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Recommendation for approval of a term sheet with Wingspan Development Group for a multifamily housing development, the Foundry, at the Mayfair Collection (11220 W. Burleigh Street) and approval of associated contracts with Mannedge Consulting and Prism Technical
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Submitted by:
Economic Development Team
Department:
Development, City Attorney, Finance
A. Issue
Wingspan Development Group has requested Tax Increment Financing support for a multifamily residential building to be located at 11220 W. Burleigh Street behind the current Synergy apartment complex. The Economic Development Team and a third-party financial consultant from Baker Tilly have determined that the project is not likely to proceed without financial assistance and is recommending the terms that will be discussed in closed session.
B. Background/Options
Tax Increment District Overview
This 67-acre district was created in November 2012 to facilitate the redevelopment of the Burleigh Triangle area within the City. The first phase of development is located on the western-most 23-acre parcel and adaptively re-used existing warehouse space to create a 275,000 square foot regional specialty retail center known as Mayfair Collection.
The Common Council approved a term sheet for phase 2 of the project on October 6, 2015 which resulted in additional retail, a grocery store, a hotel, four restaurants, and a parking structure to support phases one and two. A third phase will include additional retail as well as more than 1,000 apartments. Terms for the first 260 apartments and 50,000 sq. ft. of retail were approved on August 2, 2016. Demolition of the Schoenick warehouse took place in 2020-2021 as well as the completion of internal roadways and utilities. The City is currently in negotiations for the acquisition of the necessary private property to complete a roadway under the interstate at the northern tip of the district. In addition, an 80 unit affordable housing building broke ground in 2023.
As of January 1, 2023, the incremental value of the district was $194,987,000. The fund balance as of 12/31/23 is estimated to be negative $493,849 but is projected to grow positive in 2-3 years.
Project Overview
The City of Wauwatosa received a request for financial assistance through Tax Increment Financing (TIF) to assist with financing a portion of the eligible costs related to the construction of an approximate 523-unit 2 building multi-family housing project with underground parking known as the Foundry. This project has received approval as a Planned Unit Development and the map below shows the project layout within the Mayfair Collection (buildings 1 and 2).
As shown in the map above, this is intended to be a two-building project that will share a single underground parking structure and be completed and financed as one project with construction occurring separately for each building. The first building will include 289 residential units, and the second building an additional 234 units. Construction of the second building is proposed to begin immediately following completion of the first building. In total the development is proposed to contain 523 total market rate residential units. Construction of the proposed development is expected to begin in the summer of 2024 and continue until completion of the second building in 2026. The first building is proposed to have occupancy beginning in 2025, and full occupancy of both buildings is expected to occur in 2027.
Tax Incremental Financing Request and District Financial Projections
The Developer has requested financing of the underground parking structure through a pay-as-you-go Municipal Revenue Obligation. The Developer has requested that Wingspan be reimbursed for constructing off-site public infrastructure including a public pedestrian path, dog park, cross streets that integrate with the overall grid and below grade storm water vaults. The details of these requests will be covered in closed session as part of the negotiation process.
It should be noted that property increment generated by this project was assumed to help fund the 56 affordable apartments being constructed as part of the 80-unit MSP project to the north. In addition, a payment will be made by the Developer to the Community Development Authority’s affordable housing fund, with a credit provided for the 56 units described above, in lieu of providing affordable units in this project.
We have determined that the projected property tax increment, along with existing increment, will be sufficient to fund the Municipal Revenue Obligation and maintain a 1.25 coverage ratio for the borrowed funds required for the reimbursements as well as existing District debt.
If these were the final obligations incurred by this District, it could close in 2033 with $294 million of projected incremental property value. However, the City still has additional development opportunities as contemplated by the District Project Plan which also includes using increment to construct an underpass to provide a northern connection to Feerick or Wirth Streets as well as a pedestrian and bike overpass into Curry Park east of the railroad tracks.
Professional Service Contracts
The Developer will agree to having the project inspected by a third-party owner’s representative as well as complying with the City’s Procurement Equity policy in hiring 25% Disadvantaged Businesses and employing 25% of new workers from designated zip codes in Milwaukee County.
The City proposes utilizing Mannedge as the owner’s representative. This will require an amendment to the competitively bid 2015 contract (attached) although Mannedge has agreed to continue to hold their 2015 pricing on a per monthly report basis. The total estimated cost is $32,600 assuming a 36-month construction timeline.
The City proposes continuing to utilize Prism Technical for project inclusion monitoring and support. Their proposal is for a not-to-exceed amount of $111,465 for the first building. This service was competitively bid in 2022. Both costs are included in the Tax Increment District assumed expenses.
C. Strategic Plan (Area of Focus)
Economic Development & Financial Resilience
D. Fiscal Impact
Details of the financial liabilities for the City will be discussed in closed session. We project that the district will have sufficient revenues to cover these liabilities so there is no anticipated impact on the general fund or the property tax rate.
E. Recommendation
Depending on the direction given in closed session, we recommend approval of a Term Sheet with Wingspan Development, approval of a contract amendment with Mannedge Consulting and a new contract with Prism Technical.
recommendation
The Committee may convene into closed session regarding this item pursuant to Wis. Stat. §19.85 (1)(e), to deliberate or negotiate the purchasing of public properties, the investing of public funds, or conducting other specified public business, whenever competitive or bargaining reasons require a closed session. The Committee may reconvene into open session to consider the balance of the agenda.