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November 15, 2019

11/7/2019 7:30:00 AM
City Council considering creating Redevelopment Authority
ABX expansion proposal takes shape

Heather Schaefer
Associate Editor

The Rhinelander Common Council is considering hiring the Madison-based community impact consulting firm Redevelopment Resources to help city leaders through the process of establishing a Redevelopment Authority and amending the city's tax incremental financing districts.

Generally, the purpose of a Redevelopment Authority is to eliminate conditions that inhibit neighborhood reinvestment while also encouraging business and housing development.

According to the Department of Revenue, tax incremental financing allows a municipality to fund infrastructure and other improvements, through property tax revenue of newly developed property. A municipality identifies an area, the Tax Incremental District (TID), as appropriate for a certain type of development. The municipality identifies projects to encourage and facilitate the desired development. Then as property values rise, the municipality uses the property tax paid on that development to pay for the projects. After the project costs are paid, the municipality closes the TID. The municipality, schools, county, and technical college are able to levy taxes on the value of the new development.

Rhinelander currently has 6 active TIDs, including one environmental district, all of which are scheduled to close between 2025 and 2040.

According to city administrator Daniel Guild, the city would have to amend its TID project plan if it wishes to grant a request from ABX (Advanced Barrier Extrusions) for $1 million in public sector money to complete an expansion project.

ABX cofounder Steve Pawelko outlined the project, which involves increasing the company's output by 50 percent, during an Oct. 21 city budget workshop.

"I do want to announce that ABX is looking at expanding in our community," Pawelko said. "Obviously, we need some support to accomplish that. I want to give you an overview of who we are and what we do."

Pawelko is one of three individuals who founded the company, which produces high technology films for food, medical and industrial packaging, in 2005.

ABX now employs 64 people and has a $5 million payroll, Pawelko said.

"The expansion that we're looking at is basically increasing our output by 50 percent," he continued. "What we're looking at, if everything goes well and I think it will, I'm being conservative with these numbers, in four years after we do the expansion adding another 16 people, moving payroll from $5 million today dollars to $6 million today dollars."

To increase capacity, the company is looking to add a piece of equipment called a slitter, according documents submitted to the city.

"The project is to prepare the site for expansion by removing a significant amount of dirt, install additional building space and install another cast line and eventually a slitter for volume growth," the documents state.

Due to the complexity of the various steps necessary to make changes to the city's tax incremental districts, Guild suggested Redevelopment Resources could provide city officials with valuable assistance.

"Redevelopment Resources has a very extensive resume," he said. "They are well known to our regional economic development director. They have personal ties to the city of Rhinelander which is something I thought was important to folks here."

Guild made his initial recommendation during the council's Oct. 28 meeting. After the administrator finished speaking, alderman Steve Sauer immediately made a motion to direct staff to bring in Redevelopment Resources to present options regarding potential amendments to the city's tax incremental districts.

"I absolutely think that we need to get back on our TIF game," Sauer said.

Alderman Lee Emmer then shared the results of his study of the districts.

"I did review (the districts) today and it turns out TID 6 still owes $900,000," he said. "And the problem with TID 6 is it was created in 2002, Jan. 1, 2002, and the date to incur project costs in that TID is September 2020 which is next year. I question if we could get a TID amendment in place, joint review board done, everything else in place, because you'd have to do construction next summer and that means the plan, construction plan, would have to be done, because you can't spend money after that."

Guild responded by noting that ABX officials have indicated the company may relocate to another community that can better meet its needs in the event a deal cannot be reached.

"We either pursue the investigation and try to do our due diligence on behalf of ABX's request or we politely demur and say 'I'm sorry ABX, we're just not in a position to support your project,'" Guild said.

The council then voted unanimously to direct staff to ask Redevelopment Resources representatives to conduct a presentation on the districts as well as its services.

Kristen Fish-Peterson and Patrick Cannon of Redevelopment Resources gave that presentation Monday, however it took place during an open work session rather than a City Council meeting.

The council's planned budget workshop was canceled as a result of a lack of a quorum, however Guild chose to hold what he characterized as a "staff work session" on the budget instead. Mayor Chris Frederickson and alderman Emmer were the only elected officials who attended the entire session. Two other aldermen, Tom Kelly and Steve Sauer, attended at least part of the meeting, which also included 2020 budget presentations from the parks department, police department and Fire/EMS department.

Fish-Peterson outlined her findings following the firm's study of the districts.

"Your situation is actually quite positive," she said. "You have a couple of districts, the two newest districts are very lucrative, very positive. They have positive cash increments that could be invested in other areas of the community."

"What would be great about creating a Redevelopment Authority is that it could have a strategy for redevelopment projects in Rhinelander," she added.

Fish-Peterson also touted the firm's extensive history of assisting other communities including Wausau and Watertown.

"We are unique consultants in that we've actually done this work," she said. "We've bought buildings, we filled them with tenants, we've sold buildings, we've marketed vacant stores as hard as we possibly can. We don't just tell you what to do, we've actually done the work so we know how to do it."

Costs to the city are dependent on whether the council chooses to contract with the firm just to help launch the Redevelopment Authority or if it chooses to hire the firm to also act as executive director of the Redevelopment Authority after the launch.

The council is expected to vote on the firm's proposal in an upcoming meeting.

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