Oshkosh staff recommends selling Washington lots at $35,000 after right‑of‑way bids exceed budget

City staff told the Oshkosh City Council at a workshop that the lowest bid to complete right‑of‑way work for 18 lots at the Washington site came in at about $830,000, leaving the city short of funds to finish all work and prompting a staff recommendation to sell each lot at $35,000.

The recommendation, presented by city project staff, would price the lots higher than earlier estimates the city shared with potential buyers and partners (the staff said the city earlier suggested $25,000 per lot). Habitat for Humanity has expressed continued interest in acquiring nine of the 18 lots, the presenter said.

Staff said the bid covers private laterals, grading and stormwater preparation so that finished lots would be build‑ready; the city is not planning to cover utilities such as Internet. "The lowest bid came in at about 830,000," a city staff member told the council. Staff said the bid implies an average cost per lot of just under $46,000.

Why it matters: selling lots below cost would require the city to use capital improvement program (CIP) funds or borrow. Staff told the council that a $35,000 sale price per lot would leave an approximate funding gap of just under $200,000 (the presenter characterized the remaining shortfall as roughly $190,000), which the city could cover from housing CIP lines or other sources. The presenter also said DPW CIP is not eligible because the bid work pays for private laterals and other private benefits rather than public‑facing assets.

Staff reviewed other financing options and said state trust fund borrowing is possible but might not be cost‑effective for the size of the amount. Council members asked about American Rescue Plan Act (ARPA) funds previously allocated to Washington; a city staff member said $75,000 of ARPA money had been designated for purchase of the Washington school site and that those funds were used for the land purchase and are not available for the lot preparation costs being discussed.

Council direction and eligibility rules: Council members signaled general support for the staff recommendation and gave guidance on household income limits and other RFP requirements the city will include for the nine city‑side lots to be reserved for workforce housing. Staff said the city will use U.S. Census median figures and asked the council to confirm a target income band for qualifying buyers; council consensus was to use an eligibility range of 80% to 120% of median income. "I think 80 to a 120 is what we said all along," one council member said.

Staff also proposed an equity and resale recapture policy: owner‑occupancy required, a repayment/clawback provision if a unit is sold within a set number of years, and a lien recorded in second position to protect the city's investment. Council members debated whether the repayment period should be five or 10 years; staff reported more council members favored five years and the group settled on five years for the recapture duration. Staff also proposed that selected builders complete construction within two years, and council members agreed that two years is an appropriate build deadline for the RFP.

Builder role and city oversight: Staff told the council they do not have the personnel capacity to screen and select individual buyers and instead recommended allowing a selected master builder to buy the city lots, handle insurance, and build. The city would verify income eligibility and other RFP requirements at closing before a property is transferred to a purchaser. "My suggestion would be to give these metrics to the builder and say, we will come in when you're ready to close and verify all of these things," a city staff member said.

Design and program details: staff proposed baseline housing specifications (three bedrooms and two baths, basement bedroom with egress acceptable, garage, and design consistent with neighborhood aesthetics) and said Habitat for Humanity had indicated the organization could work with the proposed standards and timeline. Staff will include income verification requirements, owner‑occupancy, the five‑year equity recapture, and the two‑year build timeline in the RFP for a master builder.

Longer term: staff briefed the council that Washington is the immediate phase but that additional city‑owned parcels (Farmington) could present a much larger cost and scope. Staff estimated Farmington's initial phase preparation at roughly $2 million; that work would include roads, mains, laterals and stormwater and would require separate funding decisions.

Next steps: staff said they will finalize the RFP language reflecting the council guidance on price ($35,000 per lot for the city‑side lots), income eligibility (80%–120% of median), five‑year recapture, two‑year build window, and other specifications and return to council at a future meeting with the RFP and any recommended funding plan for the remaining shortfall. Staff emphasized the city will verify buyer eligibility at closing rather than directly selecting occupants.

Ending: Council members expressed conditional support for the approach but noted there is no guarantee developers will participate at the proposed price; staff said it could return with requests to reduce price or provide additional subsidies if market interest proves insufficient. Staff also warned that Farmington will require far greater upfront investment and that the Washington project will be used as a benchmark for future work.