Answers to Common Questions about Boca Grande’s TIF Project

SOURCE: Boca Grande Capital, LLC

 Why does the Boca Grande project need the support of a TIF?

* The State of Wisconsin’s TIF law requires that the City and the other relevant taxing authorities determine that the proposed development would not occur “but for” the TIF. In other words, if city financial assistance is not provided, the developer will not pursue the redevelopment project.
* It would be highly unusual for a developer like Boca Grande to undertake and finance a project like this without some form of city assistance. Cities routinely provide assistance to development projects in order to make them financially viable, recognizing that the successful development will provide long-term benefits to the city. Without TIF in this instance (which will result in lower interest rates and more flexible repayment periods), the anticipated income stream from this development would not justify the costs of undertaking the development. More specifically, this TIF assistance will bridge the gap between the cost of the project and the amount available from Boca Grande’s investment funds and conventional bank loans.

 What will happen if Boca Grande does not receive the TIF assistance?

* Unfortunately, if the TID or the development assistance is not approved, Boca Grande will not be in a position to move ahead with its plans. It is likely that no significant new development or redevelopment would be undertaken in the downtown area for the foreseeable future.

 Why can’t TIF be used to fix the potholes?

* As noted above, the effectiveness of TIF depends upon an increase in property values and the amount of taxes generated by the property. That increase will come about as a direct result of the development activities receiving TIF assistance.
* Despite the importance of, and value inherent in, fixing potholes and having well-maintained roads, sidewalks, and other public improvements, simple maintenance and repair of those existing facilities does not cause property values to increase. As a result, those activities also do not generate additional property tax revenues. Conversely, development or redevelopment of new building projects cause properties to be more valuable and, as previously noted, generate increased tax revenues. Those activities are necessary in order to justify the City borrowing money that will be paid back by increased tax revenue. Simply put, without development or redevelopment, there is no increase in tax revenue to pay back the City’s investment.
* As noted above, however, only the increase in tax revenues is applied to repayment of the financial assistance. The original, pre-development base tax associated with the property remains continuously available to pay for municipal services, including fixing potholes.

 What this TIF is NOT.

* This TIF assistance is not a handout. The City will not write Jim Connelly a check. Rather, City funds will be deposited into an escrow account, and the developer will submit invoices and similar evidence that specific work has been completed on the project, at which point funds will be disbursed to pay for that work. In short, invoices will be submitted to the City and paid from the escrow if the City is comfortable the payment is justified and in keeping with the agreements between the City and the developer.
* Use of TIF also is not a tax break. The property owner/developer will pay full taxes on all of its properties included in the tax increment district. As noted above, all parties anticipate a significant increase in the taxes on the properties being redeveloped. The only difference from the normal taxing process is that a portion of the developer’s property taxes (i.e., the amount of the increase in taxes) will be applied to pay back the assistance provided by the City.
* TIF is NOT a tax increase; it is a method of allocating taxes in order to enable cities to provide development incentives that will, over the life of the TID, be repaid through increased tax revenues stemming from property development. The only way a property owner’s taxes will increase is if the value of that owner’s property actually increases.

 What happens if this project is not successful or completely fails?

* Jim Connelly has agreed to personally guaranty (a) completion of construction of each redevelopment project that the developer starts, and (b) payment of taxes reflecting a significant and agreed upon increase in the assessed value of the redevelopment properties for a period of 5 years after opening of the project. City representatives have reviewed and approved Mr. Connelly’s personal financial statement in order to verify his ability to satisfy these guaranty obligations.

 Where will the people come from to fill the Ripon Inn and Spa?

* Some guests will be from nearby locations, and others will be out-of-town visitors from up to 250 miles away drawn to the attractive and historic development in Ripon. The Ripon Inn and Spa is being designed to feature a level of quality and service similar to the American Club in Kohler, which draws repeatedly from a similar 250-mile regional radius. However, the Inn and Spa in Ripon will feature more modest room rates, making it more affordable, and therefore more attractive, for a broader spectrum of people.

 We have no water or golf course; can the Ripon Inn and Spa really work?

* Many different shopping, activity and eating alternatives attract people to a community. The developer and its hospitality consultants believe strongly that a renewed sense of vibrancy and a sense of history stemming from restoration of the historic downtown district and the Republican President’s Museum will attract families, empty nesters, and businesses to the community, both as visitors and as new residents. As a part of the development efforts, the infrastructure of Ripon will be brought to the leading edge of technology through a community-wide wireless broadband to create a uniquely attractive environment for businesses seeking to relocate their operations and/or headquarters to a community that provides an unparalleled quality of life for its employees.

 When will this project start? When will it be finished?

* Boca Grande plans to begin construction in the Spring of 2010, with an anticipated opening of the Ripon Inn and Spa and most of its other projects by the Summer of 2012.

 How many jobs will be created?

* The development efforts are expected to create 60 to 80 full-time construction jobs for an approximately two-year period. In addition, the new businesses are expected to require 75 to 100 new employees. The developers have pledged to hire local contractors for construction whenever feasible. In keeping with past practices, they will make it a priority to try to hire local employees in connection with each of the businesses included in the project after construction is completed.

 What is being done to address parking?

* Boca Grande will be retaining a traffic consultant to fully analyze downtown traffic patterns, traffic flow, and parking needs, including how they will be affected by future development. Based upon the results of that evaluation, the developer will work with the City to address any additional parking or traffic flow needs, and it will undertake all of its construction projects with a view toward minimizing to the extent feasible impacts on parking and traffic flow.

 What if I have more questions?

* Boca Grande has established an Information Hotline that you can call if you have additional questions. The Hotline can be called any time, 24/7, and your questions will be responded to within twenty-four hours. The Hotline can be reached at (920) 896-1082.