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Wauwatosa TID 6 Feasibility Memo Update 080310 (2) (2)

Wauwatosa TID 6 Feasibility Memo Update 080310 (2) (2)

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Published by: Chris Capper Liebenthal on Aug 08, 2010
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TO: James Archambo, City Administrator FROM: Mikaela Huot, Assistant Vice President/ConsultantJoseph Murray, Vice President/Client RepresentativeTony Schertler, Senior Vice President/Client RepresentativeCC: Nancy Welch, Director of Community DevelopmentRon Braier, Finance Director Alan Kesner, City AttorneyDATE: August 3, 2010SUBJECT: Feasibility Analysis for UWM Engineering Campus Project TIDThe City is in the process of establishing a Tax Increment Financing District for financing of a portion of the publicimprovements related to development of a proposed UWM Engineering Campus within the City of Wauwatosa. TheCity requested that Springsted provide an economic feasibility study to determine if the projected revenues generatedfrom the District as a result of the proposed development can finance the costs associated with the implementation of the Project Plan.The tax increment revenue projections are based on the potential development of certain buildings and/or sites toaccommodate future land uses. The development projections are based on information provided by the UWFoundation (proposed developer) along with an understanding of the general market conditions and feasibility withinthe area. Any changes in the type or size of buildings in the proposed site plan would result in expected increasesand/or decreases in projected revenues.TID Number 6 – Table I Projected Development
Springsted Incorporated380 Jackson Street, Suite 300Saint Paul, MN 55101-2887Tel: 651-223-3000Fax: 651-223-3002www.springsted.com
PROJECT ValueSquareFeet orUnitsExpected DateofConstruction
Improved Land $13,550,000Accelerator Building $3,000,000 2012Academic Buildings
NA 400,000Residential
$16,150,000 190 Units 2012-2015Office/Research $54,506,250 475,000 2013-2031Retail $14,407,500 113,000 2014-2020
City of Wauwatosa, WisconsinAugust 3, 2010Page 2
The land is currently owned by the County and therefore tax-exempt. Following the sale to the University, theassumption is that the land will become taxable. The estimated value based on the assumed sale price is$13,550,000. The City anticipates that the Accelerator building will be constructed first within the research park thatwill create incremental new value of approximately $3.0 million.With the exception of the academic buildings and accelerator, projected development of the Research Park is still inpreliminary stages. Future projections are based on a site plan of the Park which includes the following:
Residential (rental and owner-occupied)
RetailThe site plan includes approximately 400,000 square feet of academic buildings, 190 units of residential housing,475,000 square feet of office/research buildings. Total estimated square footage of the site is approximately 988,000.Our estimates of incremental new value on the campus are based on the provided square footages and businesstypes. Using that information, we estimate that the incremental new value will be approximately $101.6 million uponfull build-out of the site. The incremental value estimates will be refined as additional information on projected futurebuild-outs becomes available.The objective of the District creation is to facilitate the development of a new campus. With the expanded campus, itis anticipated that office/research will locate within the District creating additional demand for new housing andsupporting retail. The new development is anticipated to create a total of $101.6 million in incremental value. Theeconomic feasibility projections are based on the utilization of approximately 27 years of the allowed tax incrementcollection period, which is the maximum for blighted TIDs.The economic feasibility analysis should be considered as a baseline projection that is annually monitored to ensureprojected targets are met. The purpose of the annual monitoring is to determine that total incremental value hasbeen achieved rather than whether a specific identified project created those increments. Future public borrowingand/or expenditures should be based on this annual review process. It is the intent of this Project Plan to maximizethe potential of Tax Incremental Financing District Number 6 to accomplish the proposed public improvementsidentified in the Project Plan.Table I summarize the development assumptions that have been used in the economic feasibility analysis. Theseprojections have been prepared based on information received from the UWM Foundation and City staff. Theprojections in Table I include assumptions on square footage and business type for future developments that havebeen proposed in the preliminary site plan. Assumptions of the taxable value by type of use are based on a review of comparable real estate values.The incremental new value projections included in Table I are not total construction cost estimates, but are factoredto equate to the anticipated equalized value to which an annual mill rate will be applied. The actual constructioncosts may be higher than projected value because construction costs may include soft costs not necessarilyassessed by the City. Real estate valuation can also significantly fluctuate from year to year. For that reason, there
City of Wauwatosa, WisconsinAugust 3, 2010Page 3
should be an annual review and evaluation of the stability of the increment value prior to making annual borrowingand/or spending decisions.The economic feasibility analysis for Tax Incremental District Number 6 is presented in Tables III and IV includedbelow. Table II shows the projected tax increments from the District based on the development assumptions made inTable I. The projections assume the total incremental new value will be $101.6 million by 2037.TID Number 6 – Table II Projected Tax IncrementsTable III shows the preliminary debt service schedules for financing of the proposed public improvement costs in theamount of approximately $12.0 million. The City anticipates financing the proposed project costs through a bondissuance. Table III indicates on a preliminary basis that projected tax increments are expected to be sufficient tosupport the debt service through the maximum term of the district.The retirement of the District, taking into consideration the assumptions identified for the Proposed Project Costs,Public Works & Improvements) and Table I (Projected Development Assumptions), is based on the property taxcollection that was in place at the time the Public Hearing will be held on August 9, 2010.The future development assumptions have been based on a review of market conditions that existed in 2010 andpotential future development. It is expected and recommended that the City annually review the financial condition of Tax Incremental District Number 6. The economic feasibility analysis indicates that the District is feasible, providedthe development assumptions have been achieved. The City should not spend at levels projected in Tables II and IIIwithout a "risk assessment" that defines the maximum financial exposure the City finds acceptable or without
TID2009/10PVTI RevenuePeriodCumulativeValuationBaseValueNet TotalAnnualAvail forEndingTIYearValue *IncrementTax Rate/1000TI RevenueValue Yr PymtsRevenue(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)(13)(14)13,550,00013,550,00013,550,00013,550,00013,550,00021.000  1/1/2011-13,550,00013,550,000-13,550,000-13,550,00021.000--20119/1/2011-  1/1/20125,422,50018,972,50018,972,500-18,972,500-18,972,50021.000284,550284,55020129/1/2012284,550  1/1/201311,103,12530,075,62530,075,625-30,075,625-30,075,62521.000284,550264,46920139/1/2013569,100  1/1/20146,024,37536,100,00036,100,000-36,100,000-36,100,00021.000398,423352,67220149/1/2014967,523  1/1/20155,652,50041,752,50041,752,500-41,752,500-41,752,50021.000631,588532,44120159/1/20151,599,111  1/1/20169,052,50050,805,00050,805,000-50,805,000-50,805,00021.000758,100608,66020169/1/20162,357,211  1/1/2017-50,805,00050,805,000-50,805,000-50,805,00021.000876,803670,44120179/1/20173,234,013  1/1/20189,052,50059,857,50059,857,500-59,857,500-59,857,50021.0001,066,905776,95420189/1/20184,300,918  1/1/20195,450,62565,308,12565,308,125-65,308,125-65,308,12521.0001,066,905739,95620199/1/20195,367,823  1/1/20203,601,87568,910,00068,910,000-68,910,000-68,910,00021.0001,257,008830,28820209/1/20206,624,831  1/1/2021-68,910,00068,910,000-68,910,000-68,910,00021.0001,371,471862,75620219/1/20217,996,301  1/1/20225,450,62574,360,62574,360,625-74,360,625-74,360,62521.0001,447,110866,99020229/1/20229,443,411  1/1/20235,450,62579,811,25079,811,250-79,811,250-79,811,25021.0001,447,110825,70420239/1/202310,890,521 1/1/2024-79,811,25079,811,250-79,811,250-79,811,25021.0001,561,573848,58620249/1/202412,452,094 1/1/20255,450,62585,261,87585,261,875-85,261,875-85,261,87521.0001,676,036867,41720259/1/202514,128,131 1/1/2026-85,261,87585,261,875-85,261,875-85,261,87521.0001,676,036826,11120269/1/202615,804,167 1/1/2027-85,261,87585,261,875-85,261,875-85,261,87521.0001,790,499840,50420279/1/202717,594,666 1/1/20285,450,62590,712,50090,712,500-90,712,500-90,712,50021.0001,790,499800,48020289/1/202819,385,166 1/1/2029-90,712,50090,712,500-90,712,500-90,712,50021.0001,790,499762,36220299/1/202921,175,665 1/1/20305,450,62596,163,12596,163,125-96,163,125-96,163,12521.0001,904,963772,47520309/1/203023,080,628 1/1/20315,450,625101,613,750101,613,750-101,613,750-101,613,75021.0001,904,963735,69020319/1/203124,985,590 1/1/2032-101,613,750101,613,750-101,613,750-101,613,75021.0002,019,426742,75820329/1/203227,005,016 1/1/2033-101,613,750101,613,750-101,613,750-101,613,75021.0002,133,889747,48420339/1/203329,138,904 1/1/2034-101,613,750101,613,750-101,613,750-101,613,75021.0002,133,889711,88920349/1/203431,272,793 1/1/2035-101,613,750101,613,750-101,613,750-101,613,75021.0002,133,889677,99020359/1/203533,406,682 1/1/2036-101,613,750101,613,750-101,613,750101,613,750-21.0002,133,889645,70520369/1/203635,540,571 1/1/2037-101,613,750101,613,750-101,613,750101,613,750-21.0002,133,889614,95720379/1/203737,674,459 Totals:88,063,750$ 37,674,459$ 18,210,291$
* Assume base value of new development to be $0. Land current tax-exempt.
CumulativeValue withInflationValueDue toPersonalPropertyAnnualIncreasedValue of NewBuildingsCumulativeValue of NewBuildings &ImprovementsTotalEstimatedTaxable ValueAnnual TaxIncrementRevenue

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