Rendering of the proposed Foundry on 3rd development in Wausau. Image courtesy: City of Wausau
WAUSAU, WI (WSAU) — Before the Wausau City Council voted 6-3 to approve a developer’s agreement for the former Center Mall site, Alder Lisa Rasmussen addressed the funding model for the project.
Rasmussen says it’s been the most common question among residents for the last few weeks, specifically why the city would funnel tax dollars to rental housing. She says that’s not the case with this project.
“That’s why this is a good project,” said Rasmussen. “The increment that’s being used to incentivize this project is not from the general levy, it’s not from our tax dollars on our individual homes. It’s from the increment generated by the new building itself.”
Essentially, that means a portion of the tax dollars paid by the owner of the building will come back to them to the tune of about $6 million. Rasmussen notes that the building will also add some money to the city’s general fund while that is being paid back as well.
She also clarified the conditions of the city’s involvement, which some have said will be more than $10 million. But according to Rasmussen, it’s unlikely that the city will reach that level of involvement. “The public ask is $6 million of increment that they create themselves off of their own building. The agreement carries an interest-bearing component equal to the value of the mortgage that the developer secures, or 5%. But with early repayment, we will never get to the $10.8 million cap. That is a cap on our investment assuming that the obligation would take 20 years to pay for.”
The agreement also calls for T Wall to formally acquire the land, secure a mortgage, complete construction, and formally bring the project onto the city’s tax rolls before any of the money is paid to them. Rasmussen went on to call the agreement one of the best that she’s seen in her time on the council.
“It doesn’t get any better than this,” she added.
Community Development Director Liz Brodeck also addressed the model, noting that she has received compliments from many of her peers in the business on the protections in the agreement and funding mechanisms.
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