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Trustees cautious about development proposal

Concerns voiced about amount of existing office space

Nov. 22, 2011

Village of Sussex - Village trustees say they want more information, and the village board should move cautiously, before deciding whether to provide real estate tax incentives to the developers of a proposed business park to be located on the former Meissner family farm located near Highways VV (Silver Spring Road) and 164, behind the Kohl's/Shopko retail complex.

Executives with NAI/MLG have said it would be necessary for the village to create a tax increment financing (TIF) district on the site in order for the project to be financially viable.

Real estate tax revenues generated within the TIF district would be set aside to help pay for municipal improvements such as sewer, water and storm water control facilities and streets and sidewalks.

The tax dollars set aside for those projects would be repaid to the village, schools, and other units of local government through future taxes generated from a larger tax base in the region because of the new development.

The construction of municipal improvements is among the largest costs that a developer encounters with a new development and often takes years to recoup, according to Andy Bruce, executive vice president of NAI/MLG.

The developers are in the process of purchasing the approximately 380-acre site from Johnson Bank which took possession of the land from Bielinski Development that had originally purchased it for residential development.

Approximately 75 acres of the land is in the Town of Lisbon and is not part of the development proposal being considered for the Village of Sussex, according to NAI/MLG officials.

J. Michael Mooney, NAI/MLG Board Chairman, said he has been doing business with the village for more than 30 years including three other business parks and is "very confident" that the development will generate enough tax revenue in the future to repay the village's investment.

He said new businesses would be attracted to the park because of the relatively low real estate tax rates in the community, its access to major highways, economic diversity and its ability to provide housing for both corporate executives and blue-collar workers.

"I have dealt with a number of different village presidents and village boards through the years and the village administration has always been responsible and rational," he added.

But one of the newest appointed members of the Village Board, Bob Zarzynski, Vice President of Business Bank, with M&I Bank, now part of the BMO Harris Financial group, said he needs more information.

"We have just closed out one TIF district and I think we need more information before we decide to open another one," he said.

Zarzynski said he also needed additional information before deciding whether he agreed with three other village trustees, all who said the village should proceed "cautiously" before making a decision.

Trustee Pat Tetzlaff also has concerns.

"I know to the staff this may look like a home run and everyone likes to hit a home run, but we also have to be careful not to strike out. The village is in pretty good shape financially despite the recession and I want to make sure we stay that way as the economy improves," said Tetzlaff.

Trustee Jim Batzko is a City of Delafield police officer who has observed there appears to be a large inventory of vacant commercial and retail office space in the region including in the downtown Delafield business district and the Village Square shopping center at highways 16 and 83.

While acknowledging the potential benefits of a new development in a TIF district, Batzko said he was concerned whether the project could generate enough revenue to pay back the village's investment considering the large inventory of commercial and retail space in the region.

Trustee Tim Dietrich, a truck driver, has also noticed a lot of commercial office space vacancies in his travels throughout the region and is concerned whether another office park can generate enough revenues to repay the village.

"I know the way it is supposed to work is that when an established business moves into a new office park, newer businesses are supposed to move into where the established business moved out of, but it just doesn't look like it is working that way," he said.

However, Moody and Bruce noted that are only a few parcels of land remaining in the office parks they have built in Sussex and they anticipate a future demand for the space because the village is attractive to businesses.

"When you get a client who is looking to expand their space, they are often already two or three years behind in what they need and they want something as soon as possible," Moody explained.

He added that company's goal is to have a new office park with sewer, water, and easy access to highways available as soon as the new clients need the space.

Bruce said he anticipated executives from the company would meet with village board members for the first time at a village board meeting in January.

Bruce said village officials would have to determine whether they want to consider creating the TIF district before, or after, the Plan Commission begins consideration of a more detailed proposal.

The concepts of the development were outlined to the Village Board by staff during a closed session two weeks ago.

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