City of Oak Creek

Common Council Report

Meeting Date: January 16, 2007

Item No.:

Recommendation: That the Council authorize staff to retain a financial advisor to analyze developer requests for financial assistance within tax incremental financing (TIF) districts.

Background: Staff is requesting that the Council authorize the retention of an outside firm to analyze developer requests for financial assistance within TIF districts; initially TIF district No. 7. As part of this TIF district, there have been several requests made by developers for financial assistance for their projects. At least two of those requests are for financial incentives.

It is important that the City have the capability to analyze those, and whatever requests may follow to ensure that the incentive provided, if any, is appropriate in scale to the benefit being provided to the City. Developer incentives need to be based on an independent analysis of the economics of the proposal as it relates to the market conditions within the TIF district.

The specialized knowledge of the real estate industry, and the analytical tools needed to review pro formas and financial statements are not skills that are available in-house. There are firms that have track records of providing this type of service to municipalities. One of those is the S. B. Friedman Company. The following excerpt from their website[1] addresses the type of service the City would be requesting.

“Our experience with real estate financial analysis provides greater insight on economic feasibility issues for both the private and public sectors. Detailed and complete analysis of development costs, cash flow, and investment returns help make market judgements more realistic and provide a basis for investment and financing decisions by both private and governmental funding sources.”

The Community Development Authority has unanimously recommended that the Council avail themselves of this type of review capability.

Fiscal Impact: This is a TIF eligible cost that would be recovered through the increment generated by the district. Any contract for such services would need to be reviewed and approved by the Council.

Prepared by:

Doug Seymour, AICP

Director of Community Development

Respectfully submitted,

Patrick DeGrave

City Administrator

Fiscal Review by:

Beverly A. Buretta, CMC

City Clerk