#5 Approve project plan for TIF #35, sw corner of STH 11 & Beloit Avenue (File Res. #2011-816)Economic Development Department Memorandum
August 22, 2011
TO: Janesville City Council
FROM: Vic Grassman, Economic Development Director
DATE: August 10, 2011
SUBJECT: Action on a proposed resolution approving the Project Plan for and establishing the
boundaries of Tax Increment Finance District No. 35, land located at the southwest
corner of STH11 and Beloit Avenue (File Resolution No. 2011-816).
____________________________________________________________________________
SUMMARY
The City Administration is proposing to create TIF No. 35 which includes a 226-acre parcel of land
acquired by the City located at the southwest corner of STH 11 and Beloit Avenue. The proposed
district is being created to attract potential industrial developments. The parcel is a certified
industrial site which provides potential developers a site that is “shovel ready”. It is expected that
the possibility of TIF incentives will attract new industrial developments within this TIF district. The
Plan Commission held a public hearing on the Project Plan for TIF No. 35 at their August 1, 2011
meeting and recommended its adoption. The Administration recommends that the Council adopt
Resolution 2011–816 approving the creation of and setting the boundaries for TIF No. 35. If the
Resolution is approved, TIF No. 35 will go to a Joint Review Board for review and approval.
DEPARTMENT RECOMMENDATION
The Administration recommends that the Council adopt Resolution No. 2011–816 approving the
Project Plan for and establishing the boundaries for Tax Increment Finance District No. 35.
CITY MANAGER RECOMMENDATION
The City Manager concurs with the recommendation proposing adoption of the Project Plan.
ANALYSIS
Function of TIF Districts
A. : Both the State and City have adopted laws and policies to
encourage industrial development and retention. TIF is one tool used to stimulate industrial
development through financial incentives. TIF allows cities to recapture the up-front costs
of public improvements (i.e. land acquisition, transportation and utility improvements) from
all property taxes created by new development in a TIF district occurring as a result of the
improvements. Once all public improvements have been repaid by the “tax increment” from
the new development, the TIF district is dissolved and all taxing jurisdictions can collect
taxes levied on the new property value created. The TIF District must be dissolved no later
than 20 years after being created.
Location of TIF 35
B. : The Administration proposes the creation of TIF No. 35 located at the
southwest corner of STH 11 and Beloit Avenue as shown on Map 1. The site is 226-acres
in size and is located within City limits. The parcel is zoned M1, Light Industrial District and
is adjacent to property north and west also zoned M1 located within City limits.
Purpose of TIF 35
C. : The attached Project Plan describes proposed TIF expenditures and
development. TIF No. 35 would facilitate future industrial expansion within the City. Since
this is a certified industrial site, potential developers have the ability to expedite their
projects since the site is “shovel ready”. In addition, TIF No. 35 has the following
objectives:
1. Promote industry retention, expansion, and attraction through the development of a
new fully improved certified industrial park, thereby creating new jobs and increased
tax base.
2. Provide appropriate financial incentives to encourage industrial expansion.
3. Reduce the financial risk to the taxpayer by timing the implementation of the Project
Plan with the creation of additional property value through industry expansions.
4. Generate sufficient new property tax increments within eight (8) to ten (10) years
from each specific development project within the TIF District to fully repay the City's
TIF project expenditures associated with the development project.
Appropriateness of the Project Plan
D. : The Project Plan is economically feasible and
serves as an appropriate guide for development in the area. The Plan projects that TIF
35's up-front public improvement costs will be paid with “tax increments” created from new
development within the project period. These projections are based on conservative
assumptions and policies. The City will not proceed with any public improvements until the
developer or business commits to construct a new building with a value sufficient to
generate property tax increments needed to cover the improvement costs.
Appropriateness of Proposed Boundaries
E. : District boundaries are appropriately drawn to
meet industrial development objectives and to assure that TIF 35 can be dissolved within
the 20-year period. The area has been identified as a primary area for future industrial
growth.
Consistency with City Plans
F. : The proposed TIF District is consistent with City plans and
policies, including the City’s Zoning Ordinance, the Growth Concept Plan, Comprehensive
Plan, Industrial Development Plan, and the City Council’s Industrial Development Policy.
Industrial development activities are guided and implemented most directly by the Industrial
Development Plan and Industrial Development Policy. TIF 35 is consistent with the
following general objectives and policies of these industrial development documents
because it:
Targets public investments for industrial development toward the southeast side of the
City as the City’s planned large scale industrial district.
Concentrates on retaining existing industrial firms by providing a range of incentives to
stimulate its expansion.
Encourages the continuation of sequential industrial development within the urban
service limits.
Clusters industrial sites to create industrial neighborhoods which reduce land use
conflicts and minimize development costs.
Provides for City purchase of land to create additional industrial development sites and
allows for the subsequent conveyance of those sites to prospective firms, consistent
with adopted City plans.
Suitability of Land Area for Industrial Development
G. : The 226-acre site was previously
annexed into the City and zoned to M1, Light Industrial District upon annexation. The M1
zoning is consistent with the City’s Comprehensive Plan future land use designation of Light
Industrial. The entire area is within the City’s urban service limits. Municipal sewer and
water utilities are available to the district through extensions of existing facilities within the
area.
PLAN COMMISSION ACTION – 1 AUGUST 2011
Brad Schmidt, Associate Planner, presented the written staff report.
Cherek explained the Plan Commission’s role in reviewing the creation of the TIF.
Commissioner Siker asked what the reaction was from the two single-family homeowners in the
boundary. Grassman indicated that one home is currently vacant however both are located in the
Town. The properties wouldn’t be affected but the if the need arose in the future, the City could
potentially offer to buy these homes. Cherek stated the land area proposed for TIF 35
encompasses land that is currently included in TIF 22. TIF 22 was amended in 2004 to include this
property, and at this time, a new TIF District (TIF 35) is being created to overlap that portion of TIF
22.
Commissioner Madere asked who prepared the revenue expenditure chart. Hulick indicated that
he prepared the form.
The public hearing was opened and closed without any speakers.
There was a motion by Commissioner Consigny with a second by Commissioner Siker to approve
Resolution No. 2011-01 adopting the project plan for TIF 35 and designating the district boundaries
and to then forward a positive recommendation to the City Council to create TIF District No. 35.
The motion carried on a 6-0-0 vote.
cc: Eric Levitt
Jay Winzenz
Resolution No. 2011 – 816
RESOLUTION APPROVING THE PROJECT PLAN AND CREATING TAX
INCREMENT FINANCE DISTRICT No. 35 WITHIN THE CITY OF JANESVILLE
ROCK COUNTY, WISCONSIN
WHEREAS, the City of Janesville has prepared a Project Plan and proposed a boundary for the
creation of City of Janesville Tax Increment Finance District No. 35 in accordance with the
provisions of Wisconsin Statues ss 66.46, a copy of said Project Plan and proposed TIF No. 35
boundary are attached and herein incorporated to this Resolution; and
WHEREAS, the Plan Commission has held a public hearing on the proposed creation of Tax
Increment District No. 35 and the proposed boundaries thereof, and recommended the approval
of the Project Plan for Tax Increment District No. 35 and the creation of the new TIF district;
and
WHEREAS, the Chief Executive Officer of the local school district, Rock County Board,
Blackhawk Technical College, and the other entities having the power to levy taxes on the
property located within the proposed Tax Increment District No. 35 have been notified pursuant
to Section 66.46 (4) (a) and (e), Wisconsin State Statutes; and
WHEREAS, all of the land within the proposed TIF District No. 35 is currently zoned M-1
Industrial and has been found suitable for industrial development within the meaning of Section
66.52, Wisconsin State Statutes and will remain zoned for industrial purposes for the 20 year life
of the TIF District; and
WHEREAS, the project costs directly serve to promote industrial development, consistent with
the purpose for which the TIF District is created, and the improvement of such areas for
industrial projects will significantly enhance the value of all property within the TIF District; and
WHEREAS, the aggregate equalized value of taxable property within all of Janesville's TIF
Districts does not exceed twelve percent (12%) of the total equalized value of property within the
City of Janesville; and
WHEREAS, the Project Plan for Tax Increment District No. 35 is economically feasible and has
been found to be in accordance with the City's General Development Plans, Zoning Ordinance,
and other relevant policies and that this project is in the best interest of the City of Janesville and
for the benefit of its residents.
Resolution 2011-816
Page 2
NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of Janesville that
it hereby approves the Project Plan for City of Janesville Tax Increment Finance District No. 35
and creates Tax Increment District No. 35 in the City of Janesville as described on the attached
map and Project Plan for TIF District No. 35.
ADOPTED:
Motion by:
Second by:
APPROVED:
Councilmember Aye Nay Pass Absent
Brunner
Dongarra-Adams
Eric J. Levitt, City Manager
Liebert
McDonald
ATTEST:
Rashkin
Steeber
Voskuil
Jean Ann Wulf, City Clerk-Treasurer
APPROVED AS TO FORM:
City Attorney
Proposed by: Economic Development Division
Prepared by: City Manager’s Office
TAX INCREMENT FINANCE DISTRICT No. 35
PROJECT PLAN
Adopted August 22, 2011
Prepared By:
Economic Development Agency
Accounting Division
City Manager’s Office
City of Janesville, Wisconsin
18 N. Jackson St.
Janesville, WI 53545
CITY OF JANESVILLE
TAX INCREMENT FINANCE DISTRICT No. 35
TABLE OF CONTENTS
I. WISCONSIN TAX INCREMENT LAW AND PROCESS ........................ 1
II. TIF No. 35 PLAN OBJECTIVES ......................................................... 2
III. BOUNDARIES OF TIF No. 35 ......................................................... 3
IV. EXISTING ZONING AND PROPOSED LAND USES ............................. 5
V. PROPOSED TIF PUBLIC WORKS PROJECTS AND .............................. 8
IMPROVEMENTS
VI. DETAILED LIST OF ESTIMATED PROJECT COSTS............................ 10
VII. ECONOMIC FEASIBILITY AND METHODS OF FINANCING ............. 14
VIII. PROPOSED CHANGES IN ORDINANCES, CODES, & PLANS ............ 18
IX. LIST OF ESTIMATED NON-PROJECT COSTS ...................................... 19
X. METHODS FOR RELOCATION OF DISPLACED PERSONS ................ 19
XI. PROMOTION OF THE ORDERLY DEVELOPMENT ........................... 19
MAPS
1. Map 1 TIF No. 35 Boundary Map ……………. ........................................ 4
2. Map 2 TIF No. 35 Zoning ......................................................... 6
3. Map 3 TIF No. 35 Existing Conditions and Land Use ............................... 7
4. Map 4 TIF No. 35 Proposed Improvements ................................................ 10
5. Map 5 TIF No. 35 Property Within ½ Mile of Boundary ........................... 13
LEGAL AND PROCEDURAL
1. Legal Opinion From City Attorney on Project Plan…………………………20
2. TIF No. 35 Plan Adoption and Creation Resolutions………………………..22
3. Joint Review Board Resolution ……………………………………………..25
City of Janesville
Tax Increment Finance District No. 35
Project Plan
WISCONSIN TAX INCREMENT LAW AND PROCESS
I.
Under Wisconsin Statutes Section 66.1101 (1), the State declared that the policy of the
State is "to encourage and promote the development of industry to provide greater employment
opportunities and to broaden the State's tax base to reduce the tax burden of residents and
homeowners." Locally, the City of Janesville has adopted an Economic Development Policy
designed to "diversify the economic base of the City through the retention and expansion of
existing businesses ...” In addition, the City seeks to attract new industries through the creation
of fully improved industrial parks.
One tool designed to help stimulate new development is "Tax Increment Financing
(TIF)". When the State Legislature enacted the Tax Increment Law (ss 66.1105) in 1975, they
found, "that the accomplishment of the vital and beneficial purposes of the Promotion of Industry
Statute (ss 66.1101) is being frustrated by the lack of incentives and financial resources." One
stated purpose of the Tax Increment Law, "is to create a viable procedure by which a city or
village, through its own initiative and efforts, may finance projects which will tend to
accomplish," the promotion of industry.
The Tax Increment Law allows a community to recapture the costs of public expenditures
made to stimulate new development, from the property taxes generated by the new development.
Fundamental to the TIF law is the concept that new development will benefit an area broader
than the municipality in which the development occurs. However, an inequity occurs because
the community is left to finance the entire cost of public expenditures needed to facilitate the
development. The TIF law recognizes that without the TIF expenditures, the development could
not have occurred.
Thus, the TIF law provides that all property taxes levied on increased property value
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within a TIF district are retained by the community to finance the public expenditures made
within the TIF district. The base value (the value that existed at the time the TIF district is
created), however, continues to provide same level of revenues to other taxing jurisdictions.
Once all of the public expenditures have been repaid, all taxing jurisdictions can collect taxes
levied on the new property value.
State statutes are very specific as to how a TIF district is created. First, a TIF project plan
is developed and presented to the Plan Commission for a formal public hearing. The
Commission makes a recommendation on the TIF project plan to the City Council. The Council
then must pass a resolution adopting the TIF project plan and establishing the TIF boundaries.
Finally, a Joint Review Board is created with members from the City, school district, county,
vo-tech district, and one member at large. The Joint Review Board reviews the TIF plan and
public hearing comments and approves the creation of the TIF district. Amendments to a TIF
Project Plan may be made by following the same procedures. TIF project plan amendments
may be necessary to revise projected budgets and/or to amend the boundaries of the original TIF
district.
This document will meet the statutory requirements for a Project Plan for Tax Increment
Finance District No. 35.
TIF No. 35 PLAN OBJECTIVES
II.
Industrial development activities in the City of Janesville are guided by the City's
Economic Development Strategy and implemented in accordance with an Economic
Development Policy. The overall goal for the City's industrial development effort is to diversify
the City's economic base through the retention and expansion of existing businesses, and through
the attraction of growing industrial and large regional service sector employers that will create
new employment opportunities and expand the local property tax base.
TIF No. 35 will advance the City of Janesville's industrial development objectives and
specifically will:
A. Promote industry retention, expansion, and attraction through the
development of a new fully improved certified industrial park, thereby
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creating new jobs and increased tax base.
B. Provide appropriate financial incentives to encourage industrial expansion.
C. Reduce the financial risk to the taxpayer by timing the implementation of
the Project Plan with the creation of additional property value through
industry expansions.
D. Generate sufficient new property tax increments within eight (8) to ten
(10) years from each specific development project within the TIF District
to fully repay the City's TIF project expenditures associated with the
development project.
BOUNDARIES OF TIF No. 35
III.
Described as follows:
Pt SE. ¼ and Pt SW. ¼ Sec 13-2-12 and also Pt NE. ¼ and NW. ¼ Sec 24-2-12, 4TH PM, City
of Janesville, Rock Co, WI DAF: Com NE cor sd Sec 24; th S0°18'59"E alg E L NE ¼ sd Sec
24, 400.21'; th N88°27'04"W 33.02' to W L CTH G and POB; th N88°27'04"W 3826.97' m/l; th
N0°02'51"W 1704.64' to N L SE ¼ SW ¼ sd Sec 13; th S89°02'36"E alg sd N L 1291.03' to NE
cor sd SE ¼ SW ¼ sd Sec 13; th N0°00'24"E alg N-S CL sd Sec 13, 1283.03' to S L STH 11;
th S88°41'40"E alg sd S L 1757.16' to W L Lot 1 CSM rec in Vol 8 Pgs 114-115; th
S1°18'01"W alg sd W L 217.05' to SW cor sd CSM; th S88°42'05"E alg S L sd CSM 110.0' to
SE cor sd CSM; th N1°18'01"E alg E L sd CSM 200.0'; th S88°41'40"E 70.0' to NW cor Lot 1
CSM rec in Vol 9 Pgs 132-133; th S1°18'01"W alg W L sd Lot 200.0' to SW cor sd Lot; th
S88°42'05"E alg S L sd Lot 115.05' to SE cor sd Lot; th N1°18'01"E alg E L sd Lot 200.0' to S L
STH 11; th S.88°41'40"E 163.80' alg sd S L STH 11; th S71°01'05"E alg sd SL 293.11' to W L
CTH G; th S05°31'29"E 429.43' alg sd W L; th cont S alg sd W L 187.2' m/l to pt on N L CSM
rec in Vol 15 Pgs 135-136; th N88°34'17"W 7.0' m/l to NE cor Lot 1 sd CSM; th S alg E L sd
Lot 1 570.00' to SE cor sd Lot; th S88°34'17"E 7.0' m/l to W L sd CTH G; th S alg sd W L
1722.62' m/l to POB. 6-17-126, 6-17-126.4, 6-17-126.6,pt 6-17-125, pt 6-17-212, & pt 6-17-214
3
MAP 1
4
EXISTING ZONING AND PROPOSED LAND USES
IV.
The City of Janesville is proposing to create TIF No. 35 to expand an existing industrial
park on the City’s south side. TIF District No. 35 currently contains one, 226 acre parcel of
vacant land in an industrially zoned area on the City's south east side. The parcel is unimproved
and has been used for agricultural crop production for decades. In 2004, the City negotiated to
purchase an additional 226 acres of land located south of STH 11 and west of County Trunk
Highway G. Upon annexation, this land was zoned M-1 Light Industrial.
Since that time, the City went through a lengthy site certification process in 2010 to have
the 226 acre site deemed as a “shovel ready” certified industrial site. TIF No. 22 has seen
tremendous expansion and growth, and is set to be retired within the next 3-5 years. Therefore,
the creation of TIF No. 35 would allow the 226 acre certified site to continue to be marketed and
incentivized with tax increment financing to make the site more appealing for industrial
development and expansion.
The City’s long term growth plans in this part of the city called for continued expansion
of industrial development along CTH G and State Trunk Highway 11. Therefore, TIF No. 35
could be amended to include additional industrial development sites as they become available
and are annexed into the City of Janesville
State law requires that not less than 50% of the land within a TIF district be “suitable for
‘industrial sites’ within the meaning of (Wisconsin Statutes) s. 66.1101 and zoned for industrial
use”. Within TIF No. 35 70% of the land is proposed for industrial uses and 30% is proposed for
green space and storm water uses, thus meeting the required standard. All lands within TIF No.
35 zoned for industrial uses will remain zoned for industrial uses for the life of the TIF district.
In addition, the Wisconsin TIF Law prohibits “newly platted residential areas” from being
considered as TIF project costs. No residential development is planned for TIF No. 35.
The TIF District Project Plan proposes to improve these properties with streets and
utilities to create additional industrial sites. The timing of the street and utility improvements
will be phased to meet the needs of specific development projects thereby minimizing the risk of
incurring development costs in advance of tax-producing development projects.
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MAP 2
6
MAP 3
7
PROPOSED TIF PROJECTS AND IMPROVEMENTS
V.
The public expenditures proposed in TIF No. 35 will be linked to the expansion of the
industry within the district. The expansion of the industry will increase property values and will
generate new tax increments that will allow the City to recover its TIF costs. To allow this
expansion to occur, the City will need to extend utilities to the property and construct an
extension of Progress Drive. As the demand for industrial sites increases, the City will construct
new streets and utilities to those sites as necessary to facilitate development and expansion.
Finally, the Project Plan provides funds for marketing the new industrial sites and for providing
incentive financing to companies locating new facilities within the TIF district. The kind,
number, and location of all proposed improvements proposed for TIF No. 35 are shown on Map
4 - Improvement Plan.
A. Transportation Improvements
Transportation improvements may include the construction of the southerly
extension of Progress Drive South of State Trunk Highway 11 and easterly extensions of a street
network from the newly extended portion of Progress Drive to County Trunk Highway G.
County Trunk Highway G may be widened to a 4-lane cross section as the traffic to TIF No. 35
increases with development. In addition, the TIF Project Plan allows for the construction of
approximately 10,500 feet of new streets to serve the new industrial sites. Map No. 4 shows the
planned location of these road improvements, however, the actual location of the roads may
change depending on the needs of specific development projects.
Wherever new street construction occurs, sidewalks or recreational trails, street trees, and
landscaping may be installed along the new frontage road.
B.Utility Costs
As new streets are constructed to provide access to industrial sites, sewer, water,
gas and electric utilities will be installed within the rights-of-way. In addition, a storm sewer
collection system including underground piping, surface detention ponds and safety fencing may
be installed. These utility improvements will be phased along with the street construction to
meet the needs of specific development projects. The utility costs will be included as TIF
expenditures.
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C. Street Lighting and Landscaping
As new streets are developed within TIF No. 35, street lights and street trees may
be installed. In addition, a landscaping buffer between the industrial uses and the open
space/residential uses to the west is planned as a TIF cost.
D. Marketing and Incentive Financing
In order to attract new development to the TIF No. 35 industrial park, it may be
necessary to implement a marketing program. Marketing activities may include the development
of brochures, photographs, topography and maps for use with industry prospects. Once the
marketing materials are available, a direct mail program may be implemented to attract new
development. Marketing activities may also include the payment of real estate commissions
where a private “buyer’s broker” facilitates the sale of a new development site in TIF No. 35.
Where a specific industry has been identified, incentive financing may be necessary to ‘close the
deal’. Incentive financing may include below interest loans, funding for relocation, worker
training, and unique start-up costs, and/or similar financing programs. Financing may go directly
to a development project or to capitalize a revolving loan fund to provide financing assistance for
industrial expansion projects throughout the TIF District.
Additionally, changes to State Law also allow the expenditure of TIF funds within ½ mile
of an existing TIF boundary. While much of the land within ½ mile of TIF No. 35 is currently
located outside the City of Janesville corporate limits, the City does have a boundary agreement
with the Town of Rock, and land surrounding the airport will be annexed to the City of Janesville
as development occurs. Where industrial development projects occur on land annexed to the
City within this ½ mile boundary, funding from TIF No. 35 may be used to support the
development project. If the development project is contiguous to TIF No. 35, the City may
propose a boundary amendment to the TIF No. 35 Project Plan. The development projects
located within ½ mile of proposed TIF No. 35 may need project financing and/or development
incentives to maintain employment levels or to undertake future expansion projects.
E. Administrative Costs
The TIF No. 35 project plan includes the cost incurred for administrative,
professional, organizational, and legal services related to the creation and administration of the
TIF district. Direct engineering costs shall be charged to the specific construction projects
within the TIF District. Direct legal and planning costs will be charged as administrative costs.
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The cost of the three TIF audits required under Wisconsin Statutes ss 66.1105 will
be included as TIF project costs. In addition, administrative costs will include any TIF Plan
review fees charged by the Department of Revenue.
F. Land Acquisition
In order to create a new industrial park, the City has acquired a 226 acre parcel on
the west side of County Trunk Highway G and south of State Trunk Highway 11. This Project
Plan does not provide for any future land acquisitions. However, in the event of future land
acquisitions, payments to neighboring townships to compensate them for lost tax revenues where
TIF districts include newly annexed property will also be considered a TIF land acquisition
expense. Land acquisition, surveying, soil testing, environmental engineering, and title policy
expenses may be considered TIF project costs. Additionally, any relocation expenses incurred by
future land acquisitions including crop damages would be considered a TIF land acquisition
expense. Payment of any land conversion penalty under the provisions of Wisconsin Statutes
section 74.485 would also be considered a land acquisition cost.
DETAILED LIST OF ESTIMATED PROJECT COSTS
VI.
In order to determine the economic feasibility of the proposed TIF District No. 35, total
project costs must be estimated and compared to the projected tax increments that will be
generated by the new development in the TIF district. Based on 2011 construction costs, TIF
No. 35 improvement costs are estimated as follows:
A. Transportation Improvements $4,155,500
B. Water and Sanitary Sewer Costs $2,823,200
B. Stormwater Improvements $2,011,300
C. Project Incentive Financing $4,950,000
D/E. Marketing & Administration $61,500
Total Cost of Improvements $14,001,500
The estimated cost of TIF expenditures is $14,001,500. Under the revised TIF law,
project costs may be incurred over the first fifteen (15) years of the TIF district, while TIF
revenues will be collected over a maximum of twenty (20) years. The City will have to finance
10
any negative TIF fund balance through interfund borrowing. Based on conservative projections,
including the debt service and interfund borrowing costs of $5,445,818, the total estimated TIF
.
No. 35 project costs to $19,447,318
All project costs and interfund borrowing estimates are based on the most current cost
data available in July, 2011 and may be adjusted within the total amount shown without
modification or amendment of this TIF No. 35 Project Plan.
Under the changes to the TIF law enacted in 2004, all of the TIF No. 35 project costs
except debt service and interfund borrowing will be incurred during the first fifteen (15) years of
the TIF District. Table No. 1 shows the schedule and timing of the proposed expenditures. The
actual timing of expenditures will be contingent on the commitments from industries locating
facilities and guaranteeing a minimum property value that will generate sufficient tax increments
over the life of the TIF district to cover the TIF project costs. This Project Plan includes funds to
market the vacant industrial land within the TIF District for industrial and development.
Table No. 1
Tax Increment District No. 35
Summary of TIF Costs By Year
Year Type of Cost Cost
2011 Marketing and Administration, Engineering Services $362,500
2012 Streets, Utilities, Incentives, and Administration $6,533,250
2013 Incentives, Streets, Utilities, Marketing $5,328,750
2014 Incentives, Marketing and Administration $508,750
2015 Incentives, Marketing and Administration $507,250
2016 Incentives, Marketing and Administration $503,750
2017 Incentives, Marketing and Administration $251,875
2018 Administration $5,375
Total Cost of Improvements $14,001,500
Debt Service and Interfund Borrowing $5,445,818
Total Estimated TIF No. 35 Costs $19,447,318
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Prepared By: Economic Development and Accounting
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MAP 4
12
MAP 5
13
ECONOMIC FEASIBILITY AND METHODS OF FINANCING
VII.
A. Economic Feasibility Analysis
Under Wisconsin's Tax Increment District Law (ss. 66.1105), 100% of the
property taxes levied against new property value created within a TIF district is retained by the
City to pay for improvement costs that were incurred to attract the new development. Implicit in
the law is the concept that without the improvements, the attraction of new development, the
creation of new jobs, and the expansion of the tax base would not occur.
The Wisconsin TIF law as revised by the Legislature, allows the City fifteen (15)
years in which to make the improvements needed to stimulate and support development. The
property tax increments generated by the new development are retained by the City until all TIF
costs are paid. In no case shall the TIF district have a life longer than twenty (20) years.
The City of Janesville's Tax Increment District No. 35 will be created by Council
action in July, 2011. Therefore, all TIF project improvements must be completed by September,
2026. The taxes on any increased property value in the district between 2013 and 2031 will be
retained by the City to repay the TIF project costs. TIF No. 35 will be dissolved when all TIF
project costs are repaid, or in July 2031, whichever comes first.
In order to determine the economic feasibility of the proposed TIF district,
estimated TIF costs must be compared to projected TIF property tax increments. Where tax
increments exceed TIF costs over the twenty (20) year life of the TIF district, the TIF district is
considered economically feasible.
The City of Janesville has made conservative assumptions about the future to
determine the economic feasibility of TIF No. 35. All TIF costs related to industrial expansion
projects are incurred according to the schedule shown in Table No. 1. TIF property value
increases for are shown for the installation of streets and utilities, as well as potential new land
acquisitions for future industrial projects to be developed.
Where possible, the construction of new streets and utilities will be phased and
linked to known development projects. The City will enter into binding contracts with the
industries locating within TIF No. 35 that will guarantee the minimum amount of investment
needed to fully amortize all TIF costs associated with each project within 8 to 10 years. The
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overall TIF District should be able to recover all costs by the year 2030.
The equalized value property tax mill rate levy is projected to increase 0% per
year. This assumption is also conservative. In recent years, the equalized value property tax mill
rate in Janesville increased slightly. Based on these assumptions, the $51,500,000 in new
property value generated between 2013 and 2019, will create sufficient new property tax
increments to repay all planned TIF project costs. The City will limit the implementation of all
TIF expenditures until the actual levels of new property value are known.
TIF project costs of $14,001,500 plus financing costs of $5,445,818 equate to a
total TIF Cost investment of $19,447,318. These monies will only be expended if the property
value of the industrial construction is adequate to ensure a sufficient tax increment to recover the
cost within the life of the TIF district. If a total of $51,500,000 of new property value is created
as projected, the TIF district will generate a total of $30,423,005 in property tax increments over
the 23 year life of the district. Since property tax increments are projected to exceed TIF costs
including debt service by $390,294 in 2030 TIF No. 35 is found to be economically feasible.
Projected TIF revenues will cover TIF costs within 19 years and the City projects that TIF No.
35 will be dissolved by 2031.
Since there is no guarantee that new development projects will be found to
construct new property value within TIF No. 35, the City will only implement additional street
and utility construction project when they are needed to prepare new industrial sites for specific
projects. The TIF plan includes $4,155,500 in transportation improvements including
improvements to CTH G and HWY 51 as well as street extensions through the industrial site.
Additional, the Project Plan includes $2,823,200 in utility improvements including extensions of
water mains and sanitary sewer to serve the site, as well as $2,011,300 in stormwater
improvements. The Project Plan also includes $1,680,000 for potential future land acquisitions.
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City of Janesville
Tax Increment vs. TIF Cost Comparison
19-Aug-11
Equalized Long Admin.
Const.TotalValueTaxTermDebt & OtherInterfundTIF
YearValueTID ValueMill RateIncrementDebtServiceCapital DirectInterestBalanceTIF
Increment ProceedsCostsExpend.CostsCosts Year
2011000.02458620350,0000350,00012,500$0($12,500)
2012000.024586206,520,00049,0006,520,00013,250$375($75,125)1
201312,000,00012,000,0000.024586205,320,000960,4005,320,0008,750$2,254($1,046,529)2
20145,000,00017,425,0000.0245862295,034500,0001,677,720500,0008,750$31,396($2,469,361)3
20155,000,00022,985,6250.0245862428,415500,0001,698,960500,0007,250$74,081($3,821,237)4
201620,000,00044,060,2660.0245862565,129500,0001,718,200500,0003,750$114,637($5,092,695)5
20177,500,00052,849,2720.02458621,083,275250,0001,735,440250,0001,875$152,781($5,899,516)6
20181,000,00055,195,5040.02458621,299,36301,715,68005,375$176,985($6,498,194)7
20191,000,00057,600,3920.02458621,357,04801,659,92000$194,946($6,996,012)8
2020059,040,4010.02458621,416,17501,604,16000$209,880($7,393,877)9
2021060,516,4120.02458621,451,57901,548,40000$221,816($7,712,514)10
2022062,029,3220.02458621,487,8691,457,6400 $231,375($7,913,660)11
2023063,580,0550.02458621,525,065751,2800 $237,410($7,377,285)12
2024065,169,5560.02458621,563,192191,0000 $221,319($6,226,412)13
2025066,798,7950.02458621,602,272134,0000 $186,792($4,944,932)14
2026068,468,7650.02458621,642,32979,0000 $148,348($3,529,952)15
2027070,180,4840.02458621,683,38726,0000 $105,899($1,978,464)16
2028071,934,9960.02458621,725,47100 $59,354($312,347)17
2029073,733,3710.02458621,768,60800 $9,370$1,446,89118
2030075,576,7050.02458621,812,82300 $0$3,259,71519
2031077,466,1230.02458621,858,14400 $0$5,117,85920
$51,500,000Totals:$24,565,177$13,940,000$17,006,800$13,940,000$61,500$2,379,018
Assumptions:Expenditures:AmountYear
1. Eq. Value Growth1.025Direct Cost12,5002011
2. Mill Rate Growth :1.000Debt350,0002011
3. Interfund Cost :3.0%Direct Cost13,2502012
4. G.O. Bond Rate :4.00%Debt6,520,0002012
Direct Cost8,7502013
5. TIF CostsDebt5,320,0002013
Direct Cost8,7502014
Debt500,0002014
New Construction Direct Cost7,2502015
2012 - Debt500,0002015
2013 12,000,000Direct Cost3,7502016
2014 5,000,000Debt500,0002016
2015 5,000,000Direct Cost1,8752017
2016 20,000,000Debt250,0002017
2017 7,500,000Direct Cost5,3752018
2018 - Project Costs14,001,500
Interest Costs5,445,818
Total TIF Costs$19,447,318
Prepared By: City Manager's Office
B. Methods of Financing
Wisconsin Statutes provide several methods of financing the cost of improve-
ments in tax increment districts. For smaller amounts, financing through the general fund may
be feasible. Transfers can be made from the municipal general fund account into the TIF
expenditure account to cover the cost of TIF improvements. This method of financing avoids the
interest cost associated with municipal borrowing. However, since the General Fund balance is
reduced, the General Fund loses interest income, so an interfund borrowing cost is charged to the
TIF account.
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State law also provides for municipal borrowing. Community borrowing is
divided into two forms -- that subject to a statutory limitation and borrowing not subject to
limitation. Possible funding sources include:
1. General Obligation Borrowing - Is sometimes referred to as a local
promissory note from a bank, State Trust Fund, or other lending institution.
This form of borrowing requires little effort or legal costs and works well
for smaller sums. This sort of borrowing is included in the municipal
borrowing limitation.
2. General Obligation Bonding – Is an irrepealable property
tax obligation of the community. General obligation bonds
can often be sold at lower interest rates than other forms of
borrowing. However, there are additional regulations and
requirements that make G.O. Bonds suitable for larger
projects. G.O. Bonds are included in the municipal
borrowing limitation.
3. Mortgage Revenue Bonds - Are repaid through the revenue generated by a
public utility like a water or sewer utility. Revenue bonds also have
regulatory and legal requirements that make them suitable for larger project
costs. Since revenue bonds do not pledge the community's taxing capacity,
they are not subject to a municipal borrowing limitation.
4. Federal and State Grant or Loan Programs - Like Community Development
Block Grants or State Transportation aids are sometimes available to
supplement local funding sources. However, the amount of grant dollars
available is limited and state and federal funding is uncertain given the
need to balance budgets.
The actual method of financing specific TIF projects will be determined by the
City based on the current fiscal condition of the City, anticipated non-TIF capital needs,
municipal borrowing rates and terms, and the amount of financing needed. Where general
obligation borrowing is used, TIF financing costs have been calculated assuming financing over
ten (10) years, with equal principal payments.
The City will not proceed with any phase of the planned public improvements
until a developer or business is committed to construct a new building or renovate an existing
building with a value sufficient to generate the property tax increments needed to cover the cost
of the improvements. Therefore, the actual City expenditures in TIF No. 35 may be substantially
different that those shown in the project plan.
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C. Additional Economic Benefits
The economic feasibility analysis has shown that the property tax increments will
be sufficient to cover all TIF project costs over the twenty (20) year life of the TIF district. The
development of TIF No. 35 will facilitate an industrial expansion, increase property values, and
create new jobs in the City of Janesville. These jobs will help diversify the local economy and
the increased manufacturing and warehousing/distribution payrolls will have a positive multiplier
effect in the trade and service sectors.
PROPOSED CHANGES IN ORDINANCES, CODES, & PLANS
VIII.
The proposed TIF No. 35 project plan is in conformance with the City of Janesville's
present zoning ordinance, with the City's Industrial Development Plan and the General
Development Plan. All of the properties within TIF No. 35 have been found to be suitable for
industrial development in accordance with Wisconsin's Promotion of Industry Statute ss 66.1101,
and will remained zoned for industrial purposes for the life of the TIF district. All development
in TIF No. 35 will have to conform with the State Building Codes and will be subject to the
City's permitting and inspection procedures. The TIF No. 35 project plan conforms with all
relevant State and local ordinances, plans, and codes, thus, no changes to the existing regulations
are proposed or needed.
The City has requested that the Wisconsin Department of Commerce amend the
Janesville Community Development Zone boundary to include the land within TIF No. 35. This
allows companies that locate within the amended TIF No. 35 boundary to apply for State of
Wisconsin income tax credits under the Development Zone Program.
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LIST OF ESTIMATED NON-PROJECT COSTS
IX.
All of the public improvements and other project costs included in this project plan are
TIF eligible costs as defined in Wisconsin Statutes ss. 66.1105, the Tax Increment District Law.
Where an improvement can serve an area larger than the TIF district, the cost of the
improvement will be prorated so that only the proportion of the costs to serve TIF No. 35 will be
included as a project cost. That portion of the total costs which serves areas outside the TIF
district will be considered 'non-project' costs and charged to funding sources other than TIF No.
35.
METHODS FOR RELOCATION OF DISPLACED PERSONS
X.
The TIF No. 35 Project Plan does plan land acquisition, thus, there may be displacement
of persons or business needing relocation assistance. For any reason, should relocation be
necessitated by the City's involvement in the implementation of this Project Plan, it will be
undertaken pursuant to Wisconsin Statutes Section 32.19 and 33.195, and according to a
Relocation Plan, as approved by the Wisconsin Department of Commerce.
PROMOTION OF THE ORDERLY DEVELOPMENT OF THE CITY
XI.
The creation of TIF No. 35 and the implementation of the projects in the TIF Project Plan
will promote the orderly development of the City of Janesville by encouraging that new
industrial development occurs in areas of the City planned for industrial growth. By creating
well designed and strategically located industrial parks, land use conflicts and infrastructure
deficiencies can be avoided. By providing financial incentives to stimulate private development
projects, the City is able to ensure that economic growth continues to occur, thus offsetting the
inevitable loss of jobs and incomes when economic conditions force the closure of other
employers in the community.
By utilizing the provisions of the Tax Increment Finance Law, the City can increase
property values through development projects that result in increased tax base. TIF No. 35
continues the industrial development on the City’s southeast side that began with the creation of
TIF No. 5 in 1988 and TIF No. 16 in 1996 and TIF No. 22 in 1999. TIF No. 35 will add to the
tax and employment base of the community, and will generate positive secondary impacts in the
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community through increased local disposable incomes.
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CITY ATTORNEY’S OFFICE MEMORANDUM
August 8, 2011
MEMORANDUM
TO: Vic Grassman, Economic Development Director
FROM: Wald Klimczyk, City Attorney
RE: Legal Opinion -- T.I.F. No. 35 Project Plan
Sec. 66.1105(4)(f), Wis. Stats., of the Tax Increment
Financing Law mandates that the project plan for a proposed tax
increment financing district "include an opinion of the city
attorney or an attorney retained by the city advising whether
the plan is complete and complies with this section.” You have
asked me to review a certain proposed “Tax Incremental Finance
District No. 35 Project Plan” dated August 8, 2011, for Tax
Increment Finance (T.I.F.) District Number 35 and determine if,
in my opinion, it is complete and complies with the requirements
of Wisconsin's T.I.F. Law. This memorandum constitutes my legal
opinion.
Sec. 66.1105(4)(f), Wis. Stats., sets forth those
components of a T.I.F. project plan which are required by state
law. They are as follows:
1. A statement listing the kind, number, and location of
all proposed public works or improvements within the district
or, to the extent provided in Section 66.1105(2)(f) 1. k., Wis.
Stats., outside the district;
2. An economic feasibility study;
3. A detailed list of estimated project costs;
4. A description of the methods of financing all of the
estimated projected costs;
5. The time when the costs or monetary obligations
related thereto are to be incurred;
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Vic Grassman
August 8, 2008
Page 2
6. A map showing the existing uses and conditions of the
real property in the district;
7. A map showing the proposed improvements and uses in
the district;
8. Proposed changes of:
a. Zoning ordinances.
b. The master plan, if any.
c. The master map, if any.
d. Building codes.
e. City ordinances.
9. A list of estimated non-project costs;
10. A statement of proposed methods for the relocation of
any person(s) to be displaced; and
11. How the Tax Increment Financing District promotes the
orderly development of the City.
I have reviewed proposed “Tax Incremental Finance District
No. 35 Project Plan” dated August 8, 2011, for Tax Increment
Finance (T.I.F.) District Number 35, prepared by the City of
Janesville Economic Development Agency, Finance Division, and
City Manager’s Office. It is my legal opinion that said project
plan as prepared by the Economic Development Agency is complete
and does comply with Section 66.1105(4) (f), Wis. Stats.
According to the terms of the above cited statute, this legal
opinion should now become the final component of that project
plan amendment.
Wald Klimczyk
City Attorney
wk
cc: Jean Ann Wulf, City Clerk-Treasurer
J:\Attorney\Word\Shared\TIF 26 Legal Opinion.doc
22
23
Resolution No. 2011 – 816
RESOLUTION APPROVING THE PROJECT PLAN AND CREATING TAX
INCREMENT FINANCE DISTRICT No. 35 WITHIN THE CITY OF JANESVILLE
ROCK COUNTY, WISCONSIN
WHEREAS, the City of Janesville has prepared a Project Plan and proposed a boundary for the
creation of City of Janesville Tax Increment Finance District No. 35 in accordance with the
provisions of Wisconsin Statues ss 66.46, a copy of said Project Plan and proposed TIF No. 35
boundary are attached and herein incorporated to this Resolution; and
WHEREAS, the Plan Commission has held a public hearing on the proposed creation of Tax
Increment District No. 35 and the proposed boundaries thereof, and recommended the approval
of the Project Plan for Tax Increment District No. 35 and the creation of the new TIF district;
and
WHEREAS, the Chief Executive Officer of the local school district, Rock County Board,
Blackhawk Technical College, and the other entities having the power to levy taxes on the
property located within the proposed Tax Increment District No. 35 have been notified pursuant
to Section 66.46 (4) (a) and (e), Wisconsin State Statutes; and
WHEREAS, all of the land within the proposed TIF District No. 35 is currently zoned M-1
Industrial and has been found suitable for industrial development within the meaning of Section
66.52, Wisconsin State Statutes and will remain zoned for industrial purposes for the 20 year life
of the TIF District; and
WHEREAS, the project costs directly serve to promote industrial development, consistent with
the purpose for which the TIF District is created, and the improvement of such areas for
industrial projects will significantly enhance the value of all property within the TIF District; and
WHEREAS, the aggregate equalized value of taxable property within all of Janesville's TIF
Districts does not exceed twelve percent (12%) of the total equalized value of property within the
City of Janesville; and
WHEREAS, the Project Plan for Tax Increment District No. 35 is economically feasible and has
been found to be in accordance with the City's General Development Plans, Zoning Ordinance,
and other relevant policies and that this project is in the best interest of the City of Janesville and
for the benefit of its residents.
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Resolution 2011-816
Page 2
NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of Janesville that
it hereby approves the Project Plan for City of Janesville Tax Increment Finance District No. 35
and creates Tax Increment District No. 35 in the City of Janesville as described on the attached
map and Project Plan for TIF District No. 35.
ADOPTED:
Motion by:
Second by:
APPROVED:
Councilmember Aye Nay Pass Absent
Brunner
Dongarra-Adams
Eric J. Levitt, City Manager
Liebert
McDonald
ATTEST:
Rashkin
Steeber
Voskuil
Jean Ann Wulf, City Clerk-Treasurer
APPROVED AS TO FORM:
City Attorney
Proposed by: Economic Development Division
Prepared by: City Manager’s Office
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