Consultants outline funding options, $6 million gap for proposed Germantown TID; village borrowing would raise homeowner costs

Phil Costant, a consultant with Eller's, told the Germantown Plan Commission that consultants had prepared answers to five questions raised at the March 31 public hearing on a proposed tax-increment district and project plan and outlined options for commissioners: approve the plan as drafted, not pass the resolution (which would stop the process), or modify the plan or district boundaries before referring it to the Village Board.

The project plan identifies parcels for redevelopment and shows how consultants calculated that roughly 51–52% of property within the proposed district meet the plan’s administrative standard for “in need of rehab or conservation”; wetlands were excluded from that calculation. Costant said the district could remain in place for up to 27 years and that the plan uses a conservative 2% annual property appreciation assumption for TID revenue projections, explaining that the village’s 27-year average growth is about 2.4% (the last decade averaged about 3.98%).

Why it matters: the consultants identified approximately a $6,000,000 gap in funding for early phases of the plan. Costant said the village previously approved purchasing properties with an assessed value of about $7,700,000 and warned that if the TID is not created the village would need to borrow to pay for those acquisitions. Using a Zillow average home value for Germantown of about $415,000, the consultants presented an illustrative homeowner impact of roughly $62 annually and about $1,237 over a 20-year bond for the village debt service if those costs were borne directly through borrowing.

Key assumptions and methodology: Costant said consultants excluded wetlands from the “in need” parcel calculation and treated the determination of rehab/conservation need as an administrative finding consistent with statute rather than a legal adjudication. On tax-rate assumptions, the consultants used a declining equalized tax rate in the model because they said, historically across Wisconsin, equalized tax rates have tended to decline as property values rise while levy limits restrict local budget growth; they described that approach as more conservative than assuming a flat tax rate over the district’s life and said using a flat rate could overstate TID revenue.

Funding gap options: Costant listed several potential ways to close the roughly $6 million shortfall: developer contributions or lower sale prices to developers; state brownfield grants via the Wisconsin Department of Natural Resources for cleanup costs; the WEDC “Vibrant Spaces” program for community gathering spaces; grant programs at Washington County; levy support through the village debt service levy; revenue sharing from other successful Germantown TIDs; and future redevelopment of parcels north and northwest of Mequon Road (though revenues from those parcels are not included in the Phase 1 and Phase 2 projections). Costant said consultants did not assume any revenue from parcels beyond Phase 2 in the plan’s current financial model.

Discussion, timing and next steps: Costant said because the Plan Commission already held a public hearing, state notice timing does not require waiting two weeks before the Village Board acts; the plan could be forwarded to the Village Board as soon as next week or on May 5. He reiterated commissioners’ procedural options: approve the project plan as prepared, decline to pass the resolution (which halts the current process), or modify the plan and/or boundaries before referral. Costant summarized the five items addressed in the consultant presentation and said the materials and parcel-level detail appear on page 12 of the project plan.

The presentation referenced recent years’ higher property-value growth (examples shown as recent annual rates of about 9%, 7% and nearly 5%) but used the longer-term averages in revenue modeling. Costant cautioned that some inputs—such as possible land sale prices to developers—were unknown and were therefore excluded from the base-case fiscal analysis. "You can approve, deny, or even modify the plan," he said, summarizing commissioners’ options.

All formal actions on the project plan and any vote on establishing a TID would occur later if the Plan Commission forwards the plan to the Village Board; the consultant presentation did not record any motion or formal vote during the segment provided.