RACINE — The conceptual, more than $50 million @ North Beach project at the former Walker Manufacturing site along the lakefront is to be partly funded by a developer-funded tax increment district. That existing TID currently has 14 years of life remaining, city officials explained.
“As tax increment is created by the investment created by the developer, we would share 90 percent of that increment” for the TID’s remaining life, City Director Amy Connolly said Tuesday. “We’re not extending it, and the developer has agreed to that.”
City Administrator Jim Palenick said that arrangement is a way to help Royal Capital fill the financing gap that exists because Racine’s property taxes are relatively high and rents relatively low. There are no recent comparable market-rate projects for lenders to use as measuring sticks.
“All you have to go by is the past,” Palenick said. “(The developers) have to create a brand-new market that doesn’t exist.”
The developer will get some of its property taxes back to make the project work better on paper.
Parking and infrastructure costs
There are two other main components to the incentive package that city officials negotiated with Royal Capital. One is a contribution of $6.496 million to the construction of the two parking structures in the plan.
“We really wanted this to be very urban, very dense,” with a very large developer investment, Palenick said. And that meant structured parking — which is very expensive — was necessary.
That money would come from reserves already created by growth within the TID, Palenick explained. It was calculated at the figure of $28,000 per parking space.
“It’s incentivizing the density that will bring that much more investment,” he said.
For the public infrastructure, Royal Capital is paying “a good portion,” Palenick said. The city will pay for the streets and sidewalks within public right of way, and that contribution will be capped at $1,049,000. That will be repaid from the city’s 10 percent cut of the additional increment created by new growth within the TID.
The City Council will be asked to approve the incentive agreement with Royal Capital at its Dec. 18 meeting, Connolly said. The pending agreement first goes to the council’s Finance and Personnel Committee on Monday.