Left, the sale of Point Motel, 209 Division Street, is pending but could be torn down for a proposed student housing project. (City-Times photo)

By Brandi Makuski

Monday’s decision to approve a $500k incentive for CCFS Group LLC to build a new student rental complex at the current location of Point Motel was labored under heavy public scrutiny for both its secrecy and outcome, but city leaders claim the incentive package has been mislabeled and misunderstood by the public.

Comptroller-Treasurer Corey Ladick said city leaders wanted to encourage a development at the motel’s location because there’s a chance that property could be lost to the tax rolls if it’s purchased by UWSP.

“We knew they (Point Motel owners) were looking to sell the property, and we knew hanging out there was the possibility the university could acquire that property,” Ladick said. “If that were to happen that would become a tax exempt property and you’re looking at $500k of value coming out of that tax district. That wouldn’t drive it into the ground, but it would be a hit.”

The developer’s agreement with the city includes a $500k upfront payment to CCFS in exchange for increasing the value of the Point Motel property to at least $4.9 million by Jan. 1, 2016. Ladick said that incentive payment would be taken from the TIF 5 fund, but that amount would first need to be either borrowed or transferred from the city’s general fund balance.

“So basically we’re providing that money up front, and then the increment, that extra property taxes in the amount of $120k-$125k, would go back into TIF 5, and that’s what would repay that, either to repay $500k in borrowing, or if we self- finance, to repay the (city’s) general fund,” Ladick said.

Ladick added he feels the better option would be for the city to finance the payment itself, though the decision of whether to borrow the money or transfer the $500k from fund balance would need to be made by the City Council.

According to Ladick, a TIF works to improve the overall tax base of by increasing property values within blighted or economically distressed area. Property taxes, he said, are still doled out but only at the assessed value of each property for the date the TIF was created. Additional tax revenue generated by increased property values- known as a tax increment- remains in a separate fund for each respective TIF for additional district improvements. Once the life of the TIF expires, he said, the full tax payments return to city, county and school entities as normal and improve the overall tax base and equalized value of the city.

TIF 5, which encompasses the Division Street corridor between Fourth Avenue and Sentry Insurance, was created in 2005 and is “just about breaking even”, Ladick said.

City tax documents indicate the current assessed value of Point Motel, 209 Division Street, is $518,100 and brings in about $10,000 in annual tax revenue- revenue that will continue
uninterrupted should the project move forward. Ladick said once the minimum assessed value of the developer’s agreement is reached, the TIF will see a minimum hike of $114k in annual taxes beginning in 2016.

“It’s a huge jump in revenue,” Ladick said. “But with any TIF, the unfortunate thing you’re trying to address is, if the city spends money to increase the property values of a specific area, we make the investment but everybody benefits; the county, Mid-State, the school district. Over the long term the city will benefit because of the raised property values. That would improve the overall value of the city.”

Mayor Andrew Halverson said TIF 5 was designed to improve what he calls the “main gateway into the city”.

“TIF 5 is performing much better than TIF 6 (the downtown TIF), which isn’t saying a whole lot, but it is a redevelopment TIF,” Halverson said. “It’s about refreshing the district and we want to continue that. There are a lot of potential projects, with lot combinations or land acquisitions, tearing existing buildings down- that’s the kind of redevelopment we’re talking about.”