Beaver Dam hotel incentive OK’d by committee
Beaver Dam is expanding how it uses a common economic development tool as it acts to draw a new hotel to the city.
The city’s community development committee recommended Tuesday a proposed agreement to offer $700,000 in tax-increment finance funds to the developers of a Holiday Inn Express on the north side of Beaver Dam near Industrial Drive and Highway 151. The hotel is in a new tax-increment financing district in and around the mall, which allows the city to offer incentives to developers to attract them to the area. The proposal has to be approved by the Common Council.
The TIF district was created in an attempt to combat blight in the Heritage Village Shops mall area. With a TIF district, the city pays for financial incentives with higher tax revenue that will come in the future from the increased property value of redevelopment, including the hotel. Officials see the hotel as a way to address a perceived need for more room capacity for business, athletic tournaments and more.
“Traditionally, we’ve only incentivized manufacturing-type,” said Robert Ballweg, who is on the committee. “There seemed to be a disinterest in incentivizing anything other than that. That being said, I think we need to make the leap, which effectively we’re doing now, to incentivize other business-type ventures and retail if we deem a need and if there’s a need for it. Other municipalities are doing the same thing.”
A new apartment building is also going to be built the area, though the developers did not seek incentives for that. Mayor Becky Glewen said the plan in the near future is to use new revenue for road improvements and parking lot improvements to help the mall, which lost its Boston Store a few months ago.
“My experience is, something like a hotel development and putting some money into trying to avoid blight with the mall, we likely will not have to incentivize any other retail,” said Phil Fritsche, committee member and president of the Beaver Dam Chamber of Commerce. “There will probably be more restaurants that will want to come because of the growth and they’ll be happy to come because the population will be there, the captive market so to speak. It would be my hope that we won’t have to incentivize any of these things further.”
In this case, the city would not hand out the $700,000 until and unless the project is done in April 2020. The Holiday Inn Express will be near the existing AmericInn, 325 Seippel Blvd.
The $700,000 is 10 percent of the $7 million the developers would guarantee the hotel will add in taxable value. If the value ends up being less, the developers will make up the difference in property taxes.
The partnership to develop the Holiday Inn Express includes Kinseth Hospitality, based in North Liberty, Iowa; Ben Westra, the president of JCW Development and WDS Construction; and Rick Kiolbasa and Bob Welstead, who have both worked with Kinseth to develop hotels in the Omaha area.
The current base value of the properties in the mall TIF district is about $6 million, bringing in about $150,000 a year in property taxes. Until the district closes, new revenue from property taxes as development continues would go to paying for costs and debts for the TIF districts instead of going to education and public services as they normally would.
The district is expected to add over $27 million in new property value through its 20-year lifespan while bringing in an extra $675,000 a year in tax revenue by the end.
The committee also discussed the possibility of expanding another TIF district that has existed for a few years and covers an area including the Beaver Dam Lofts and the senior apartment complex on Madison Street. Under the idea, the district would be expanded further to cover downtown.
Glewen said, in her conversations with other officials involved in the city’s economic development, expanding the TIF into a more established area would not produce enough new revenue or projects to pursue it. Ballweg said it could be a good way to fund for future improvements downtown, instead of putting it on the general tax roll with capital borrowing like the council did with this year’s round of spending.
The committee decided let conversations continue on the idea.