A SPECIAL REPORT TO THE VILLAGE BOARD STATUS OF TAX INCREMENTAL DISTRICTS IN THE VILLAGE OF MENOMONEE FALLS

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1 A SPECIAL REPORT TO THE VILLAGE BOARD STATUS OF TAX INCREMENTAL DISTRICTS IN THE VILLAGE OF MENOMONEE FALLS PREPARED BY: PAUL M. THOMPSON & KEVIN MULLEN HUTCHINSON, SHOCKEY, ERLEY & CO. & VILLAGE OF MENOMONEE FALLS STAFF MARCH 20, 2017

2 Tax Increment Finance (TIF) Adopted for use in 1975, tax increment finance (TIF) is Wisconsin s most widely used local economic development tool. Currently there are 1,122 active tax increment districts (TID) in Wisconsin. 9 TIDs are active in the Village of Menomonee Falls.

3 A TID becomes its own tax entity: collecting tax revenue from new development that takes place after district is created. How TIF Works

4 How TIF Works

5 Tax Increment Districts Village-wide Since 1988, the Village created 12 TIDs. Active and closed TIDs have created more than $514 Million in new property value increment and a significant share of the approx. 42,000 primary jobs in the Village. TID No. 1 closed after creating approx. $55.6M in new value increment. TID No. 2 closed after creating approx. $28.1M in new value increment. TID No. 3 closed after creating approx. $124.6M in new value increment. The 9 active TIDs have created more than $276.5M in new value increment through 2016.

6 Anticipated TID Closure Dates Tax Incremental District Number District Creation Date 1 Apr 1988 Closed 2 Feb 1991 Closed 3 Jul 1995 Closed 4 May Jun Apr Feb Jul Jan Aug Aug Sep Projected Closure Date

7 Closed Tax Incremental District No. 1 Industrial TID Created in 1988 with a base value of $5.4 Million Closed in 1995 with a value of $61.0 Million Fully developed Falls Business Park including: Magnetek campus (3 buildings) Lamplight Farms Former Kohl s distribution facility

8 Closed Tax Incremental District No. 1 Base Value & Increment

9 Tax Incremental District No. 2 Rehabilitation TID Created in 1991 with a base value of $22.4 Million Closed in 2014 with a value of $50.5 Million Key developments: Main & Mill and Main & Grand mixed use buildings Owner-occupied and rental multi-family projects Centennial Plaza, trail, decorative lighting, and streetscape improvements

10 Closed Tax Incremental District No. 2 Base Value & Increment

11 Tax Incremental District No. 2 Financial Analysis TID No. 2 closed in 2014 with a value of $50.5 Million. Since the collected tax increments were sufficient to pay the remaining debt service, TID No. 2 closed four (4) years in advance of its maximum termination date. The overlying taxing jurisdictions received their proportionate amount of the excess tax increment (after final debt service payment).

12 Closed Tax Incremental District No. 3 Industrial TID Created in 1995 with a base value of $4.6 Million: $126,638 in total annual tax revenue $27.53 net tax rate (after credits) Closed in 2007 with a value of $129 Million: $2,056,260 in total annual tax revenue $15.94 net tax rate (after credits) Fully developed Silver Spring Corporate Park including: Kohl s Corporate Headquarters

13 Closed Tax Incremental District No. 3 Industrial TID 1995 Aerial Photo 2007 Aerial Photo *Year District Opened *Year District Closed

14 Closed Tax Incremental District No. 3 Kohl s Corporate Headquarters Over 800,000 square foot Kohl s Corporate headquarters (view looking west)

15 Closed Tax Incremental District No. 3 Base Value & Increment

16 ACTIVE TAX INCREMENT DISTRICTS

17 Tax Incremental District No. 4 Industrial TID Created in 1996 with a base value of $13.9 Million Current 2016 value of $108,969 Million Key developments: Woodland Prime Office Park North Hills Medical Offices Senior housing projects Landscape and streetscape improvements

18 Tax Incremental District No. 4 Woodland Prime Office Park

19 Tax Incremental District No. 4 Base Value, Increment, and Projection

20 Tax Incremental District No. 4 Financial Analysis There is no debt service remaining in TID No. 4. In 2010 the Joint Review Board approved the transfer of tax increments from TID No. 4 to TID No. 8 until Through 2016, the amount transferred to TID No. 8 was approximately $11.4 million. The annual transfer is a little over $2 million.

21 Tax Incremental District No. 4 Looking Ahead Projected to close in $1,893,000 projected to be distributed to tax jurisdictions when the TID closes in 2019: Menomonee Falls School District - $1,062,000 Village of Menomonee Falls - $517,000 Waukesha County - $194,000 Waukesha County Technical College - $120,000 Full value (base and increment) will accrue to taxing jurisdictions.

22 Tax Incremental District No. 5 Westbrook Corporate Office Park Created in 1999 with a base value of $5.6 Million Current 2016 value of $110.2 Million Key developments: Actuant Headquarters Briggs & Stratton Arandell Froedtert & Medical Colleges of Wisconsin ER Wagner Infrastructure improvements

23 Tax Incremental District No. 5 Westbrook Corporate Office Park pictures

24 Tax Incremental District No. 5 Base Value & Increment

25 Tax Incremental District No. 5 Financial Analysis TID No. 5 generated approximately $1.8 million in tax increment for Approximately $4.4 million in debt to be retired by Annual MRO payments of approximately $270,000, with the final payment due in 2018.

26 Tax Incremental District No. 5 Looking Ahead TID No. 5 will close in 2019, three (3) years ahead of schedule, with an estimated value increment of $106 million.

27 Tax Incremental District No. 6 Rehabilitation TID Re-determined base value in 2008 of: $33.8 Million Current 2016 value of: $47.2 Million Key Projects: Radisson Hotel & Pilgrim Village shopping center redevelopment

28 Tax Incremental District No. 6 Pilgrim Village Shopping Center (Before & After)

29 Tax Incremental District No. 6 Former Falls Inn (Before & After)

30 Tax Incremental District No. 6

31 Tax Incremental District No. 6 Base Value & Increment

32 Tax Incremental District No. 6 Financial Analysis TID No. 6 generated approximately $255,000 in tax increment for Approximately $9.3 million in debt payable over the remaining life of the TID (2033). There are no annual MRO payments for TID No. 6. A Village advance of approximately $1.4 million is to be retired over the life of the TID.

33 Tax Incremental District No. 6 Targeted Sites for Redevelopment

34 Tax Incremental District No. 6 Looking Ahead East Main Street Marketing Packet Corridor Landscaping Site Improvement Grants

35 Tax Incremental District No. 7 Industrial TID Developer Funded Created in 2008 with a base value of: $1.0 Million Current 2016 value of: $18.8 Million Key developments: Quad Graphics, NCL Specialty Graphics, and The Vault self-storage facility.

36 Tax Incremental District No. 7 Base Value & Increment

37 Tax Incremental District No. 7 Financial Analysis TID No. 7 generated approximately $341,000 in tax increment for There is no debt service associated with TID No. 7. An annual MRO payment of approximately $335,000. Final payment due in A Village advance of $235,000 is to be retired over the life of the TID (2026).

38 Tax Incremental District No. 7 Looking Ahead The last MRO payment to First Industrial is scheduled for TID No. 7 will close after the last MRO payment is made. The Vault Self Storage is preparing to construct Phase II of their self-storage development as a result of the high demand for their product.

39 Tax Incremental District No. 8 Rehabilitation TID Created in 2008 with a $9.0 Million base value Current 2016 value of $52.7 Million Key Projects: Froedtert & Medical College of Wisconsin and Wisconsin Athletic Club New commercial development and market rate apartments Construction of Falls Parkway, Pilgrim Road, Roosevelt Drive, Utility Infrastructure, and Extensive Contamination Remediation

40 Tax Incremental District No. 8 Project Example: Former Western Industries Facility (Before)

41 Tax Incremental District No. 8 Project Example: Froedtert & Wisconsin Athletic Club (After)

42 Tax Incremental District No. 8

43 Tax Incremental District No. 8 Base Value & Increment

44 Tax Incremental District No. 8 TID No. 4 Donor TID Financial Analysis TID No. 8 generated approximately $840,000 in tax increment for Current outstanding debt of $28.2 million to be retired over the life of the TID (2035). Transfers from TID No. 4 to continue until An annual MRO payment to Cobalt Partners is scheduled to begin in 2018 with final payment in 2035 if development guarantees are met.

45 Tax Incremental District No. 8 Looking Ahead

46 Tax Incremental District No. 8 Looking Ahead Reconstruction of Roosevelt Drive including new water mains and storm sewers Repaving of Water Street

47 Tax Incremental District No. 9 Mixed Use TID Created in 2010 with a base value of $104.7 Million Current 2016 value of $100.6 Million There is no debt service associated with TID No. 9 Key Projects: EDMF matching grant & loan program Fresh Thyme Farmers Market Riverwalk on the Falls

48 Tax Incremental District No. 9 Mixed Use TID

49 Tax Incremental District No. 9 Base Value & Increment

50 Tax Incremental District No. 9 Financial Analysis TID No. 9 did not generate any tax increment for There is approximately $250,000 in debt to be retired by There are two MRO payments that are scheduled to begin in 2018 and end in 2030 for Fresh Thyme Farmers Market and Riverwalk on the Falls. A Village advance of $210,000 is scheduled to be retired over the life of the TID.

51 Tax Incremental District No. 9 Looking Ahead Riverwalk on the Falls to be completed late 2017 with 114 units of market rate apartments. Fresh Thyme Farmers Market to open early May of 2017.

52 Tax Incremental District No. 10 Mixed Use TID Created in 2011 with the base value of $46.2 Million Current 2016 value of $56 Million Key Developments: 102,000 SF Eaton Corporation development 21,000 SF office development Over 100 acres for future development

53 Tax Incremental District No. 10 Mixed Use TID

54 Tax Incremental District No. 10 Base Value & Increment

55 Tax Incremental District No. 10 Financial Analysis TID No. 10 generated approximately $190,000 in tax increment for There is approximately $14.3 million in debt with a balloon payment scheduled for To be refinanced long-term when final increment values are known. An annual MRO payment of approximately $250,000 with final payment due in 2024.

56 Tax Incremental District No. 10 Looking Ahead Acres; Zilber Option Through February Acres; Zilber Acres; Zilber 4. Mixed-Use Development Acres; Weas Development

57 Tax Incremental District No. 11 Industrial TID Created in 2011 with a base value of approx.: $11.9 Million Current 2016 value is approx.: $14.5 Million Key Projects: 95,000 SF expansion with future additions planned; Approx. 100,000 cubic yards of rock removal

58 Tax Incremental District No. 11 Base Value & Increment

59 Tax Incremental District No. 11 Financial Analysis TID No. 11 generated approximately $50,000 in tax increment for Approximately $500,000 in debt with a balloon payment scheduled for To be refinanced when final increment values are known Annual MRO payment for TID No. 11 based on increment generated with final payment in 2019.

60 Tax Incremental District No. 11 Looking Ahead Space for Potential Building and Operational Expansions

61 Tax Incremental District No. 12 Industrial TID Created in 2014 with a base value of approx.: $5 Million Current 2016 value is approx.: $10.2 Million Key Projects: Environmental Remediation, Lilly Road Improvements and construction of two industrial buildings by Zilber totalling over 325,000 square feet.

62 Tax Incremental District No. 12 Industrial TID - Before

63 Tax Incremental District No. 12 Industrial TID - After

64 Tax Incremental District No. 12 Base Value & Increment

65 Tax Incremental District No. 12 Financial Analysis TID No. 12 generated approximately $100,000 in tax increment for Approximately $1.3 million in debt with a balloon payment scheduled for To be refinanced when final increment values are known No MRO s associated with TID No. 12.

66 Tax Incremental District No. 12 Looking Ahead Proposed 157,000 square-foot industrial building (below). Improvements to Lilly Road Multiple shovel-ready sites for industrial development.

67 Tax Increment Finance Status Report Village of Menomonee Falls Thank you Village Board of Trustees Meeting March 20, 2017