Reimbursement for Misrouted Power Line Expected to Keep Downtown Development Project Alive

This drawing shows the current building design for the Sturgeon Bay Terrace development along the west side of the Maple-Oregon Street Bridge. Source: City of Sturgeon Bay.

Sturgeon Bay’s Finance/Purchasing and Building Committee recommended Oct. 11 that American Transmission Company (ATC) pay reimbursements totaling more than $230,000 related to the company misrouting a high-voltage power line on the city’s West Waterfront.

Because ATC did not route the power line in the specific area where the city granted an easement near the west end of the Maple-Oregon Street Bridge, that limited the amount of buildable space where Peter Gentry of WWP Development could construct a mixed-use building known as the Sturgeon Bay Terrace with a beer taproom and deli.

City Administrator Josh VanLieshout said ATC has agreed to the reimbursements “in principle.”

The city decided previously that it wasn’t practical to seek to have ATC remove and reroute the power line, which goes under the bay of Sturgeon Bay to a substation on the east side, so the city contacted Gentry to find out whether the project was still feasible by shifting the building’s footprint.

“The developer and his architect and the city figured out what that would look like, and to the passerby or the customer, it doesn’t matter,” VanLieshout said. “It’s about 10 or 15 feet [of a shift]. No one’s going to tell the difference.”

He said the developer-incurred costs to relocate the building were determined by the developer and his architect to be $111,750, and the city’s incurred expenses came to $10,000.

In addition, VanLieshout said economic costs due to a reduction in buildable area and a loss of value of outdoor improvements, namely seating, were calculated at another $50,500 for the developer, while the city’s estimated loss of tax incremental financing (TIF) revenue and forgone tax revenue from the outdoor improvement came to another $59,700.

“Someday the [TIF] district is going to close, and we’ll have continued losses,” he said.

VanLieshout said the developer is agreeable to receiving $162,250 in reimbursement, and the city would receive $69,700 for incurred costs.

“We know there’s additional costs in his project because of this, and it’s fair to divide it up, and [the developer is] on board with it,” he said.

District 3 Alder Dan Williams, who is on the Finance Committee, said the reimbursements are fair for both the city and the developer, who entered into a development agreement for the project to take place.

“It’s an unfortunate error, but I think we were able to recover from it and get our costs and his costs recovered, and the project goes on,” Williams said. “We were very concerned about the project dying on the vine. So I think that if this [reimbursement] stops that from happening, and he’s satisfied with the split of the proceeds, then I think it’s a very good deal for us.”

When contacted following the committee’s meeting, Gentry said the project is still on, but he is waiting to take title to the property and to receive the money from ATC before beginning construction.

“With winter fast approaching, construction may have to start first thing in the spring,” he said. “It’s a little disappointing, but with all of the hurdles this project has faced, it is important to have every ‘i’ dotted and every ‘t’ crossed before we get started.” 

VanLieshout said he expects that the full Sturgeon Bay Common Council will consider the committee’s recommendation on the reimbursements in early November.