Should the Village Assist in Funding Mandel's Apartment Development?

Residents raised concerns and questions with the village's plan to contribute $4.9 million to the development by creating a TIF district. Negotiations continue between the village and The Mandel Group.

Should the village assist in funding The Mandel Group's 100-unit luxury apartment development near Silver Spring Drive?

This was the question posed to residents at a public hearing of the Community Development Authority Thursday night.

The village estimates it will contribute through a tax incremental finance (TIF) district to The Mandel Group's $27-million, three-building development containing 100 high-end apartments in the parking lots north of Silver Spring Drive, between Santa Monica and Consaul Place.

At the hearing attended by less than 10 residents, resident Robert Crawford said he likes the project, but he questioned the use of public TIF funds for it.

"I think good, old-fashioned capitalism will see that this project is built," he said. "If any of us came in and wanted to build a big house in Whitefish Bay, we'd be paying taxes on it the next year."

The 'but for' test

According to state guidelines, the use of TIF funding by a municipality must meet the "but for test," which attempts to evaluate if the development would not occur "but for" the use of TIF funding.

CDA Chairman Ray Krueger said history has shown the development would not occur without public financing, and it is in the village's interest to make the project happen because it is part of the Silver Spring Master Plan.

"Capitalism should always have the first oppportunity to work," Krueger said. "But to my knowledge in the past 10 years, through good economic times and bad, we have not had viable proposals made to the village that could be successful or sustained without village support."

Resident Lynn Weber, who recalled when Whitefish Bay still had farmland, said she was more concerned about the added congestion in the parking lot and side streets directly neighboring her condominium on Beaumont Avenue.

"Can you imagine doubling the amount of traffic?" she said. "How is that going to be an advantage to our enjoyment of living here?"

Village officials are still in negotiations with the developer about public funding, so the TIF plan was tabled at Thursday night's meeting.

A tax incremental finance district allows a municipality to borrow and spend money on public improvements, and then recoup the money through the growth in tax revenue generated by those improvements.

Breaking down dollars and cents

The village's $4.9 million contribution includes:

  • $1.6 million in direct capital from bond proceeds.
  • $2.2 million pay-as-you-go TIF note, which places the up-front project costs on the developer's shoulders with a promise from the village to reimburse the developer.
  • $1.1 million in "air rights" to symbolize the value of the air above the public parking lots on the east end. When all other TIF bonds have been paid off, the village will pay itself for the contribution.

Once the project is built and stabilized, the developer estimates the property will be valued at $14 million, and return an additional $320,000 in annual tax revenue. The developer expects the TIF will close by 2040, one year earlier than the 27-year maximum prescribed under state law.

Resident Santo Sturino questioned how the project's estimated assessed value is only $14 million.

"I'm a little shocked that they'd spend $27 million on a $14 million project," Sturino said.

The assessed value was calculated by The Mandel Group and Mike Harrigan of Ehlers and Associates, the village's financial advisor, using the state assessor's rules, said Robert Monnat of The Mandel Group. The assessed value estimation will be vetted by the village assessor in the future, he said.

What's next

Going forward, the TIF will go before a joint review board consisting of entities that will lose out on potential new tax revenue from the development for a maximum of 27 years, which is the legal lifetime of a TIF district . The board includes representatives from the village, Milwaukee County, Milwaukee Area Technical College, Whitefish Bay School District and the public.

After the Joint Review Board reviews the plan, it will go in front of the Village Board for final amendments. The Joint Review Board will then have a chance to approve any amendments to the plan. Once the state certifies the TID, it will be effective as of Jan. 1.

StaynConnected September 11, 2012 at 07:04 PM
re: entities that will lose out on potential new tax revenue from the development for a maximum of 27 years - includes the village, Milwaukee County, Milwaukee Area Technical College, Whitefish Bay School District and the PUBLIC. I'd like to see this project go forward, or one similar to it. However, the proposed financing on this effort is not equitable. It will be 27 YEARS before the project begins to return tax revenues to Village and other entities. I could understand 5-8 years, perhaps, but 27?!
Chris Anderson September 11, 2012 at 07:36 PM
I'll make it unanimous: No. Whitefish Bay doesn't need this, doesn't want this and it does nothing for the community. The village shouldn't put up any money, nor allow its public parking to be built over. Will Village leaders listen? Not a chance.
Absolutelyfabulous September 11, 2012 at 08:30 PM
Just a question and I've brought it up before. Are any of the businesses adjacent to the parking lots that are to be redeveloped going to receive any financial compensation from the Village of WFB for their hardship/loss of business during construction? If so, will this be announced to the public/taxpayers of WFB after the initial 4.9 million TIF is approved. That's what they did in Shorewood, though the only business directly affected is Sendiks and they received one hell of a pay out and they have the gall to make note that their business is suffering during Mandel's construction of his apartment complex on the parking lots that Sendik's utilized. Now, Mandel has said he will keep parking spaces open in WFB, but that was also the case in Shorewood. There are alternatives close by that people may utilize and never come back ie Walgreens/Ye Olde Pharmacy on Port Rd in place of Fitzgerald's on Silver Spring. Just as an example. Ye Olde delivers. "Sendik's Sales Shrinking As Mandel Group Development Takes Root" http://shorewood.patch.com/articles/sendik-s-sales-shrinking-as-mandel-group-development-takes-root
digitalhermit September 12, 2012 at 12:58 PM
"I'm a little shocked that they'd spend $27 million on a $14 million project," Sturino said. - No shock here; it's the way the developers have done it for quite a while. If it doesn't make financial sense to privately finance, try to get a hand out from the local government and shift the potential cost of failure to the tax payers. Heads the developer wins, tails you lose. Shoot this turkey down.
Absolutelyfabulous September 12, 2012 at 05:47 PM
It won't get shot down. Why can't certain people put 2 & 2 together? Only 10 residents showed up at the Village Board/CDA meeting. This blog means nothing. This development mirrors what happened in Shorewood. Though, no matter how many times they were asked what the valuation of Mandel's Shorewood luxury apartment would be upon completion, the only information forthcoming was that in the year 2039, YES 25 years later, Mandel's $32,000,000 luxury development in Shorewood, would have an estimated taxable/assessed value of $22,000,000. You, the residents, don't count in matters like these. You were used as pawns when the village didn't want Boris Gokman or his developments and actively sought and used the residents opinions as reasons to deny requests for zoning changes/development proposals. Not the case with Mandel. How obvious can it be? This deal/development was hammered out long before any public presentations were made. What do you not understand/are able to put together/comprehend? Why would Mandel purchase the lots behind the Fox Bay Theater, if he didn't have assurances/agreements in place to be able to secure the Village owned parking lots that are a necessity for this development to proceed along w/ guarantees of the zoning changes that are necessary while KNOWING that Boris Gokhman had previously sought zoning changes as well as presented multiple development plans as well as seeking $$ assistance from the village and was DENIED every time.


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