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Agreements Approved for Apartment Projects Near Target

Development agreements for two apartment projects planned near the Sturgeon Bay Target store were recommended last week by the City’s Finance/Purchasing and Building Committee for approval Tuesday by the Common Council.

The development agreement includes $750,000 in financial assistance for Duquaine Development of Green Bay, which is proposing to construct 160 apartment units, with the first phase consisting of approximately 64 units northeast of Target and south of Oak Street (Sawyer Drive).

Marty Olejniczak, community development director, said the council previously backed using $275,000 in American Rescue Plan Act funds and $475,000 in affordable-housing funds.

Olejniczak said the city plans to allocate the $475,000 from revenue generated by the one-year extension of Tax Increment District (TID) #1, through which an estimated $850,000 would be available by 2023.

Under a provision in state law to help increase the city’s amount of available housing, the council approved a resolution in April to authorize additional property taxes generated by development (i.e., tax increment revenue) over the next year of TID #1 to be used anywhere in the city.

This drawing highlights the phase-one portion of plans by Duquaine Development of Green Bay to construct approximately 64 apartment units – as part of 160 eventual units – northeast of the Sturgeon Bay Target store and south of Oak Street (Sawyer Drive). Source: City of Sturgeon Bay.

The TID was created in 1991 for the industrial park and will close next year.

The resolution directed 75% of the final increment funds to be used for affordable housing, with the remainder used to improve housing in general. “Affordable” in the resolution is defined as 30% of a household’s gross monthly income. The resolution did not define what affordable rents or what an application of the funds would look like to make the housing affordable.

Olejniczak said the $275,000 will be provided by the city upfront to assist with infrastructure as needed, and the $475,000 would be paid out with occupancy of the buildings. The developer would also need to achieve a minimum assessed value and follow the protocols of the annexation agreement to the City of Sturgeon Bay from the Town of Nasewaupee. The development agreement calls for the annexation to take place after the 64 units in phase one are constructed.

“The safety net for the city is that the majority of the financial incentives are backloaded,” Olejniczak said. “You need to get an occupancy permit in order to get any of that [$475,000 in affordable-housing] money. If halfway through the project they go belly up or something, and they’re sitting there with a shell of a building, we could still be out that initial infrastructure money, but then presumably, the next developer, or whoever buys the property, could still use that.”

PRE/3 of Brookfield plans to break ground next month on the vacant, 12.6-acre lot between the Sturgeon Bay Target store and Duluth Avenue to begin construction on a 96-unit apartment development in the newly created Tax Increment District #7. Photo by Kevin Boneske.

According to the development agreement, the $475,000 would be made available for building-construction funding within 30 days of an issuance of an occupancy permit for each completed building in the project’s phase one, but not prior to Jan. 1, with $160,000 for the first building, $160,000 for the second building and $155,000 for the third building.

The agreement further states that phase-one construction must be “substantially completed” by Dec. 31, 2023.

Once the property is annexed to the city, Olejniczak said the first phase of development is expected to generate $6.5 million in property value for an annual tax payment to the city of around $52,000.

“It’s good to see this happening,” said District 1 alder and committee chair Helen Bacon.

Excavation work has already begun at the project site, which still remains in the Town of Nasewaupee.

This drawing shows the layout for PRE/3 of Brookfield to develop 96 apartment units in eight buildings between the Sturgeon Bay Target store and Duluth Avenue in Tax Increment District #7. Source: City of Sturgeon Bay.

TID #7 Apartments

The apartment project between the Target store and Duluth Avenue on 12.6 acres in the newly created TID #7 would have two-bedroom, individual-entry units, said Jared Schmidt, an engineer with Robert E. Lee & Associates who appeared June 1 before the city’s plan commission to present the project plans.

Schmidt said the units would have monthly rents in the range of $1,200-$1,300.

The city is planning to provide a developer-financed loan as part of the development agreement for the 96 apartment units that PRE/3 of Brookfield will develop on the site in eight buildings. Olejniczak said the loan of up to $1.5 million would be paid back by the tax increments generated by developing the project.

“It is a significant financial assistance to the developer because they should have no problem getting that loan because it’s backed by the tax increment district,” Olejniczak said.

The vacant parcel currently has an assessed value of $143,000. The guaranteed minimum assessed value upon completion of the project would be at least $8.8 million as of Jan. 1, 2026, and thereafter.

“The reason why we wanted a minimum guarantee is because we’re using that district to cover other costs,” Olejniczak said. “If they don’t at least get to that level, we could be struggling to pay for other public improvements.”

Olejniczak said the developer would have to make up the difference on the amount of property tax owed between the required minimum assessed value and the actual assessed value.

While the overall project is under construction, the agreement sets two preliminary steps for the minimum assessed value, calling for at least $3.3 million as of Jan. 1, 2024, and at least $6.6 million as of Jan. 1, 2025.

Olejniczak said that, if required by the city, PRE/3 would have to dedicate the northerly access drive between Target and Duluth Avenue as a public street.

“We’re not positive we want [it] to be a public street,” he said. “It’s kind of nice not to have to worry about plowing it or resurfacing it in the future. But if we decide it makes sense to make it public, then they would be obligated to dedicate it. They’re willing to do that as long as it’s clear we’re not going to turn around and assess them for some curb and gutter, or something. That’s in [the agreement] as well. We did put money into the tax increment district to cover any improvements, if that does become a public street.”

Olejniczak said the private drive between Target and Duluth Avenue to the south of the parcel is a “crazy mess.”

“It’s some kind of 33-foot-wide private easement recorded in 1917, or something like that,” he said. “Nobody has any idea who has rights and responsibilities on that. I just know it’s not the city.”

The developer is planning to break ground next month, with the new apartments expected sometime next year.