commercial enterprises to the area, Washington County officials
arranged to subsidize a potential development project in Germantown,
negotiating an agreement with representatives from Briggs &
Stratton, Zilber Property Group and village leaders.
approved by members of the County Board of Supervisors after a
private meeting on July 11, is an intergovernmental agreement
between officials from the county and the village of Germantown.
permits county officials to underwrite a loan for $1 million develop
a business park within the village. The low-interest loan will be
offered to Briggs & Stratton executives, to generate the
construction of a building they will use.
still negotiating the final terms, but staff from Economic
Development Washington County have proposed a 15year term with an
interest rate that is about 0.75 percent of the prime rate published
by the Wall Street Journal, which would be about 3.75 percent.
However, the actual rate will be determined by the perceived risks
of providing the company with money.
As part of the
agreement, staff and board members from EDWC will provide the loan
payment to company officers, who will use the dollars to make lease
payments to representatives from Zilber as repayment for
constructing the 700,000 square-foot warehouse and distribution
center that Briggs & Stratton staff will occupy.
would use the space as a distribution center for its engines and
products and would be in addition to its existing service and parts
distribution center in Menomonee Falls,” said Lauren Vagnini, the
corporate communications manager from Briggs & Stratton Corp.
EDWC will offer
the loan to the company instead of the developer.
“One of our
outstanding principles is that we don’t incentivize prospective
development, we incentivize the end users who are creating the
jobs,” said Christian Tscheschlok, executive director of Economic
Development Washington County. “In this case it is Briggs &
representatives will be responsible for the loan until they satisfy
requirements laid out in an agreement that has yet to be finalized
between themselves and county officials. Once the requirements have
been completed, repayment of the loan will come from the tax
incremental finance district that is managed by village leaders, so
they will be making the formal payment to county officials from
property taxes derived from the district.
“What I want to
point out is, where is the money for the tax incremental financing
district coming from?” Tscheschlok said. “It is coming from Briggs
and the developer because Briggs is paying Zilber who is paying into
the tax incremental financing district. It is that tax incremental
financing district that is being funded through property taxes by
this development that is making the payment on this note.”
previous reporting by the Daily News, village officials had been
discussing the proposed development on the 150-acre property for
several months. The site is east of Interstate 41, west of
Goldendale Road, north of Holy Hill Road and south of Rockfield
“Zilber came in
and said, ‘we would like to develop a business park in this Holy
Hill area, but in order to make that happen we need access to sewer
and water,’” village of Germantown Administrator Steve Kreklow said.
“This was in the village’s long-term plans to have this type of
development up there, so we saw this as an opportunity to finance
the extension of sewer and water to that area.”
they will also make improvements to Holy Hill Road. Total expenses
for the improvements will cost village leaders about $7.8 million.
They plan to subsidize the cost of those improvements from
additional property tax revenue they will receive from the creation
of the financing district — their eighth.
districts are development tools that municipal officials can use.
They will pay for the upfront cost of developing an area from the
incremental property tax money collected because of increased land
When a financing
district is created, the land is valued at a specific amount known
as the base value. Property taxes generated from the base value are
shared among the various taxing jurisdictions, from the county to
the school district.
developers enhance the location, such as constructing buildings for
commercial space, the value of the land will increase.
Theoretically, the increasing land values should generate additional
property tax revenues. It is those revenues, the increment, that
village officials will use to pay for improvements they made since
those dollars are not disbursed to the other taxing jurisdictions.
they have modeled the future value of the district, along with the
incremental taxes they expect to collect — supposing that
development continues as planned.
In the 20-year
life of the district, officials estimate an $88 million increase in
the value of the properties, which they expect to generate an
additional $22 million in future tax revenues.
The risk is that
village officials, along with their financial consultants,
miscalculated the amount of development that will occur at the site,
potentially reducing the land value and the corresponding taxes that
could be collected. In that case, the incremental taxes may not be
sufficient to repay the loan and the associated interest.
would be the risk but what we were able to negotiate into the
developer’s agreement with Zilber, is they are guaranteeing enough
of the incremental development to pay for the debt service,” Kreklow
Of the $88
million increase in property values, Zilber representatives are
promising to construct two buildings that will add about $33 million
of additional value to the district, generating enough in taxes to
repay the loan.
According to the
development assumptions from the project plan, an additional
building will enhance the district by more than $10 million and
future development comprises the rest to reach the $88 million-mark.
project’s potential impact, all parties believed the potential
advantages outweighed the potential threats.
“It is right in
line with all of the revolving loan funds that we administer and
execute,” County Administrator Joshua Schoemann said.
The loan from
the county was the catalyst needed to begin the chain reaction that
would create synergies for everyone involved with the project. The
loan was enough to entice Briggs & Stratton executives to locate to
Germantown. That decision would generate the lease payments to
Zilber to make developing the area a profitable venture. That choice
was sufficient reason for village officials to make improvements,
which opens the possibility for other development in the future.
<<EARLIER: Briggs and Stratton could anchor first phase of G’town