Eau Claire's Confluence Project: A Focus on the Finances - WQOW TV: Eau Claire, WI NEWS18 News, Weather, and Sports

Eau Claire's Confluence Project: A Focus on the Finances

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Eau Claire (WQOW) - With more than 150 years under its belt, Eau Claire's downtown has created a lot of memories for generations.  A project in the works could set the stage for different memories for generations to come, but before that happens, there are questions about how the $80+ million project will be financed.

**This is the final story in the WQOW News 18 series, "Eau Claire's Confluence Project:  A Watershed Moment"**

On Wednesday afternoon, there were signs of life and activity everywhere in downtown Eau Claire.  It won't be long before we close the door on winter.  Hope springs eternal... about the new season and downtown development.  "The real value in this project is what it excites, not what it brings in itself, but what it creates on its periphery," said Dan Clumpner from Commonweal Development.

Clumpner says businesses have already expressed an interest in Eau Claire's Confluence Project.  "We just have no doubt that there will be plenty of spin off development," said Clumpner.  The Confluence Project would consist of a community arts center, student housing, retail, etc.  There would be multiple partners from the arts community to the university to the city.  Clumpner calls the unique public-private partnership a blessing.  "Everyone can get virtually all of the facility they need at half the capital cost and half the operating cost.  That's also to some extent the curse because there isn't a model for it."

The arts community and university would be partners in the proposed arts center.  They plan to ask the UW Board of Regents for $25 million to help pay for it.  The UW System says it has never entered into a project like this, in which it would co-operate a facility.  With that in mind, the board spelled out a to-do list for project organizers.  At the top:  they must provide proof of an independent guarantor, which could also be called a co-signer.

A UW System representative said it's no secret these kinds of facilities can have cash flow issues.  They don't want to be on the hook for it, so they want someone else to backstop the operational costs.  "I don't think taxpayers in the City of Eau Claire should be responsible for the operations of the facility," said Eau Claire City Council Member Bob Von Haden.  Organizers have asked the city for $200,000 a year through hotel/motel sales tax revenue.  That would more than double what the city gave the Regional Arts Council (ECRAC) a year ago.  "Now you tell me which other organization in Eau Claire... Now, we're not going to fund the Children's Museum, the Chippewa Valley Museum, the Paul Bunyan Camp?  We take the money from them, where does it come from?" asked Von Haden.

As the funding debate ensues, talk of a TIF could surface.  TIF stands for Tax Increment Financing (District).  Rebecca Noland, the city's finance director says Eau Claire TIF districts have added more than $218 million in value to the tax base in the past 15 years.  "It is a means that local governments have of providing infrastructure and being able to recover those costs," said Noland.  The city takes out bonds to make shovel-ready sites.  The bonds pay for things likes streets, water and sewer.  "Then, when a company like HTI is looking for new headquarters, we can say, 'Here is the property.  It's ready to go.  We have a good workforce, we have a good educational system, we have good transportation, we have excellent hospitals, consider our city,'" said Noland.

Gateway West Business Park is the TIF district where HTI is located.  The project costs were $7.1 million for water and sewer mains, storm drainage, streets and lighting for the 396-acre industrial park.

"These new projects that come from using the bonds then generate new taxes.  Those new taxes are usually way above your original taxing was and so, that new tax increment is used to pay off the bond," said Eau Claire Economic Development Director Mike Schatz.  When the bond was paid off and the Gateway West TIF closed in 2003, it added more than $70 million in incremental valuation to the tax base.

"The benefits of tax increment districts have been well demonstrated in this community," said Clumpner.  There are examples all over Eau Claire, even right across the river from the proposed Confluence Project to North Barstow.  "When the TIF was started, we had a valuation of about $10 million in that area.  We're already up to $30 million.  It's been a tremendous success," said Schatz.

That success could extend south.  "It's understood that the Confluence is within TIF 8," said Noland.  That TIF was developed in 2002 with the idea there would be an investment in South Barstow.  "We always anticipated that the TIF would provide some enhancements in terms of soil corrections, flood plain corrections, river walks, plazas... and to the extent that the Confluence Project only requires, it's about $2 million, $2 million of those investments, the TIF could do that right away," said Noland.

"The benefits are the new buildings, the new projects that wouldn't have been there without the TIF.  The risks are you won't get the increment coming in the way you thought it would," said Schatz.  So what if that happens?  "We might have a payment in lieu of tax or we'll have a lien on the property.  We'll have something that enables us to correct the situation if we need to," said Noland.

Here's another thing to consider about the Confluence Project:  "Only a portion of their project is taxable.  The performing arts is not, the university part, the dorms is not so it's only the commercial space down below that is taxable, so we have to be very careful," said Schatz.

There is a lot at stake with this project and a lot of stakeholders.  "I think every stakeholder that's been identified and has been asked to participate in the project financially needs to participate for the project to be successful," said Clumpner.

Along with the $25 million for the arts center, project organizers also plan to ask the UW Board of Regents for $30 million for the student housing element.  The city is being asked for $10 million, the county is being asked to make a $5 million commitment and there's a philanthropy goal.  "We're at about $3 million of the $10-13 million goal," said Clumpner.

The goal remains to finish the Confluence Project by 2016.  As night falls on downtown Eau Claire, you can be certain there will be more ebbs and flows.  The conversation will wind like the rivers that meet where this project was envisioned... a project that will be a watershed moment for downtown Eau Claire.

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