Watertown council reviews options for city-owned 111 South Water Street; no sale approved

City staff presented the history and options for 111 South Water Street on Aug. 5, asking the council to give direction on whether to market, sell or retain the city-owned parcel. The site, about three-quarters of an acre, is owned by the City of Watertown and zoned Central Business with a Future Land Use designation of Central Mixed Use, staff said. A Phase I environmental site assessment completed in 2017 identified contamination issues tied to the property’s past uses; staff said the Wisconsin Department of Natural Resources has been engaged on those concerns. Why it matters: the property abuts Benson Family Town Square and the riverfront. Council members said the parcel’s appearance and unresolved seawall maintenance are concerns for downtown development and for completion of the Riverwalk, a goal identified in the city comprehensive plan and the RDA’s Rock River District vision plan. Staff recapped prior efforts: the city created Tax Incremental District (TID) No. 8 in 2021 to support development on the parcel, and an earlier development agreement lapsed after extensions when a private developer did not break ground. Staff said three different private developers attempted projects; one December 2023 request for proposals returned a single response and that developer no longer exists. Intrepid Investments had investigated the parcel and a nearby parking lot but withdrew; staff said Intrepid would be worth re-contacting if the council wished. Council members outlined options and concerns. Alderman Arnett said large-scale residential or a hotel “is not going to work out” given the site’s size and parking constraints and argued the city should pursue small-scale commercial uses that take advantage of the riverfront: “we start with the type of business that makes sense for that location.” Alderman Smith argued for selling the parcel to return it to the tax rolls: “allow the free market to operate… sell this site as is.” Alderman Berg urged a smaller public-oriented reuse, such as an extension of Benson Family Town Square, a modest restroom, or an outdoor market to complement downtown businesses and the library, noting concerns about subsidizing expensive residential projects. Staff described implementation constraints: seawall deterioration (Public Works Director Andrew Bayer provided the assessment), high construction and parking costs that likely require TIF or Pay-As-You-Go (PAYGo) assistance, and the DNR environmental issues that would need resolution before construction. Staff noted TID No. 8 currently has fund balance capacity; TID No. 5 overlays remain but new increment in the overlay area would go to TID No. 8. Financial and procedural details cited in the meeting: the parcel is about three-quarters of an acre; staff estimated a rough market value “somewhere, 200,000” (staff comment); the city’s RDA has a revolving loan fund with approximately $120,000 available; staff noted a 2017 Phase I environmental assessment and DNR conversations. Outcome and next steps: no formal motion or vote was taken. Staff requested direction; council members expressed a range of preferences (sell as-is, pursue a private-sector riverfront business, or retain for a public use). Staff recommended re-contacting Intrepid Investments if council wanted to market the site, and suggested a certified survey map to split off the Riverwalk area so the city could retain riverfront control if the parcel were sold. Ending: The council left the matter open for future direction from the mayor and staff; members asked that the RDA remain involved as appropriate.