Divided Port council agrees to TIF funding for downtown apartments

Port Washington aldermen last week voted 5-2 to approve $2.6 million in tax incremental financing for Pier Street Landing, a 51-unit apartment building  that also contains two commercial spaces planned for downtown.

Aldermen Pat Tearney and Mike Gasper voted against the funding, part of a developer’s agreement with developer Haley Dobre, owner of the Boerner Mercantile Building on Franklin Street who wants to use a parking lot she owns between Washington and Pier streets for the four-story apartment building.

Aldermen voted on the agreement following a closed session.

Tearney said Tuesday that although he likes the project, he’s not a big fan of TIF funding and believes it’s time for the city to pay off these districts instead of expanding them.

“This is a hard one,” he said. “I like the project. It’s a local developer. It enhances downtown. It provides housing that we need.

“But it’s a pretty big chunk of money, and I’m just not sure this is the right time for the city to do more (TIF projects).”

Pier Street Landing is within the city’s downtown TIF district, which had been projected to close in 2031. Adding funding for this project will extend the closing date by about one year, Finance Director Mark Emanuelson said.

Ald. Jonathan Pleitner said Tuesday that the fact the project will take an underused, private parking lot and convert it to much needed housing are among the reasons he supported the financing.

The funding will offset the cost of underground parking and burying utilities, he said, aspects of the project that would otherwise make it cost prohibitive.

“I think this fits with downtown,” Pleitner said. “It fits with what we’re trying to do, to bring more people downtown and keep it vibrant.”

The project also creates housing that isn’t already found in downtown, he said, adding it “taps a different segment of the market.”

Pleitner noted that the financing is structured to put the risk on the developer, not the city.

“It’s really low risk,” he said. “And it takes an unused parking lot and creates life with it.”

The pay-as-you-go TIF project calls for Dobre to borrow the money and pay the upfront costs of the project and be repaid through the increased taxes on her property. 

In a TIF district, the properties within the district continue to increase in value and are charged property taxes commensurate with that increase, but taxing entities such as cities, counties and school districts only receive the same amount of taxes they did when the district was created.

Any additional tax revenue generated by the development, called increment, is to be used to pay for infrastructure and similar amenities within the district. Once the costs are repaid, the TIF district is dissolved and the entire value of the property is added to the tax rolls.

Officials said in January that taxes on the property would increase from the $1,600 paid today to an estimated $266,950 in 2032, when the TIF is closed.

Ald. Dan Benning said the project “is needed and makes sense.”

“I think she (Dobre) has done a really good job of bringing a unique building concept in,” he said. “She took our feedback in designing it. I think this is what we need to give us a balance of housing options. I think this will be a good fit in that area.”

The fact that the TIF district will close earlier than originally forecast, even with funding for the Landing added to it, was important, Benning added.

“That’s what made me more comfortable with this,” he said.

The developer’s agreement calls for Dobre to begin work on the project by Oct. 1 and substantially complete it by Dec. 31, 2027.

The document notes that the city expects the assessed value of the property will increase to $19.6 million by the beginning of 2028.

The TIF funding cannot total more than 15% of the assessed value of the project as of that date, the agreement states. 

The developer’s agreement also restricts Dobre from converting the apartments into condominiums for 20 years or whenever she fulfills the financial obligations outlined in the agreement.

Dobre told aldermen in January that her project will help the city realize its vision for downtown.

“The spirit of TIF (district) 2 was to bring development to downtown Port Washington,” she said, noting the parking lot she’s building on has been slated for mixed-use development in the downtown plan. 

TIF funding is needed for the project, she said.

“We need a little help,” she said. “We can only do this with the TIF assistance.”

Dobre said at the time that she planned to begin construction of Pier Street Landing in June, with completion of the project scheduled for next year.