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Sturgeon Bay’s TID #7 Forming to Fund New Housing

Street and park improvements also slated 

The creation of a seventh Tax Increment District (TID) in the City of Sturgeon Bay on a 12.6-acre vacant lot between the Target store and Duluth Avenue is being recommended for approval by the city’s Plan Commission.

Premier Real Estate has proposed constructing a 96-unit apartment complex on the property, which had an assessed value of $143,000 as of Jan. 1.

Of the $2,734,600 in project costs the commission backed for the TID, $1.5 million would be for a developer grant/loan incentive, in which property taxes generated from the site being developed would be used to pay off the loan.

If the project would generate less in property taxes generated from development (i.e., tax increment revenue) over the 20-year life of the TID, the project’s development agreement with the city requires the developer to make up the shortfall.

The commission recommended April 27 to trim $200,000 from the project costs. Brian Ruechel of Baird presented financial projections that showed expenses paid off three years before the TID would close.

Community Development Director Marty Olejniczak said the TID project costs no longer include $105,000 for improvements now taking place at the Ashland Avenue/Highway 42-57 intersection.

“Those are being implemented as we speak,” he said. “Likely we couldn’t have used [tax incremental financing] to pay for that anyway, because under TIF law, only expenses incurred after the adoption date [of the TID] are allowed.” 

Olejniczak said park improvements were reduced by $50,000 to $150,000, and another $45,000 was reduced for street improvements.

“We could decide not to spend any more money, but if we do decide to do those projects – some park improvements at Woods West Park, for instance – it would be an eligible expense to be reimbursed through the TID, and we would pay for it out of a TID budget,” he said.

Property taxes generated in the TID from development in the district, once it is created, are able to go directly for infrastructure improvements, rather than being split among the various taxing entities where the TID is located. 

The Joint Review Board, which would have the final say on approving the TID, is composed of one public member and representatives from the city, County of Door, Northeast Wisconsin Technical College and Southern Door School District, with the latter not previously included in any of the city’s previous TIFs. The city’s other six TIDs were created within the Sturgeon Bay School District.

Mayor David Ward said TID #7 is “being formed around a project with a high probability of fulfillment.”

“This is a pretty small TID as TIDs go, but it’s targeted to a project that we pretty much feel is going to happen,” he said. 

Ward said Baird’s financial projections for TIDs are “very conservative,” based on assumptions of no increase in the tax rate and inflation going up by 1% annually, so increases above that would bring in more revenue for the TID.

The Sturgeon Bay Common Council is slated to consider the proposed TID #7 during its May 17 meeting, followed by final consideration by the Joint Review Board on May 24.