Mayor Explains Funding For Buffalo Street Redevelopment Project
March 21, 2017 at 4:26 p.m.
By David [email protected]
“Basically, I just wanted to talk a little bit about – have you guys understand – how the funding is working for the Buffalo Street project,” he said.
The city has been acquiring property for the project since 2009.
Thallemer told the council he wasn’t going to get into the details of the project itself – which includes housing, a plaza and a multi-use building in the 300 block of North Buffalo Street – but instead talk about how the funding and financing works.
“With the Regional Development Authority approving and then the Indiana Economic Development Corporation approving the final project, the numbers are pretty hard and fast now, and I wanted all of you to be aware of the numbers,” Thallemer said.
He said there wasn’t anything for the council to consider and it’s all been approved.
The partners in the project include the developer, Matthews LLC, South Bend; the City of Warsaw; Kosciusko County Community Foundation; and IEDC representing the state’s funding through Regional Cities.
Matthews is investing $20.55 million in the residential redevelopment, the private portion of the project; the city’s portion is $3.56 million, which is for street and underground utility reconstruction and expansion, the public plaza and park improvements; KCCF is providing a $150,000 donation for public art in the plaza; and state funding is $3.5 million.
“It’s a $27 million project, but again, essentially a 60-20-20 split. Sixty percent the private portion of it, 20 percent public and 20 percent state,” Thallemer said.
City Planner Jeremy Skinner later clarified that the developer Dave Matthews, is actually investing closer to 75 percent of the project costs.
When the developer came in and sat down with the city, he said the developer promised to come in and do the development but the city in return promised to put the road in and improve all the infrastructure.
“If you remember, back in 2015, we had one opportunity to do a (Tax Increment Finance) Revenue bond, the last opportunity we had. I think July 1 was the deadline in 2015. The state put an expiration date on the TIF district. And that actually was a stimulus to get the project going because had we not been able to do that, we wouldn’t have been able to do the project,” Thallemer said.
The city’s portion of the project will be repaid from TIF revenue generated by the TIF district and not property taxes, he stated.
“The land value is pretty much the balance of that investment,” Thallemer said. “The land value includes the park property, the Indiana American Water properties and then, we had three residential properties.”
Former Mayor Ernie Wiggins acquired 309 N. Buffalo in December 2009 because it became available. The city knew it was going to do something down at North Buffalo Street eventually and began acquiring properties as they became available. A Housing and Urban Development property was acquired for $40,000 in 2013, and 321 N. Buffalo St. was acquired in 2014.
“The three properties that we are contributing to the project are properties that we acquired,”?he said.
The North Buffalo Street project evolved over the years from a boulevard to moving the city hall down there to what it is today. “We wanted to move the borders of the downtown toward Center Lake shores. We knew we were going to do something on Buffalo Street so we acquired those properties.”
The other property the city acquired was the Indiana American Water Co. building in August 2013.
The land value the city put toward the project, including park property, is estimated at $1.06 million. The city also will have demolition and sewer costs at approximately $163,000. Thallemer said the infrastructure improvements down there needed to be made anyway.
“The impact of this entire project, when it’s completed, will be a little over half a million dollars a year in annual taxes. It’ll be property tax and sales tax revenue” for the city, he said. Depending on what kind of retail goes into the mixed-use building, five to 10 new jobs could be created.
The expected annual return on property taxes is $461,000 a year, with the expected sales tax from a restaurant at $55,000 a year. The city’s expected total return on the investment is $516,000 annually in taxes not including income tax.
Councilman Jack Wilhite asked what the next milestones for the project are. Skinner said a utility relocation meeting is planned for month’s end. After the engineering documents are finalized, the project will go out to bid for construction. Construction will begin in late spring or early summer.
In other business:
• Councilwoman Diane Quance reminded everyone the public informational hearing on the Husky Trail project is from 4:30 to 6:30 p.m. March 27 at Harrison Elementary School. The format will be like an open house where people can ask questions and look at timelines and maps.
“It’s an open format so, in the beginning it’ll just be me talking about the sequencing and the project itself. But after that, if you can’t make it at 4:30, or if anyone from the public can’t make it at 4:30, I’ll still certainly be there. The plans certainly will still be there,” Skinner said, adding that he can answer any questions during those two hours.
• The council, on second reading, approved an ordinance transferring $600,000 from capital outlays into professional services within the Northern Tax Increment Finance’s 2017 budget to cover a portion of the engineering services for the proposed sewage treatment plant expansion.
The ordinance was approved on first reading by the city council at its March 6 meeting and by the Redevelopment Commission.
On March 3, the Board of Public Works and Safety approved the engineering agreement for an amount not to exceed $1.39 million with Wessler Engineering.
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“Basically, I just wanted to talk a little bit about – have you guys understand – how the funding is working for the Buffalo Street project,” he said.
The city has been acquiring property for the project since 2009.
Thallemer told the council he wasn’t going to get into the details of the project itself – which includes housing, a plaza and a multi-use building in the 300 block of North Buffalo Street – but instead talk about how the funding and financing works.
“With the Regional Development Authority approving and then the Indiana Economic Development Corporation approving the final project, the numbers are pretty hard and fast now, and I wanted all of you to be aware of the numbers,” Thallemer said.
He said there wasn’t anything for the council to consider and it’s all been approved.
The partners in the project include the developer, Matthews LLC, South Bend; the City of Warsaw; Kosciusko County Community Foundation; and IEDC representing the state’s funding through Regional Cities.
Matthews is investing $20.55 million in the residential redevelopment, the private portion of the project; the city’s portion is $3.56 million, which is for street and underground utility reconstruction and expansion, the public plaza and park improvements; KCCF is providing a $150,000 donation for public art in the plaza; and state funding is $3.5 million.
“It’s a $27 million project, but again, essentially a 60-20-20 split. Sixty percent the private portion of it, 20 percent public and 20 percent state,” Thallemer said.
City Planner Jeremy Skinner later clarified that the developer Dave Matthews, is actually investing closer to 75 percent of the project costs.
When the developer came in and sat down with the city, he said the developer promised to come in and do the development but the city in return promised to put the road in and improve all the infrastructure.
“If you remember, back in 2015, we had one opportunity to do a (Tax Increment Finance) Revenue bond, the last opportunity we had. I think July 1 was the deadline in 2015. The state put an expiration date on the TIF district. And that actually was a stimulus to get the project going because had we not been able to do that, we wouldn’t have been able to do the project,” Thallemer said.
The city’s portion of the project will be repaid from TIF revenue generated by the TIF district and not property taxes, he stated.
“The land value is pretty much the balance of that investment,” Thallemer said. “The land value includes the park property, the Indiana American Water properties and then, we had three residential properties.”
Former Mayor Ernie Wiggins acquired 309 N. Buffalo in December 2009 because it became available. The city knew it was going to do something down at North Buffalo Street eventually and began acquiring properties as they became available. A Housing and Urban Development property was acquired for $40,000 in 2013, and 321 N. Buffalo St. was acquired in 2014.
“The three properties that we are contributing to the project are properties that we acquired,”?he said.
The North Buffalo Street project evolved over the years from a boulevard to moving the city hall down there to what it is today. “We wanted to move the borders of the downtown toward Center Lake shores. We knew we were going to do something on Buffalo Street so we acquired those properties.”
The other property the city acquired was the Indiana American Water Co. building in August 2013.
The land value the city put toward the project, including park property, is estimated at $1.06 million. The city also will have demolition and sewer costs at approximately $163,000. Thallemer said the infrastructure improvements down there needed to be made anyway.
“The impact of this entire project, when it’s completed, will be a little over half a million dollars a year in annual taxes. It’ll be property tax and sales tax revenue” for the city, he said. Depending on what kind of retail goes into the mixed-use building, five to 10 new jobs could be created.
The expected annual return on property taxes is $461,000 a year, with the expected sales tax from a restaurant at $55,000 a year. The city’s expected total return on the investment is $516,000 annually in taxes not including income tax.
Councilman Jack Wilhite asked what the next milestones for the project are. Skinner said a utility relocation meeting is planned for month’s end. After the engineering documents are finalized, the project will go out to bid for construction. Construction will begin in late spring or early summer.
In other business:
• Councilwoman Diane Quance reminded everyone the public informational hearing on the Husky Trail project is from 4:30 to 6:30 p.m. March 27 at Harrison Elementary School. The format will be like an open house where people can ask questions and look at timelines and maps.
“It’s an open format so, in the beginning it’ll just be me talking about the sequencing and the project itself. But after that, if you can’t make it at 4:30, or if anyone from the public can’t make it at 4:30, I’ll still certainly be there. The plans certainly will still be there,” Skinner said, adding that he can answer any questions during those two hours.
• The council, on second reading, approved an ordinance transferring $600,000 from capital outlays into professional services within the Northern Tax Increment Finance’s 2017 budget to cover a portion of the engineering services for the proposed sewage treatment plant expansion.
The ordinance was approved on first reading by the city council at its March 6 meeting and by the Redevelopment Commission.
On March 3, the Board of Public Works and Safety approved the engineering agreement for an amount not to exceed $1.39 million with Wessler Engineering.
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