Economic (Re)Development

The Solution

The Village engaged Ehlers to collaborate with its staff and legal counsel to:

• Create an Overlay TID District (blight TID)
• Draft a developer contract template (this was the third developer who attempted to make this site work)
• Assist in developer negotiations
• Conduct pro forma analysis

In completing this work, the Village identified the true financing gap and a calculated a reasonable rate of return for the developer, which allowed the project secure financing and move forward.

The Outcome

The development brought 73 market rate housing units, helping the community meet current and future housing needs; a 2,800 square-foot retail/office building development on main street; and upgrades to both water and sewer utilities in the area as well as street reconfiguration and improvements to better service the development and overall area. The environmental contamination on the site adjacent to the downtown was cleaned up.

The Solution

Village officials engaged Ehlers for debt issuance & management, financial management planning and economic development and redevelopment services. As the Village’s longtime advisor, Ehlers developed a plan of finance for the public improvements needed to support the new Foxconn facility, assisted in the negotiation of terms with Foxconn and advised on the issuance of debt. New revenues generated by the project will reimburse the Village for its infrastructure costs, while minimizing financial risk.

Ehlers prepared extensive modeling and sensitivity analysis. The statutory tool in Wisconsin for capturing future tax revenue is a Tax Incremental District (TID), which Ehlers created on behalf of the Village. We also advised on special legislation needed for successful project implementation.

Ehlers conducted an RFP process leading to selection of five underwriters to form the deal team for issuance by the Village and Racine County of approximately $375 million in obligations. To date, the Village has issued:

» $120 million Tax Increment Revenue Bonds with a State of Wisconsin Moral Obligation Pledge

» $83 million Sewer System Revenue Bond Anticipation Notes (Private Placement)

The Outcome

Initial site work and construction of a 96,000 sq. ft. multi-purpose building were completed in 2018. In 2019, construction commenced on a nearly 1 million sq. ft. advanced manufacturing facility with roof installation and weather-tight enclosure completed at year’s end. Manufacturing operations commenced in 2020. Also under construction is a nearly 260,000 sq. ft. Smart Manufacturing Center and High Performance Computing Data Center. Ehlers participation resulted in the:

» Passage of legislation providing additional flexibility for the Tax Incremental District and providing authority for assignment of the State’s Moral Obligation pledge as credit enhancement for a portion of the project debt.

» Approval of a Development Agreement providing substantial protections for the Village and its County & State partners including:

Project valuation guarantee of $1.4 billion
$60 million Foxconn cash contribution provided for land acquisition
Village retains ownership of land acquired for project until actual development occurs
Consent to levy of special assessments to recover all debt service costs for additional land acquired
» Successful creation of the Tax Incremental District – the largest in the history of Wisconsin, encompassing 6.5 sq. miles

» Development & successful execution of all initial phases of the financing plan

The Solution

The Village engaged Ehlers for Economic Development & Redevelopment Services. Ehlers created Tax Incremental Finance District (TID) 1 for the 170-acre Bristol Business Park and TID 2 with 69 acres for the Bristol Highlands Commerce Center. The original TID project plans identified $31.4 million in infrastructure improvements reimbursed on a pay-as-you-go basis with revenues generated from the TIDs. While both developments stood to benefit from the infrastructure, it was initially unclear which development would advance first, creating a very fluid situation. The other taxing jurisdictions, represented through the Joint Review Board, trusted the Village to implement the financing plan despite the unknowns, granting approvals of each TID with unanimous support.

Ehlers conducted Economic Feasibility Studies to identify project costs and determine when tax incremental revenues would recover those costs. This analysis was incorporated into the project plans Ehlers prepared for creating the TIDs. Annually, Ehlers provides TID reporting services for the Village and continues to adjust repayment schedules based on the actual costs paid by each developer subject to terms specified in developer agreements.

The Outcome

Both Bristol Business Park and Bristol Highlands Commerce Center drew strong interest from industrial users early in the development process. As a result, both developers bought more land and Ehlers amended both TIDs in 2022 to include that new property and increased eligible TID expenditures by a combined $17,550,000.

Today, Bristol Business Park comprises more than 200 acres. When completed, it is projected to include more than 3 million square feet of warehouse and manufacturing space. Three completed buildings are occupied, with two more spec warehouses under construction. The remaining lots are future build-to-suit sites.

Bristol Highlands Commerce Center, when fully built out, is projected to have 2.6 million square feet of industrial space in six buildings across 154 acres. Early tenants include HARIBO, the gummi confectioner, and Visual Pak Companies, a contract packaging and manufacturing entity.

As of January 1, 2023, the TIDs generated more than $270 million in new taxable value for the Village. The full equalized value of the expanded TIDs will be realized over the next several years as development continues.