(First published in the May 2, 2019 issue of City Pages)
Stalled for years, and with people nervous about retail, the 320-acre grand plan now is expected to be a very scaled down version.
Back in 2015, then-Village Administrator Daniel Guild made a bold proposal: Weston should create a commerce center that could ultimately attract some $200 million in development. It would contain retail options to rival places such as the Fox Valley, and draw shoppers from outside the Wausau area who might currently head to Green Bay or Appleton for their shopping.
Meant to happen in four stages, the 320-acre project would place Weston, the fastest growing municipality in Marathon County, in the driver’s seat. The place would become a regional draw. Although there were plenty of other aspects to this commerce center—housing and office space, for example—retail was the primary driver and selling point of Guild’s proposal.
A lot happened since 2015, but not much on the project.
The big thing that has happened: a retail armageddon, which in Wausau brought the closing of Sears in 2016, Younkers in 2018, several mall stores in between, and the now-in-progress closings of all Shopko stores. While the economy continues its upward trajectory, retail closings have become regular news as more shoppers go online. One industry analyst says that for every 1% growth in online penetration, another 8,000 stores will close.
And amid all this was the huge municipal initiative in Weston to create a retail center.
Weston so far has spent nearly $3 million in that undeveloped area along the south side of Hwy. 29 near Camp Phillips Road, though there isn’t much to show for it, other than some utility line relocation. The first wetland permits for development were filed in fall of last year.
Newly elected as Weston’s village board president, Wally Sparks says he wants to see some changes. He wants the village to become more business friendly. He wants to make sure policies are aimed at being as helpful and responsive to its residents as possible. And he wants to make sure the Camp Phillips Commerce Centre — stalled for nearly four years now —finally starts seeing some progress. And that will likely mean a scaled down project, Sparks tells City Pages.
“What we’re trying to get done will be a viable project that will be beneficial to the village,” Sparks says. “There has been no activity for four years, at least no construction or anything that helped move this project forward. I think we’re moving in the right directions now.”
That new direction means going through the DNR process to access the area’s wetlands, instead of simply battling to change the rules.
Much will depend on how much land is actually buildable, and how much will need to remain wetlands. Weston expects to receive that information from the DNR this summer.
The other more nebulous question is what kind of retailers would even be interested in expanding in this market.
The very big idea
Original plan for Weston’s commerce center, at the southeast intersection of Hwy. 29 and Camp Phillips Road, included $200 million in retail, commercial and residential development, and “environmental” areas.
The original plan showed four separate development areas for the project, located south of Hwy. 29 and east of Camp Phillips Road. The retail area included:
• three large-scale retail lots (13–22 acres roughly)
• 11 smaller retail lots
• a hospitality lot
• three office lots next to one of two residential mixed-used complexes
• another office lot meant to house four separate office buildings (two 13,000-square-foot buildings and two 17,000-square-foot buildings)
The other three areas include a residential district, a business park and a recreation district.
Supporting all this business is a growing population base. Weston (now pop. 15,100) is expected to grow by 5,400 new residents within about 20 years, and by 2040 make up 29% of Marathon County’s total residents (compared to around 10% now). This is according to statistics and projections from the Wisconsin Department of Administration and the U.S. Census Bureau.
But is a larger local population enough to support such as large new retail infrastructure? After all, big box retail has been collapsing nationwide, and the Wausau area is no exception.
Sparks says developers Forward Development Group will handle the leasing— the village board isn’t giving them direction on what kind of retail goes there. This firm has a handle on the industry, and will choose retailers that aren’t on the verge of collapse, Sparks says. Grocery stores, hardware stores and other such businesses usually can maintain a customer base even in a poor retail environment, Sparks says.
Under the last presented timeline to the village last summer, FDG was to start acquiring the property around now, and clearing the land this summer. Construction on the first buildings on the site was to begin later in 2019.
But at this point FDG doesn’t own any of that land (six total property owners). Officials still don’t even know how much of those originally-eyed 320 acres is even buildable, or protected as wetlands.
What’s the hold up?
The project was first announced in 2015, and so far the village has spent roughly $3 million, including $2.6 million on relocating transmission lines and $392,750 on wetlands determination, preliminary planning, transportation impact analysis and legal fees, according to Village Administrator Keith Donner.
Besides that, the tax incentives for the project got expensive. Last July, FDG said in order for the project to make financial sense, the village would have to commit another $8 million in tax increment finance funds (infrastructure costs and other development aid). The total project cost was listed at $25.5 million.
That dollar amount is likely to change now too, since the new project will likely be smaller.
Right now the project is stalled in the DNR wetland permit stage. Sparks says that’s because, instead of complying with the DNR wetland permit rules, the former administrator decided to hire an attorney to try changing DNR rules for Weston. That effort didn’t work.
Donner says the current wetland permits were submitted in September 2018, and are still in progress.
Some of the issue is what counts as natural versus artificial wetlands. The village has been working with the DNR to determine what if any areas are exempt under the Artificial Wetlands Exemption rules, Donner says. Despite all the human activity on and around the site (logging, utility corridors and highway construction), the area is still mostly considered natural, Donner says.
Sparks says he was highly critical of the Camp Phillips Commerce Centre project before he was elected to office. He wondered why the village was trying to develop a site it didn’t own and that had so many wetlands issues, when other land was available.
The answer he got was that the other land, on the other side of Camp Phillips, near Saint Clare’s Hospital, was much too expensive. Sparks wonders if the land in the commerce center won’t command a similarly high price, now that it has been eyed for development.
Sparks is on board with the vision, but says it makes sense to scale it back— a lot. Claims about the enormous new tax base creating 4,000 jobs now seem exaggerated to him. The ultimate size of the project will depend on how many acres of wetlands need to be preserved, versus what can be developed on.
“I don’t think it will be the off-the-cuff estimations the prior administration had put out there, but I think it will be good for the village,” Sparks says.
Is it a good idea?
Sparks is on board with the vision, but says it makes sense to scale it back— a lot. Claims about the enormous new tax base creating 4,000 jobs now seem exaggerated.
The decision to put taxpayer support into a $113 million development (the July 2018 version, now likely to change) is questionable, says Jerome Segura III. This former UW-Stevens Point associate professor and former chief economist of the Central Wisconsin Economic Research Bureau, who now is a freelance economist, is critical of TIF usage. He adds that with a downturn predicted soon, committing to such a large project might not be the best idea.
And it would certainly cause the village to exceed the 12% of equalized property value in TIF Districts, something the state only allows through special exemption.
Special legislation passed in 2015 allows the village of Weston to exceed that amount. Weston’s total TIF District amount is 21.58% of its equalized value, already far above the previous state limit.
By comparison, Wausau’s is at 10.3%; Stevens Point’s is 7.54%; and Plover, in Portage County, is 6.27%.
“It is extremely important to note these limits are in place to constrain the amount of property tax revenue that a municipality can divert from other local taxing bodies to pay developers’ costs,” Segura says. Too much TIF spending puts a drain on public coffers in the short term, which can lead to tax rate hikes, cuts to public services and the financial uncertainty can lead to people leaving the area, Segura says.
And, Segura points out, although TIF is often presented as a growth mechanism, data shows that communities that rely on TIF more often than not don’t outgrow communities that don’t. And, he says, tax rates tend to be higher in communities that rely on TIF.
The project relies on Tax Increment Financing, or TIF, to be successful — special financing that helps Weston pay off its public infrastructure costs for the development. FDG’s representatives said as much in a meeting in January.
One issue is that the commerce center area already is in a TIF district slated to close, says Village Board member and former president Barb Ermeling. Even with a recent extension, the time to finish the project is running out.
According to a description in the village’s last budget, TIF No. 1 was created in order to spur development in the Highway X/Camp Phillips area out to Highway J. The district was created in 1998, and would have closed in March of 2021. Special legislation passed in November 2015 extended the life of the district to 2031. That still doesn’t leave a lot of time to generate enough taxes to pay back Weston’s costs of the Camp Phillips project.
And there should be more public education about the project, says Village Board member Yee Leng Xiong. He knew little about it before being elected to the board in 2018, and many Weston residents still don’t know much about it, he says. “There are a lot of people wondering what is going on, or when is it going to happen?” Xiong says. “There needs to be more info.”
Whatever size the commerce center can be— largely dependent on the DNR’s wetlands determination—Weston officials will have to seriously decide whether the cost makes sense. “We’re going to have to evaluate it to see if it’s worth it,” Xiong says.
Both Xiong and Ermeling express concerns about the future of retail. With so many businesses closing — 75,000 retail stores are expected to close in the next seven years, according to business consultant UBS — pinning such a huge municipal effort on retail makes some people nervous.
Sparks counters that Forward Development Group has a strong track record, and that the retail downturn is expected to hit some specialties harder than others. The UBS analysis says clothing stores are expected to fare the worst, losing some 25,000 stores or 25% of the industry’s total, while grocery or hardware might be more likely to stick around, Sparks says.
A scaled down commerce center won’t rely so heavily on retail, Sparks says, pointing to the office and residential components, which are viewed as safer right now, especially for a growing municipality.