Submitted for Town Board Approval November 27, 2000

 

SPECIAL MEETING OF THE

TOWN BOARD OF SUPERVISORS

Municipal Complex - Assembly Room

Thursday, October 5, 2000


MINUTES

Agendas with resolutions were posted at the Municipal Complex, Fire Station 40, Utility District, Appleton Public Library, Menasha Public Library, and Neenah Public Library.

                                                        I.            CALL TO ORDER, PLEDGE OF ALLEGIANCE AND ROLL CALL

Town Chair Arden Tews called the Regular Meeting of the Town Board of Supervisors to order at 6:00 p.m. and led the Pledge of Allegiance.

Clerk Sprague noted the roll as follows:

PRESENT:

Arden Tews, Town Chair        Jeanne Krueger, Supervisor #1

Jerry Jurgensen, Supervisor #3          Keith Kiesow, Fire Chief

Russ Handevidt, Supervisor #4          Richard Eiberger, Town Assessor

Carlene Sprague, Town Clerk            Carl Sutter, Town Engineer

Patrick DeGrave, Administrator          Randy Gallow, Street Superintendent

Myra Piergrossi, Dir. of Finance         William Weiss, Police Chief

George Dearborn, Dir. of Com. Dev.  Ron Krueger, Parks Director

Karen Tweedie, Deputy Clerk Roger Clark, Town Atty. of Counsel

Ericka Leuffen, Attorney          Judge Len Kachinsky

EXCUSED:

Bob Sprague, Supervisor #2

ALSO PRESENT:

Residents:

William Ottow Merle G. Wendt

John Zaborsky             Lee Behling

Carol Bartlein  David Watters

Marge Riedel   Jodi Watters

Joe Riedel       Alan Pheifer

Patricia Lund   Joe Nemecek

Russell Lund   Dawn Thienel

Betty Zaborsky            Jerry Vieth

Harold Clifford Todd Engleman         

Residents:

William Behling           Steve Sipiorski

Cheryl Barth    Julie Sipiorski

Mike Barth       Ann Risgaard

David Risgaard           Len Kachinsky           

Chuck Lewis   Lee Schwandt

Larry Neal        Larry Moye

Lois Grundman           Keri Walker

Jean Hesselman         Jennifer Land

Joe Trudell      Mike Land

John Schaidler            Debbie Moye

David Pheifer  Mike Thienel

Paula Pheifer  Jatame Schabo

Michael Lynch Wendy Galley

Mary Hahneman          Kris Koeppe

Dale Hahneman          Bill Weiss

Scott Peterson            Roger Clark

Arden Tews     Jerry Jurgensen

Russ Handevidt          Jeanne Krueger

Carlene Sprague         Patrick DeGrave        

Randy Gallow Len Kachinsky

William Weiss Ron Krueger

Sharon Rosenthal, Street Dept. Sec.

Non-Residents

Cheryl Hentz, Fox Cities Newspapers          

Bob Pheifer    

Doug Hahn

Carl Sutter

Erika Leuffen

      1. RESOLUTION TO BORROW $2,000,000 FOR THE INFRASTRUCTURE CONSTRUCTION IN THE GATEWAY MEADOWS SUBDIVISION PER WI STATUTE 81.01(3)

Town Administrator, Patrick DeGrave provided an overview of the Valley Gateway Development project. The Town has already entered into an agreement with Valley Gateway Development Co. to do the infrastructure construction in that planned development along Hwy CB and the West American Drive extension. It is a mixture of retail, commercial, single-family residential and multi-family residential development. The first leg of that deal is complete, you’ve seen the extended road, you have seen the multi-family going in. Carved out of the first deal was Gateway Meadows subdivision. That’s 144 lots, part of the overall development, but not included in the first infrastructure construction deal. The first deal requires the developer to produce $75,250,000 worth of added value to the Town within 5 yrs. Failing to produce that, the Town has a lien against the rights of the property, to recoup that infrastructure investment if the numbers are not achieved.

The Gateway Meadows subdivision portion of this is going to have a different finance deal, should you vote to allow us to borrow up to $2,000,000 to put in the infrastructure in this subdivision. It’s about 2 miles worth of road, sanitary sewer, storm sewer and water. It would be borrowed through the Wisconsin Trust Fund at about 5-1/2% interest and over an eight year period. The Developer feels he can produce about $42,000,000 worth of added tax base or added value to the Town through just this subdivision. If the money is borrowed, the debt service would be paid on a mixture of two things. One is the Town tax that is derived from the value added to the subdivision which would be diverted toward debt service on an annual basis. Even toward the end, it will never produce enough Town tax to pay the debt, so the balance will be paid by the developer in annual installments. We will guarantee that the entire debt, principal and interest, can be retired through an Irrevocable Letter of Credit drawn on a local bank, drawable only to the Town of Menasha. The actual amount we’re borrowing will actually be less than $2,000,000, or $l,700,000 and change. We will only use the amount necessary for the construction. We’ll set up an eight year amortization schedule. If the first year is, for instance, $270,000 as a debt service payment, it will produce no additional value because of the way the assessment is completed. There will be nothing new out there of any value by the first of the year. The first payment is entirely up to the developer from his annual letter of credit, so each year, he will be required to renew that, prior to the expiration of the first one. We will always have a valid Letter of Credit in our hands in the full amount of the remaining debt. Should the developer fall short of his portion of the payment, the letter can be drawn in it’s full amount, and the debt retired.

He feels he can produce $42,000,000 worth of additional value within the first six years or less, so his performance pays. If he can produce that, there’s $42,000,000 of Town tax that would go toward paying that debt. The more value from tax, the less he pays for. If he performs zero in six years, he pays for each year of the six years, the full amount. We are assured as taxpayers, we do not have to pay from the General Levy. It’s simply the value added from that specific parcel of land.

The entire Valley Gateway Development, when coupled with the anticipated value added from the subdivision, about $40,000,000, with the $75,000,000 that’s anticipated for the retail and commercial, you have in excess of $110 - $115 million dollars worth of additional tax base for this Town. It’s an area of the Town, and it is apparent, that people want certain retail development like a grocery store, and streets.

Town Attorney, Roger Clark, stated that when this initial proposal was made by Valley Gateway, they came to the town with a proposal that would allow them to develop an entire area, in other words, plan several hundred acres. The initial phase was desirable to the Town. That is the reason why the Town wanted to enter into an agreement with the Developer to encourage this development at the same time, being able to develop West American Drive. They came to us as the lawyers, and asked whether that’s legal and whether the agreement is appropriate, and in fact, it is. It’s in the Town’s interest, the Town Board knows it’s in the Town’s interest to have orderly growth of the Town, in this way, the plan was approved before it went into place. There are also assurances by the Developer that there will be development at a certain rate or the developer will pay all the costs. So it is a benefit to the developer who can obtain financing at a better rate than he can go and get from a bank. At the same time, the Town is assured that it is going to have its money returned.

I've been asked to draft an ordinance that will guide the Town when future developments seek financial assistance from the Town. The ordinance will modify the existing development ordinance to be consistent with the type of development that has been proposed by Valley Gateway. We, Roger Clark and Administrator DeGrave, have met with the Town's financial planner who indicates that in order for a development to warrant Town participation, it should dedicate no more than 1/3 of the total property to residential. The remaining 2/3's should be a blend of industrial, retail and commercial. In order to be consistent with the Valley Gateway Development, future developments seeking financial participation from the Town must be 200 total acres or more. Developments less than 200 will not produce the level of added value to justify financial participation. If a developer can meet the criteria set in the new Town ordinance, the Town Board should be willing to consider financial participation. In my opinion, this proposal is in the best interest of the Town of Menasha and will promote orderly growth of the Town's center. You are here to authorize the borrowing through a Special Town Meeting. If you don't authorize the borrowing, the Wisconsin Trust Fund will not loan the money to the Town.

Supervisor, Jeanne Krueger, asked about the 5-1/2% interest rate for the borrowed money. When the money is paid back, at what rate will the developer pay the Town back?

Attorney Clark states that the previous agreement has a 1-1/2% add-on for an administrative overcharge that the Town uses to cover that.

Town Resident, Bill Bailing, 1763 Oakridge Court, asked whether other townships have entered into anything like this? If they don’t, why should we?

Administrator DeGrave advised that interest in excess of borrowed funds is not part of this deal.

Attorney Clark stated that he has produced a development agreement similar, for the Town of Scott in Green Bay. This has also been promoted by the WI Town’s Association.

Resident, Bill Bailing – What happens if this Township goes bankrupt, or out of business?

Administrator DeGrave pointed out that the developer will go to a local bank and purchase an Irrevocable Letter of Credit in the amount of the principal and interest, good for one year. Prior to the expiration of the Letter, they will owe the Town a certain sum of money to make that annual debt payment, in addition to a new Letter of Credit in the new balance amount. If the developer "chooses" not to pay the debt, we will draw on the Letter of Credit. It’s a guarantee so the developer cannot avoid or cancel on the Agreement or the Letter.

           

Resident, Bill Bailing – What happens if this does not get done in eight years?

Administrator DeGrave – The loan for the construction is for the full 2 million dollars. You can borrow the amount you need and the rest would stay with them so that you do not necessarily have to use the full amount.

Construction will be done by the year 2002. The bulk of the construction would be done in the year 2001, except for the final layer of asphalt. The amortization is an eight year deal, so in the nineth year, if there is $42 million worth of value out there, then the Town keeps the tax money for Town purposes at that point (instead of debt service).

Resident, Bill Bailing asked, "What this will do to the Town payroll? How many more people are you going to need, or what will you need to take care of this area?"

Administrator DeGrave responds that there should be minimal services with no anticipated need for additional people.

Resident, Harold Clifford, 1225 Glenview Drive, made a statement. "For many years, the Sanitary District worked very closely with all developers. 100%, I would say. There was one difference. The developer always knew that financially he had to supply the money, not the tax payers of the Town of Menasha."

I have some figures, this is the equalized value (in the 90’s which has just been completed): In 1992, the equalized value was $650 million

                        In 1993, the equalized value was $725 million.

                        In 1994, $770 million

                        In 1995, $861 million

                        In 1996, $916 million

                        In 1997, $995 million

In 1998, One billion, 36 million dollars

I don’t understand what the big hurry is to get that one last lot filled? I believe that the system we had was a quite sound one. Why are we shifting and using a developer?

Why do the taxpayers have to bear this burden?

Chairman Tews – The developer came forward with this proposal and we had Administrator DeGrave and our Attorney look at it and bring it to the Residents.

Robert Phiefer, (Phiefer Bros. Construction Co. on American Drive) – I am not a resident of the Town, but as a developer of the Town of Menasha I feel I’ve paid my fair share of taxes and I’d like to explain our position. In the 70’s, Pheifer Bros. had a vision of an industrial and business park in the Town of Menasha. We feel the Town is an excellent place for a developer to develop property. We are not opposed to development and feel the Town of Menasha is the best place to do it. American Industrial Park was an ideal place because of the railroad and Hwy. 441 in proximity to it. We acquired the property of about 300 acres (similar to Gateway’s acquisition), the Walter Danke Farm, the Roy’s A Farm on south side of railroad tracks, and two others on the north side of the tracks. All of the infrastructure costs were borne by Phiefer Bros. Construction Co. We had to provide a financial guarantee, ie: Letter of Credit, or escrowed money. We used both methods in various stages of development.

Regarding the real estate tax base that our Industrial Development has created for the Town of Menasha, there is about $25-30 million of tax base generated already, about 20 businesses, about 25-30 residential lots in that area. That is a buffer between the Residents and the industrial park.

"A Developer is an entrepreneur, is a gambler, and he’s a speculator." I don’t believe the Government should be using taxpayers dollars to develop the Town of Menasha".

This Board, back in December 7, 1999, at a Town Meeting similar to this, authorized $5,799,314 for highway expenditures. The Minutes reflect that it took 7 minutes to approve borrowing almost 6 million dollars. Now this Board is asking the taxpayers to consider borrowing another 2 million dollars to improve the property for an out-of-town developer. It is best that these people that are going to be voting today, vote "no". I can not vote.

Dir. of Finance, Myra Piergrossi, stated that we did have over $5 million dollars for the project budgeted, however, we did not borrow all of that. We only borrowed $1.6 million this year, for street and road projects. That was the reason for this special meeting. It was not listed in our Capitol Projects listing.

Chairman Tews – Bob, also some of those projects, if we did them, are accessible back to the property owners. For example, there was a $1,945,000 project for Cold Spring Road from Jacobsen Rd. to Shady Lane, which we did not do. That is only one example. We’ve kept our borrowing close to the belt even though it was in that meeting. We did not go out and borrow it.

Resident, Leona Behling, 1763 Oakridge Ct. - After listening to this talk, I have one concern. It was stated in the paper, and stated in the meeting tonight, that unless the Finance Director for the State hadn’t told you that it was up to the voters to decide this, this would have passed without us even knowing about it. So, what you basically said is, you think this is the thing to do and you don’t care what the other tax payers think, until somebody else told you that you had to get our okay.

Chairman Tews spoke. We went and asked for the loan, but we never had a resolution before this Board. There are five people up here. I don’t know what any one of them would have voted.

Supervisor Jurgensen stated that even if you as electors approve this tonight, this Board has not approved it yet. This Authorization simply says that if the Town Board decides to go ahead with the Agreement, that they can then borrow the money. It doesn’t tell the Town to go ahead, and the Town Board has not acted to approve this Agreement, its still in the negotiation stage. It is just that the Town Board is aware, or became aware that it wouldn’t do any good to consider it at all because the State Trust Fund needed your approval. So we came to you first.

Leona asked, "What if all of these businesses have been build and filled? Will that give you enough tax base to be worth while? What if we can’t fill those businesses and we have put this money in to all of this?"

Administrator DeGrave stated that you have to look at two different things. Can they get the businesses in and constructed? That is their requirement under the first deal. From our investment perspective, that is what we have required them to do. They must meet the benchmark of $75,250,000 in the first two years, or we will start to apply assessment (or liens) against the property. Whether they can build them or not is a fair-market issue. Are there enough people to fill jobs and utilize commodities offered is also a fair-market issue.

Chuck Lewis, 2167 Woodlawn Lane (Member of the Planning Commission) - It has been my observation that the Town of Menasha has lead the way among the towns in this area, in intelligent development planning. One, by having a professional Director of Development, George Dearborn, and the other was the a very comprehensive development plan. The Town took the development in the direction of American Drive.

One of the things the Planning Commission appreciated, when Gateway Development came on the scene, is that it instantly reduced the biggest problem we have in development on the Planning Commission. That is the proposal from developers for creating development on existing property within the established areas of the Town.

The reason for looking at the Gateway Development was because it incorporated not only single-family, multi-family, and commercial development, the latter of which have been the major sources of contention when developers come forth for proposals in these established areas. It satisfies the need for both multi-family and commercial, which have not generally been very well received in existing neighborhoods.

If we can take advantage of the State’s guarantee of borrowing for up to $2,000,000, let’s take advantage of it and let’s expedite the recovery of the tax money which allows the developer to go that much more rapidly. Then, by all means, let’s do that.

"This may set an example for other developers for the circumstances they had to work with in the past. Let’s make this an encouraging step for developers to do this same thing in other areas". I trust that the Residents will look at this objectively and be able to find their way to support this.

Resident, Steve Sipiorski, 1917 Shady Springs Drive - My understanding is that for the first 8 years of this project, all tax dollars that we get from this property will go to pay off this debt. We, the Residents, will be subsidizing the police and the fire, and that is fine.

More rooftops mean faster retail growth. If I were a developer, I would have thought of the retail before I came in with the commercial. It’s almost as if the commercial is not coming in fast enough, so let’s go ahead and get some money for retail so we can make our plan work.

I know development is coming, whether I subsidize this plan or not. But let it come in it’s own time, and not by the assistance of the taxpayers.

Resident, Dave Pheifer, 988 Millpond Lane – When I bought in to my subdivision, the developer had to pay for the sewer and streets, and curb and gutter. It all got passed on to them. I still continue to pay my taxes. Now for 8 years, I’m going to subsidize a new subdivision in addition to the paying of taxes and development in the subdivision I live in. With the amount of development that we have seen in the Town of Menasha, and all that has been contributed, I see no need to continue to subsidise more, to jeopardize the developers that we have in our Town that are local.

Resident, William Ottow, 1376 Dunning Street – Are we setting a precedence? I’ve got the answers without having to ask the questions. Yes, it is a secured loan, and yes it does set a precedence. Our Attorney, Mr. Clark, has done a good job. The 200 acres selection, the dollar amounts set. "We ought to be proud that somebody wants to develop here because it could go to Grand Chute or somewhere else… This is our Town and if we don’t grow, somebody else will."

Resident Keith Kiesow, – What would happen if they completed the project in four years instead of taking eight years?

Administrator DeGrave hesitated to answer because of negotiations with regard to the terms of the agreement. The meeting tonight is either to borrow the money, or not borrow the money. How it gets repaid as I’ve indicated has an assurance relative to that Letter of Credit. It can be amortized over eight years and simply structured to the point that it could fill up in two years, or could never fill up. It doesn’t matter. The payments are the same no matter how much the developer pays, or how much tax money would be used towards the payment. If it filled in six years and the developer said, at this point I want to get out of this, there would be a pre-payment allowance through the State. Whether it will be allowed is still to be negotiated. The later years are when the developer would reap the greatest rewards, when the most value would be there. Will he want a quick buyout after six years and just walk away? It’s unlikely, but still in negotiation.

Richard Eiberger, Assessor, stated the economic viability of the Fox Cities. People who come from other areas cannot believe how wonderful everything is here, but that doesn’t happen by accident. That happens by planning. It happens by investing in the future, in our community. No other community in the Fox Cities has set a stage for growth to occur. You’ll be driving on this highway in the fall of 2003 all the way out past Waupaca in a four-lane environment. I’ve already shifted values this last year from farm vacant land to $25,000/acre to start. Over $5 million dollars for this tax base alone. I’m looking at another $12 million dollars for the coming year just for this project alone. Another project I got involved with on West Prospect is Touchmark Living Care Center. A $25 million dollar project was brought to this community. Demographics and taxes made them decide they wanted to be in this community.

Resident, John Schaidler, 623 E. Shady Lane (on County Board, Supervisor for Dist. 28 & Chairman on Planning & Zoning Committee for the County) – How many tax dollars are we going to forego in that eight year block of time?

Administrator DeGrave – Over an eight year period, if it builds at $9 million dollars each year over years 2-5, and $6 million dollars in the 6th year. That would be $871,000 of tax credit diverted toward debt.

John Schaidler stated he believes in orderly development and is pleased with Mr. Dearborn and his input into this process. He thinks it is a wonderful process due to the fact that it includes retail, commercial and residential. I encourage everyone to vote for this. It is a very creative approach and it takes towns and allows them to move into a Tiff District, which has been denied to towns for a long time.

Resident Mike Land, 1277 Cold Spring Road – We moved here from Indiana about 18 mos. ago. We looked at property and we personally haven’t been able to find that. We’ve looked in Kimberly, Greenville, Darboy – we want to stay in the Town of Menasha and I will be one of the first people to buy a lot. I owned a retail business for 13 years before we moved here and if the houses, and the people are there, the retail will come. The retail will be successful, so I support.

Administrator DeGrave – Available to you when you came in was a sample motion. The motion will come from the floor, but I’ve provided this as a place to start. Bottom line, it says that you would authorize this Town to borrow up to $2 million dollars, not to exceed. It also has the other dollar amounts built in, so you understand what the money is going for and, of course, the loan will not exceed the actual construction. If you’re happy with this format, then the motion can simply be to adopt this Resolution, otherwise, it can be modified from the floor.

MOTION: John Schaidler, second John Zaborsky to authorize funds for the Town of Menasha to borrow for the highway construction as stated on Resolution #0001005-1.

Town Clerk, Carlene Sprague asked all people to be seated, and stated that only Town Residents may vote. Please stand when voting. Clerk Sprague asked those Town Residents who were in favor of the resolution to stand. The vote in favor of the resolution was 36. A tally slip was also required to be shown, indicating that these people were Town of Menasha Residents.

Chairman Tews asked, "Are there any questions before we vote? Chair Tews also asked that those Town Residents who were opposed, stand with tally slips.

Clerk, Carlene Sprague counts.         21 – OPPOSED

Chair Tews reads the vote again, 36 YES – 21 NO. Motion carries.

  1. ADJOURNMENT

At 7:25 p.m., MOTION: Supervisor Jurgensen, second Supervisor Handevidt to adjourn the Special Meeting of the Town Board of Supervisors. Motion carried unanimously, with Supervisor Sprague excused.

Respectfully submitted,

 

 

Carlene L. Sprague

Town Clerk