KPW Phase 2 Map, May 2020

Council approved $3 million in TIF funding for Kettle Park West, Phase 2 on Tuesday, May 12.

A residential subdivision on the city’s west side is getting up to $3 million in taxpayer funding – including about $100,000 to pay for wetland restoration.

By a vote of 9-2, the Stoughton City Council approved a developer agreement with Forward Development Group for Phase 2 of Kettle Park West 7 at its Tuesday, May 12, meeting. The deal culminates about four years of negotiation between the city and developer, who had been at odds over several issues in that time, including additional access points on Hwy. 138 and U.S. Hwy. 51 and assurances for the city that those road improvements would happen.

The approved TIF agreement, which outlines the financial obligations of the TIF, must complete Oak Opening Drive intersection before it sells, conveys or develops any single family homes in Lot 1, on the development’s south side.

The tax-increment financing in the agreement, from TIF District No. 7, will allow the 80-acre project to move forward with its planned 195 housing units and a 10-acre park. It allows a portion of that money to go toward restoring the wetland area behind the Walmart Supercenter, which anchors the 32-acre commercial development to the east known as KPW Phase 1.

The agreement states that FDG also cannot interfere with the City’s wetland maintenance, including herbicide applications, seeding and plug planting, installation of wildlife deterrents and prescribed burns, over a five-year period.

Alds. Ben Heili (D-4) and Phil Caravello (D-2) voted against the TIF agreement, and Ald. Tom Majewski (D-3) was absent.

Heili said he has been against this decision since the fall because this type of development is a long-term toxicity to humans and animals in the region.

“I don’t think it is in the city’s interest or the planet’s interest to be doing a public subsidy of the primarily single family development,” Heili said.

TIF is a financial tool used by municipalities to incentivize economic development by pooling

increased taxes on that development among the overlying taxing jurisdictions, including the school district and county. Cities can take out bonds for immediate improvements and pay them back using the district funds or can provide what’s known as pay-as-you-go, or paygo, funding, essentially rebating the developer as money comes in and eliminating the city’s risk.

All of the TIF in the Phase 2 deal is paygo, finance director Jamin Friedl previously told the Hub, unlike much of the funding in Phase 1, which included more than $3 million in improvements to the U.S. 51-Hwy. 138 intersection.

Phase 2 funding will be used to complete projects in the development such as alleys, trails, interior streets, extensions of existing streets and facilities for managing stormwater runoff, according to the master development agreement, which outlines the building obligations of FDG.

FDG has been working with the city on the KPW development since 2009, and the first phase was the subject of many contentious votes and even an citizen-sponsored advisory referendum, in which a majority of voters opposed both taxpayer financing and the development itself.

Walmart opened in 2017, and by then, FDG was already working on its second phase, which started with a hotel and senior housing.

It initially requested $5.6 million for the rest of Phase 2 in 2016, but alders were uncomfortable with that amount then. FDG sought to lower its TIF request by eliminating apartments from its plans for Phase 2, which took up a “significant amount of space,” FDG representative Ron Henshue said at a Sept. 24, 2019, council meeting.

In July, it formally requested $3 million.

They city and FDG also were at odds over providing direct access to 138. At one point, alders told the developer it would not even discuss the subdivision further until the developer got the state to sign off on a waiver allowing the extension of Oak Opening Drive to 138.

In December 2018, DOT project development chief Michael Hoelker told the Hub the agency had agreed to the intersection. The agency initially had safety concerns with the number of access points between Hwy. 51 and Starr School Road just west in the Town of Rutland.

Under TIF agreement, funds would first go toward paying off city administrative costs, which is $5,000 a year; then wetland restoration; then $4 million the City borrowed for Phase 1 TIF agreement; a $550,000 developer incentive; then borrowing incurred for the Oak Opening Drive and Deer Point Drive; the city’s financial obligation for Phase 2; the city’s construction of the Jackson Street and the extension of a water main along Hwy. 138; all remaining increments will be used by the city at its discretion.

The TIF agreement ends in 2035.

The $98,000 figure for the wetlands comes from Ald. Regina Hirsch (Dist. 3), who worked with Cottage Grove-based consulting firm Stantec to determine that a five-year restoration of the wetlands would cost around that much.

“It will enhance the Kettle Park West development once you have some cool birds coming in — it will be a really cool site,” she said.

Contact Mackenzie Krumme at mackenzie.krumme@wcinet.com.