COMMITTEE OF THE WHOLE -Minutes 20100427
COMMITTEE OF THE WHOLE – CITY OF MUSKEGO (Unapproved)
MINUTES OF MEETING HELD TUESDAY, APRIL 27, 2010
Mayor Johnson called the meeting to order at 6:38 p.m. and led those present in the Pledge
of Allegiance.
ROLL CALL
Mayor Johnson, Aldermen Snead, Harenda, Borgman, Werner, Soltysiak, Schaumberg,
Fiedler, Deputy Clerk Jill Blenski. Also present City Attorney Don Molter, City Engineer
Dave Simpson, Community Development Director Jeff Muenkel, Finance Director Sharon
Mueller and Paul Thompson Consultant from Hutchinson Shockey Erley & Co.
STATEMENT OF PUBLIC NOTICE
The meeting had been noticed in accordance with the Open Meeting Law.
APPROVAL OF AGENDA
There were no issues with the agenda items listed.
APPROVAL OF MINUTES
Ald. Fiedler moved to approve minutes of the April 13, 2010. Ald. Schaumberg seconded;
motion carried.
NEW BUSINESS
1. Discuss Policy on Full and Temporary Interest Acquisitions.
Mayor Johnson introduced City Attorney Don Molter and City Engineer Dave Simpson.
Attorney Molter has no issues with temporary easements – without having a signed release
from lien holders but he feels it is necessary on permanent easements. If a property was
foreclosed on the City could be held accountable if there wasn’t a release of the lien. He
doesn’t remember a situation where the lien holder did not give a partial release. In his
opinion from a legal point you need to adopt the resolution.
Mayor stated that staff in checking with the State and some other municipalities found that
they did not require lien holders to signoff for projects under $10,000.00. City Engineer
Dave Simpson brought up the costs incurred in doing a title search, staff time to get lien
holders to signoff, legal bills and sometimes an appraisal. Some other municipalities and
the State have the $10,000 rule which requires that staff try to get the mortgage company
to sign off and if not done in a reasonable amount of time and the project is under $10,000
then they forego the sign off. Attorney Molter stated that from a legal aspect you need to
get a release. Ald Fiedler agreed with Attorney Molter especially if there are
improvements involved. Ald Borgman suggests setting up some type of criteria so that City
is not waiting an excessive amount of time for the releases. Ald Fiedler stated that possibly
after many attempts with no response staff could take the issue to Finance, Public Works or
whatever committee is involved for a decision. Do we have ability to make exceptions to
the rule and decision falls to elected officials? Mayor states we are looking for a policy to
be put in place. The committee agreed to accept Resolution #45-2010 as written.
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2. Discuss Bring Back the Lake cost and funding projections.
Mayor introduced Community Development Director Jeff Muenkel, Finance Director
Sharon Mueller and Consultant Paul Thompson from Hutchinson Shockey Erley & Co.
Mayor reviewed attached memo regarding the financing for the “Bring Back the Lake”
project that the City is proposing which included the following:
possible costs
costs over time
borrowing needs/funding sources
possible future project paybacks
debt service
Mayor also covered what taxes the project area generates today and what the tax possibility
could be when fully developed with the proposed condos and commercial development.
Goal is to have the project be tax base neutral and feels that 40% completion is needed to
break even. Mayor stated that the City’s positive debt service schedule would allow us to
borrow the funds for the three projects without raising the tax levy.
Director Muenkel stressed that the costs for the following three projects, Bring Back the
Lake, Durham Drive reconstruction and Janesville Road were included in the numbers
listed. It will take time for project to start to pay back.
A possible 35% debt service pay back on the interest from the Federal Government has not
been factored in per Consultant Paul Thompson – he feels numbers as presented are a
realistic projection.
Ald Snead questioned that by taking the 7 parcels off the tax roll, they would now be
exempt - where does money come from? Director Muenkel and Mayor Johnson stated that
the project would not be tax neutral at first, tax liability would shift to taxpayers, but over
time possibly 5-6 years, project should start to pay back. City needs to borrow money for
this project. Two buildings will be removed from the tax rolls due to the Janesville road
project.
Ald. Harenda questioned if this project can be done in phases? Mayor stated we need to
wait for the public hearing on May 4th before making any decisions on scope of the
project.
3. Discuss Mill Valley Site Negotiations committee.
City of New Berlin is looking to develop the area where the current gravel pit on Racine
Ave. is located. Since that area is located in the Muskego Norway School District the City
of New Berlin would like to have the City of Muskego service their sewer and water
needs for the development. Mayor is looking for two Aldermen to be on the committee. It
was decided that since it involves Ald Soltysiak’s district he should be on committee and
Ald Borgman volunteered to be the other council representative.
ADJOURNMENT
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Ald. Snead moved to adjourn at 7:35 p.m. Seconded by Ald. Fiedler, motion carried
unanimously.
Cindy Schweitzer
Secretary
CITY OF MUSKEGO
Staff Report to COW
April 27, 2010 Meeting
To: Committee of The Whole
Subject: Bring Back The Lake Financing Discussion
Date: April 23, 2010
As we approach finalizing a decision to move forward with officially negotiating with local
Little Muskego Lake landowners for “Bringing Back The Lake” (BBTL), we need to start
having the background discussions and asking the questions of how this planning effort
might be financed. Please find herein some discussion points regarding BBTL financing.
Possible Costs
Below please find a list of anticipated costs that the BBTL project may take to make a
reality. Note that the numbers provided by staff are conservative, shown higher than what
should actually happen (+15% of the assessments for the land values). This was done
intentionally so we make our decisions about moving forward based on a worst-case
scenario. The anticipated park/pad development costs are based on our consultant’s
projections.
Possible Costs
Parcel # Assessment 2010 x 15%
1 $ 631,200.00 $ 725,880.00
2 $ 420,000.00 $ 483,000.00
3 $ 400,000.00 $ 460,000.00
4 $ 1,304,500.00 $ 1,500,175.00
5 $ 1,788,400.00 $ 2,056,660.00
6 $ 1,864,900.00 $ 2,144,635.00
7 $ 1,965,100.00 $ 2,259,865.00
Total $ 8,374,100.00 $ 9,630,215.00
Park/Pad Development $ 3,004,000.00 $ 3,004,000.00
Grand Total $ 11,378,100.00 $ 12,634,215.00
-Parcel# corresponds to the parcel map attached to this document
-Last column multiplies the 2010 assessed values by 15% (The 15%
assessed amounts are used below for forecasting)
For the purpose of this document it is prudent to also know the timing of when the BBTL
costs could be expended. This table is found below. Staff also included the timeframes
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and costs anticipated for the two other large borrowing needs of the community in the near
future: Durham Drive & Janesville Road.
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Costs Over Time
Borrowing Year BBTL Project Janesville Road Durham Drive Yearly Totals
2011 $ 12,634,215.00 $ 1,385,900.00 $ 3,775,000.00 $ 17,795,115.00
2012 ~ $ 3,147,990.00 ~ $ 3,147,990.00
2013 ~ $ 1,500,000.00 ~ $ 1,500,000.00
Total $ 12,634,215.00 $ 6,033,890.00 $ 3,775,000.00
It should be stressed that the yearly totals above are not what will be required to be
borrowed that year. The city has certain funds that can be allocated to the above projects
up front that affect what the potential borrowing needs may be. The following table
reflects the potential borrowing needs from year to year along with the potential offsetting
funding sources.
NOTE: One single borrowing may be prudent due to interest rates and financing terms.
However, that would be addressed at the time of the first borrowing deadline for the three
discussed projects, which shouldn’t be until early 2011.
Borrowing Needs/Funding Sources
Possible Borrowing
Year Yearly Totals Potential Sources Need
2011 $ 17,795,115.00 $ (2,572,000.00)* $ 15,223,115.00
2012 $ 3,147,990.00 $ (500,000.00)** $ 2,647,990.00
2013 $ 1,500,000.00 $ 1,500,000.00
Total Over Time $ 19,371,105.00
*2011 Potential Sources: Landfill Fund (2 mil), TIF 8 Funds (372K), TIF Residual funds (200K)
**2012 Potential Sources: Landfill Fund
Lastly, a variety of funding sources are anticipated to help reduce the future debt for the
BBTL project. These sources should limit the actual debt service of the project over time.
Having these future funding sources is not common in a traditional borrowing for a city
project and should be considered as a huge advantage.
Possible Future BBTL Project Paybacks
City sells 4+ acres for mixed-use development $ 600,000.00 ~ $ 1,000,000.00 +
Sell 1 acre for lake frontage mixed use $ 250,000.00 ~ $ 350,000.00 +
Sell Moorland Park Parcel $ 750,000.00 ~ $ 850,000.00
Sell Park Arthur West $ 300,000.00 ~ $ 340,000.00
Sell Commercial Land in front of Library $ 125,000.00 ~ $ 150,000.00
Sell Pioneer Drive Land in front of Parks Maint. Building $ 75,000.00 ~ $ 80,000.00 +
Stewardship Funds $ 200,000.00 ~ $ 700,000.00 +
Urban Forestry Grants $ 25,000.00 ~ $ 35,000.00
Park Dedication Funds $ 50,000.00 ~ $ 200,000.00 +
Total Possible $ 2,375,000.00 ~ $ 3,705,000.00
Note: Other revenue sources could take place to help out park maintenance and/or borrowing payback
(Shelter/event rental fees, parking fees, beach fees, etc.)
Possible Cost Consideration #1:The costs anticipated are very conservative and
actual numbers should be lower than anticipated. Actual property costs would be
based on appraisals and negotiations per WI Statutes.
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Possible Cost Consideration #2:Budgeting for the BBTL project would include
the costs to actually complete the construction of the lakefront park in year 1.
Possible Cost Consideration #3:Debt requirements could be reduced by sources
specifically reserved for city projects (Landfill funds, etc.).
Possible Cost Consideration #4:There are other borrowing needs of the
community upcoming, however, the BBTL Project is the only one that could have
paybacks earmarked for future debt service along with possible revenue sources
to further the paybacks. It should be pointed out again that this is not the case for
most borrowing projects. Roads and buildings that are paid for don’t have
revenues to help out in most cases and further, road/building projects need to be
replaced over time whereas the park development wouldn’t.
Debt Service
Some of the questions that have arisen in regards to financing the BBTL project are:
1. How will the spending affect the city’s yearly debt service?
2. How will the spending affect a resident’s yearly taxes?
The following table shows the projected impact to the city’s debt service fund if the BBTL
project takes place. Also included are the borrowing effects of the Durham Drive and
Janesville Road reconstruction projects. Due to sufficient reserves, it is anticipated the
additional debt issues would not require any increase to the debt service tax levy.
Debt Service 10-Year Projection
Funding Principal Fund
Year Sources & Interest Balance
2010 1,476,349
2011 3,210,426 3,249,616 1,437,159
2012 3,518,014 3,547,243 1,407,930
2013 3,450,033 3,462,290 1,395,673
2014 3,471,370 3,508,741 1,358,302
2015 3,467,546 3,585,030 1,240,817
2016 3,470,879 3,505,833 1,205,864
2017 3,423,029 3,450,683 1,178,211
2018 3,428,301 3,645,659 960,853
2019 3,491,818 3,627,379 825,293
2020 3,487,396 5,157,579 * 617,871
* 2020 P&I includes a balloon payment for Commerce East-
TID #10 GO Note (Moorland Gateway).
Debt Service Consideration #1: The City of Muskego has been able to minimize
the need to borrow large amounts of money for community wide related projects.
Investing in the BBTL project is a venture that could affect the community as a
whole and should be seen as an investment for the future of Muskego.
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General Obligation Debt Comparison
It should be noted to Council that Muskego has a comparable amount of debt for a
community its size. Of communities having a population of 15,000-30,000 Muskego is
below the average in general obligation debt.
City Debt Capacity Consideration #1: The City of Muskego has not needed to
invest in projects like other communities have had to. The city’s infrastructure is
still relatively new and well maintained and city’s building facilities are still
adequate for current and future service.
City Debt Capacity Consideration #2: Having debt in a community is not
uncommon especially when the debt is an investment in the future of the
community.
Tax Base
Below please find a list of taxes that the BBTL project area generates today:
Taxes Generated 2009
Parcel # Taxes
1 $ 10,067.00
2 $ 6,591.00
3 $ 6,843.00
4 $ 20,883.00
5 $ 28,657.00
6 $ 29,803.00
7 $ 31,496.00
Total $ 134,340.00
Based on the site plan alternatives provided by the consultant a variety of supporting land
uses are anticipated as part of the BBTL project. These supporting uses will be key to
bringing people to the lake all four seasons of the year and to ensure that the area becomes
a destination. We know that supporting use actual details (amounts of units/building
footprints) are subject to change. However, it is very probable that the supporting uses can
generate a tax base above and beyond the existing tax base in time (see table below that
conservatively demonstrates this calculation).
Yearly Tax Generation Possibility
Parcel # Taxes
48 units residential $ 192,000.00
24,000 sq ft commercial $ 35,000.00
5,000 sq ft commercial $ 12,500.00
Total $ 239,500.00
-Forty-eight (48) residential units were considered for this calculation. The concept plans
show that anywhere from 40 to 60+ units could feasibly work in the confines of the concept.
-Residential units are based on $4,000/year in taxes; very conservative as
lake view condos are at $6,000+/year in Bay Breeze.
-Commercial taxes based on two (2) 12,000 sq. ft. structures and one (1) 5,000 sq. ft.
structure. Again, very conservative comparable projections and only improvement values
were used, not land, which would add more tax base.
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Tax Base Consideration #1: Replacing the existing tax base should be of no issue
over time. In fact, the tax generation for the city and other taxing authorities
could more than double. The two tables above show an addition of over $100,000
in tax base possibility.
Tax Base Consideration #2: Obviously it may take time to replace the tax base as
it isn’t anticipated that all commercial/residential structures would be built in
year 1. However, it should be pointed out that even one mixed-use structure of
12,000 sq.ft. commercial and twenty-four (24) units residential could come close
to making up the tax base (less than 40% of the proposed supporting development
shown on the concept maps).
Tax Base Consideration #3: How the lakefront development affects the
businesses up and down Janesville Road and Pioneer Drive cannot be
determined. However, creating a destination use like the Lakefront Park will
have some inherent value in increasing the surrounding uses tax bases once the
community embraces the lake development and businesses in turn look to invest
themselves. An example of this can already be found in Pewaukee.
Property Values
A few concerns have arisen that residential property values would decrease for those
properties that would now be found next to the future proposed development and park. It
should be noted that there is no basis to suggest that property assessments would decrease
as a result of a park and recreation land use being found next to a residential land use.
Land value assessments are strictly based upon acreage and comparable requirements to
like-kind land uses only. A recent example of not finding a change in land values is with
the city’s Park Arthur. This land has just recently been changed to a park and recreation
land use and no changes to surrounding residential land values were found.
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