650 parking permits in the city owned parking ramps, particularly the green ramp. If the development does not happen within 5 years, ownership of those lots will transfer to the city or to the Redevelopment Authority if the city chooses to do that.
Finally, this agreement terminated the previous development agreement that existed between the city and US Venture for the development of the bluff site.
City staff viewed this agreement as a win in several ways. (1) It brought a major corporation’s headquarters to Appleton’s downtown along with all the employee activity (eating and shopping) associated with that. (2) It did this at a time when, nationally, commercial real estate was not trending in a positive direction. (3) The move would was expected to drive revenue to the city’s parking utility. (4) It would hopefully result in the development of 7 lots that were currently mostly just surface parking lots.
The financial risk to the city seemed to be minimal. The city was not taking on any debt for the project and not putting any money up front. The money that would be paid to the developer would be generated by the increase in taxes brought about by the increased assessed value after the redevelopment project was completed.
Additionally, there seemed to be no risk to the parking utility, and it was confirmed that the green parking ramp had enough capacity to handle 650 spots being taken by US Venture. Director of Public Works Danielle Block spoke on this concern, saying, “We look at utilization rate as a really important factor when we’re issuing daily permits, monthly permits. The types of parking hours we would see with business usage are very different than those that would complement on a nighttime usage or nightlife usage. It’s all about balance in the parking utilities. Not only do we look at the total number of permits sold, we check that that usage rate—daily usage rate—and you can tell if there’s remote work situations or, you know, just different work schedules are peaks and valleys in the usage. So, we’re confident that the green ramp has ample capacity for the 650 permits that are mentioned in here. And overall, the yellow, green, and red ramps have plenty of capacity for the additional 200 permits that are talked about within the [Development Agreement] as well.”
Some concern was raised that the end value of the redeveloped property was expected to only be $29.3 million, but it had been reported that US Venture was going to spend $40 million on the project. Director of Community and Economic Development Kara Homan explained that commercial real estate assessed values were primarily based on comparable lease rates of equivalent space. Demand for commercial spaces has not been what it was prior to the pandemic. Additionally, construction costs, particularly for commercial projects, have been inflated significantly. Those factors contributed to projects costing more money than what their eventual assessed value would be.
Alderperson Sheri Hartzheim (District 13) was concerned that the agreement included what felt like “loose language” regarding what the marketing and developing of the 7 surface lots would entail. She wondered if the agreement could be made more clear about what US Venture was expected to do regarding those lots. City Attorney Christopher Behrens could not go into detail regarding the negotiation discussions between Appleton and US Venture, but he said that they needed to allow the developer some flexibility. “So as far as those large lots go, we have zoning codes, we have other things in place, that are going to dictate to the extent of what can be developed there. We can’t really get more prescriptive than that.” Regarding the marketing of the lots he said, “[T]hey do have some incentive to try to sell those on their own, because the agreement indicates that after five years, they will give them to the city. So really, if they can sell them and allow the, basically the commercial market to dictate in that situation, that’s better for them. It’s probably better for the city just to let the free market work. But there is that end of five years where it’s going to come to us. So, I guess my point is, I don’t think we need to get too prescriptive on how they need to market that property because there’s already built in incentives.”
During the Common Council meeting, Alderperson Doran had some questions about the agreement that necessitated the Council entering closed session. After they return to open session and discussion had resumed he said, “I’m just wanting to go on record and state that I am a little disappointed that, in my mind, at least we have a viable alternative before us to look at for not having to do a TIF agreement on this project that we have not yet pursued in in looking at purchasing the combined parking lots from US Venture to offset the need to do a TIF agreement. And I think we’re—I guess in my mind, it just lacks a little due diligence on our part to look at every avenue to avoid having to do that so that we’re not seeing other taxing entities also having to take the hit during the life of this agreement for the additional increment that’s created from this project. This isn’t a knock on the project itself. I think it’s great for Appleton and downtown. It certainly brings benefits with us—with it for the city. But I think there is an avenue for us to still see this project potentially happen that hasn’t been explored. And I’m at this point, I’m not able to in good conscience vote for the development agreement without looking at that option further.”
Alderperson Kristin Alfheim (District 11) disagreed with the idea that the city did not need to have TIF incentives for the project. Her position was that the money that would be paid to the developer was all going to come from the increase in assessed value which would not exist if the project didn’t go forward. “There is no money that they’re missing out on. It doesn’t exist without this development, and we have a great organization that’s looking to put $40 million into one of our landmark buildings. So, I in no way should I—do I believe this should be looked at as a negative. It is a wonderful use of a great building a great organization without spending a nickel. We are not taking any money out of the pockets of the other taxing entities. The money doesn’t exist unless we have a great partner like US Venture to increase the value by investing $40 million.”
Alderperson Katie Van Zeeland (District 5) also did not believe there was a viable way for the city to purchase those lots because they did not have money in the budget to do an outright purchase.
The Community and Economic Development Committee voted unanimously to recommend the agreement for approval and the Common Council voted 14-1 to approve the agreement with Alderperson Doran casting the dissenting vote.
View full Community and Economic Development meeting details and video here: https://cityofappleton.legistar.com/MeetingDetail.aspx?ID=1183969&GUID=67B0DF59-203A-495F-9C81-8478B6C73AA6
View full Common Council meeting details and video here: https://cityofappleton.legistar.com/MeetingDetail.aspx?ID=1171630&GUID=0FD6CC44-548D-406A-8681-BBD549FF0A19
2 thoughts on “Common Council Approves Development Incentive Agreement With US Venture For 222 Building On College Avenue – Agreement Includes $2.1 Million In Tax Incentives”