Manufacturer to assume TIF risk in deal with Milwaukee

By Kirsten Klahn

A Milwaukee cable manufacturer and the city are nearing a deal that would give the company a chance to recoup a portion of the cost of buying and improving a 92,300-square-foot building.

HellermannTyton Corp. would assume the risk of what would be a $750,000 tax incremental financing district. Instead of the city putting up the money, which often is the case in a TIF district, the company would invest its own $750,000 into the estimated $6.47 million it will cost to buy and renovate the building at 6701 W. Good Hope Road.

Hellermann then could then use the additional property taxes generated by the improvements in the TIF district to pay off the $750,000, said Mark Nicolini, Milwaukee’s budget director and chairman of the Joint Review Board, which is made up of local government representatives who are reviewing proposed TIF districts.

But there is no guarantee a TIF district will generate the additional property taxes, Nicolini said. If that happened, Hellermann would not recover all of the money it invested in the building, which would be the company’s third in the city.

Hellermann would have 15 years to generate the additional taxes.

“For a developer-financed TID, the developer actually puts the money at risk,” Nicolini said. “But in turn, the basic concept is that if a TID is successful, the money can be used to pay off development costs.”

The Redevelopment Authority of the City of Milwaukee on Thursday approved the TIF district, which still needs approval from the Common Council and joint review board.

There are other requirements tied to the deal. For instance, Hellermann would have to expand its workforce by 125 people in the first five years of the deal, said Terry Tuttle, Hellermann’s vice president of sales and marketing.

The company already plans to add 50 employees within the first year at the new plant, which would open in 2013, she said. The company now has 258 employees in Milwaukee.

“We’ve had very good growth,” Tuttle said. “In 2011 and 2012, our sales growth was well into the double digits.
“We feel extremely confident in our ability to meet those employee numbers.”

The TIF district, Tuttle said, is part of an incentive package Hellermann has with the city for the project. The other part, she said, is a $2.75 million loan from the Milwaukee Economic Development Corp.

According to Milwaukee’s 2011 TIF district annual report, the city has 46 TIF districts, 25 of which declined in value from 2010 to 2011.

But creating the Hellermann district encourages the company to stay and poses no risk to the city, said Jeff Fleming, spokesman for the Department of City Development.

“It solidifies the partnership with the city and Hellermann,” he said. “It does that by letting Hellermann use some of the projected future tax revenue, and it allows the city to make sure development is taking place.”

But the future tax revenue from the district is out of Hellermann’s hands, Tuttle said.

“We make improvements to the building, but we won’t really be the ones generating those taxes,” Tuttle said. “The money we receive will be based on how the land’s value is assessed.”