BRIEF HISTORY
In 2017, the Village approached the Racine Unified School District to ask that the empty Wind Point School be re-purposed or demolished. The building was deteriorating and was attracting vandals. In response, the school district approached Newport Development and offered to transfer ownership of the property in exchange for demolition. The developer took possession in 2018, and shortly thereafter demolished the building. Some of the debris from demolition has been piled on the property since that time awaiting use for planned construction.
ZONING
In August 2020, the Village Board approved the rezoning of the former Wind Point School property to R-4 (multi-family use). The Board’s action required the developer to begin construction on infrastructure (sewers, water mains, roads, etc.) within one year of the approval. The need to examine alternative approaches for the sanitary sewer service and the stormwater retention pond has delayed work on the site. The Board has since approved two requested extensions to the R-4 zoning permit, the last one in February 2023, extending the R-4 zoning until February 2025. It should be noted that if the R-4 zoning expires, it would revert to Institutional zoning, which could possibly result in a different project or use that would be exempt from property taxes.
FINANCING OF THE PROJECT
On November 15, 2022, the developer presented a formal request to the Village’s Personnel, Finance and Insurance Committee. The developer was requesting $350,000 toward the expected $725,000 cost of the stormwater retention pond. The developer claimed that the property is taking on stormwater from the surrounding properties (both inside and outside the Village limits) and as a consequence, the stormwater pond would have to be much bigger and more costly than the developer originally anticipated. The developer proposed financing through a loan from the developer at 5% interest. Principal and interest would be repaid using future property tax revenues from the new housing. The developer also offered to fund the cost of an analysis by a firm (Ehlers and Associates) with expertise in public financing. Ehlers would determine whether the request is warranted and feasible. Ehlers would analyze whether the project could go forward “but for” the provision of a subsidy from the Village. The report also would include various financing options aside from a loan from the developer. The Committee voted to forward the matter for determination by the Village Board.
At its December 2022 meeting, the Village Board discussed the developer’s request. The Board determined that a request should be made to the developer to permanently extend the R-4 zoning, and if this is agreed to, the Village would go forward with the financial analysis.
On January 16, 2023, Newport responded to the Village Administrator with a request to extend the zoning for only one year, preferring that the financial analysis be completed before extending the zoning for a longer period or permanently.
At the February 9, 2023 Board meeting, the developer stated that without the requested Village financing, he would not move forward to seek approval from the Village of Caledonia for a gravity fed sewer system, nor would he work to obtain the necessary easements for this sewer line that would travel north to Four Mile Road. After an earlier decision to extend the R-4 zoning until February 2025, the Board went into closed session to discuss the financing request. Upon returning to open session, the Board voted to move forward with the financial analysis, but asked the Administrator to first make sure the Village could still refuse to provide funding, even if the project met the “but for” test.
At the March 9, 2023 Board meeting, the Village Administrator reported that Ehlers’ initial response was that financing would have to be provided through Tax Incentive Financing, rather than through a loan from the developer. Ehlers also confirmed that the Village could refuse to move forward with the funding request, even if Ehlers determines the request meets the “but for” test.
At this same March meeting, the Village President raised several concerns.
- It is doubtful that residents would support Tax Incenting Financing (TIF) for this project and forego future property taxes from this development for an unknown number of years to pay back the principal and interest.
- The developer never presented the need for funding from the Village at any of the Plan Commission, Architectural Review Board or Village Board meetings that were held over the previous several years to consider and approve this project.
- The project has been pending since 2018, yet the developer has not secured approval from Caledonia for the sanitary sewer infrastructure, nor has the developer secured the needed easements for the sanitary sewer system.
- The serious issues that have impeded progress raise the question of whether the development can be completed as proposed.
- The debris from the 2018 school demolition remains at the property and continues to present an eyesore to neighbors.
The Village President put forward a motion to discontinue the request to Ehlers for the analysis; however, when it became clear that the motion would not pass, the President withdrew the motion. The President then moved to continue the request to Ehlers to conduct the financial analysis of Tax Incentive Financing to offset the construction costs of the pond. However, upon completion of the Ehlers’ analysis, and if the project meets the “but for” test, a public hearing must be held on the matter of a TIF before it could be initiated. The motion passed unanimously.
Lastly, it is important to point out that any and all work that is being done by or for the Village on this project is being charged back to Newport Development. This includes work performed by the village attorney and village engineer, costs related to site inspections, staff time spent on the project, and, if approved, the full cost of any financial analysis performed by Ehlers.
