The $18.85 million Menominee Nation Arena was built on the site of a derelict industrial site.
By Miles Maguire
The city is expecting to make two more amendments to its agreement with the developer of the Menominee Nation Arena, one to assist with financing and another to address environmental concerns.
The first amendment would allow the developer, Fox Valley Pro Basketball, to get an upfront payment from a private lender for the reimbursements it expects to receive from the city. These payments are capped at $5.5 million and are to come out of taxes that the developer must first pay to the city.
“The city is only required under the agreement to pay out increment paid by the developer and only if the increment … is paid to the city in full,” city staff wrote this week in a memo to the Common Council.
The word “increment” is part of the financing method that was used for the arena. The term refers to the higher property taxes that the city will receive based on the increased value of the site. The project occupies a formerly derelict industrial site that has recently been determined to be worth $18.85 million.
This newly created value is the basis for the increment, which will be paid out over the 27-year life of the project. These funds are reimbursements to the developer for public improvements, such as streets, sidewalks and utilities, as well as offsets for higher than expected costs related to the environmental problems at the site.
If the Common Council approves this financing amendment, the developer could take this promise of future payments to a private lender and trade it for an immediate infusion of cash, which would be used to supplement a traditional mortgage. The lender has not been publicly identified as yet.
The amendment would also allow the city to recoup additional administrative costs, up to $25,000 this year.
Another amendment, which would be the fourth in all, would cover environmental issues that are still being worked out between the city and the Wisconsin Department of Natural Resources. The staff memo said DNR has requested “additional environmental testing” but does not include specifics.