Business Courting Caledonia Holding Off Until 2012

UPDATE Dec. 13: Ray Leffler, one of the developers of the Caledonia Business Park, said the unnamed business hasn't made a formal committment to coming to Caledonia. Leffler explained the company wanted to wait until after the first of the year to consider the move and until that happens the project is at a stand still.

UPDATE Oct. 6: The Joint Review Board members met today and gave their approval for the TIF district, which has now officially a done deal. Still, any project proposals from businesses would need the approval of the Village Board and the Community Development Authority. Tom Lebak, the Village administrator, said the Village may be courting up to four businesses, two of which the Racine County Economic Development Corporation is in discussions with and two additional businesses. One other business, All Fasteners, plans to expand their business, which happens to be in the TIF district. Village Board President, Ron Coutts, said now the Village needs to wait until a project proposal comes forward, but now they have the ability to be in a position to negotiate with companies interested in calling Caledonia home.

UPDATE Sept. 20: In a 6 to 1 vote, the Village Board established the boundaries for expanding the Franksville Business Park. Jerry Griswold, a Village Board member, opposed it after he called the tax increment stupid, crazy, and a socialist idea. He called the back door meetings were illegal and the public hearing should have been with the Village Board and not the Community Development Authority. Elaine Eikes, the Village Attorney, said the meetings were done in accordance of the law.

UPDATE Sept. 6: At the Community Development Authority meeting, the group learned about the tax incremental financing plan. Gordy Kacala, executive director of the Racine County Economic Development Corporation, said one of the businesses in the Franksville Industrial Park will be adding 45,000 square feet and adding about 46 jobs. The other company that may be looking to move into the district is an existing business in Racine County, but it is not located in Caledonia. They may be looking to build a 119,000 square foot facility, which would bring 25 jobs to the Village in addition the number of employees they already have. The CDA voted five to 0 to approve the plan. John Shannon abstained.

UPDATE Aug. 31: The Village Board voted 6 to 1 to move forward with the discussion about the possible expansion of the TIF district. Village Board member, Jerry Griswold said the plan was "a ponzi scheme," and that he would fight the project "with everything he had." A public hearing will be held on the project plan and the boundaries at 6 p.m. Tuesday, Sept. 6 at the East Side Community Center, 6156 Douglas Ave.

ORIGINAL STORY:

The may see a new business built and one expand within the Franksville Industrial Park, but the project comes with a potential $8.9 million catch for taxpayers.

The Village Board voted 4 to 1 to move forward with a feasibility report that could create a tax incremental finance (TIF) district to expand the Franksville Industrial Park by 390 acres. Jerry Griswold opposed the project, but Jim Dobbs, Tom Weatherston, Ron Coutts, and Kevin Wanggaard approved it.

New Jobs, New TIF?

The report, which was written by Ehlers, a consulting firm the Village hired, calls for the expansion to occur in two phases, one that includes 152 acres and one that includes 238 acres. The first expansion would mostly serve two unnamed businesses, according to the report.

The two developments are expected create 70 jobs with an annual compensation between $35,000 and $55,000. And with the total build out of both phases, the district is expected to “spur” $66 to $88 million in new, and taxable, industrial development.

The total cost of the infrastructure improvements carries a price tag of $12 million. However, 25 percent of the cost would likely be paid for with grants, and the Village or the developer would finance the remaining cost of the infrastructure project, which would cost $8.9 million for both phases. The money would be used to improve the truck route, utilities, roads, sewer and water service, and add a rail spur, signage and lighting. However, the project doesn’t have to be completed all at once, said an official with Ehlers.

What is a TIF District?

A TIF district is a development tool municipalities can use to attract business. The way it works is that a financing district is created and a base value of that district is established by the taxing jurisdictions. The increased value of the property is still charged at the base rate, but the district uses the increased tax revenue to pay for the infrastructure projects.

This means those taxing entities (Village, County, Racine Unified and Gateway) still receive the same amount of tax revenue before the district was created, but the increased tax revenue pays for the infrastructure costs over a 20-year period.

Why use a TIF District?

Jenny Trick, of the Racine County Economic Development Corporation, told the Village Board the names of the businesses are confidential. However, one is ready to build immediately and the other would likely build within the year, she said.

 “The value of this discussion is not only through a recruitment perspective, but also a retention perspective,” Trick said. “You have a number of businesses that have already made an investment there and they are going to want to grow. And there is value in having your investment be retained. So you want to make sure the business park is appropriate and is an attractive business park.”

Village Board Member Jerry Griswold said he's against using taxpayer money to fund a project like this.

“I say let the developer invest their money, why should the taxpayer fund this?” Griswold said. “This thing has already gone way to far in my book…. In my mind we need to do the basics, highway, fire, and police—not get involved in development.”

But part of the condition of creating a taxing district is that using the tax increment to fund infrastructure projects can only be used if the development “would either have not occurred, not occurred in the same timeframe, or would not have occurred with the same value,” according to the report.

Wanggaard supported the project.

“This area is already designated for commercial use,” he said. “It’s not as good of an area as it should have been, but we’ve got to deal with what we’ve got. And we’ve got to utilize what we’ve got instead of try to build something else…. If we have to look at getting companies here, which we do. I think that’s the place to do it.”

What's the next step?

The approval of the report doesn’t mean the project itself is approved, but it does mean the Village can move forward with holding public hearings on the contents of the report. In order to create the district, a number of entities would need to approve the project, including the Joint Review Board, the Community Development Authority, and the Village Board, and several public hearings would need to be held.