The developers of the under construction downtown Washington square brewpub will receive as much as $350,000 in TIF funding from the city for a project that will provide additional revenue sources for the business.
Monday's city council vote for the funding was 6-2, with council members John Blundy and Lili Stevens dissenting. It was the first time a vote involving the brewpub did not pass unanimously since the project was announced in December 2021.
Grist Mill Ventures and CL Real Estate Group purchased buildings at 120 Walnut St. and 126 Walnut St. for $172,500 and $140,000, respectively, in November 2022.
Both buildings are vacant. The building at 120 Walnut, built in 1917, is a former Knights of Columbus Hall. The building at 126 Walnut, built in 1964, formerly housed Prep Freeze Cook
The brewpub will be at 140 Washington Square and 112 Walnut.
The developers' plan is to turn the building at 120 Walnut into an event space, operated by Tangled Roots Brewing Company, with a capacity of 132. A mid-2024 completion is projected.
The building at 126 Walnut will house a retail tenant. Two short-term residential units also are planned.
Estimated cost of the project is $1.25 million. The $350,000 in TIF funding represents 28% of the total project cost, or 82% of TIF-eligible work.
Blundy presented a laundry list of "serious, serious concerns" about the TIF agreement.
Stevens said she's not against the project, but wants to see the brewpub completed before more TIF money is given to the developers.
According to the brewpub developers' redevelopment agreement with the city, the brewpub was supposed to have a Dec. 1 grand opening.
The brewpub isn't expected to open until late next year, and developers still have unresolved issues with neighboring property owners Marlene Miller and the Washington Historical Society.
Unlike the city's $980,000 TIF agreement with the brewpub, which has had funds distributed for milestone events, the event and retail space project will not receive TIF funds until the project is completed.
The developers will receive one-third of the money at that point, one-third of the money one year after the project is completed, and one-third of the money two years after the project is completed — as long as the event space and retail business are open.
Blundy wanted to have firm proposed start and end dates for the event space and retail business project written into the TIF agreement, and he questioned the developers' prediction that the two properties will generate $15,000-$22,000 in home rule sales tax and $8,000-$12,500 in state sales tax revenue annually.
"Those figures were based on the revenue streams for similar projects done by the developers," said Washington planning and development director Jon Oliphant.
Blundy also said paying that much TIF money for what will become competition for established Washington businesses like Countryside Banquet Facility, LeFleur Floral Design & Events and The Blend, and Five Points Washington, which is still struggling to emerge from the COVID-19 pandemic, wasn't fair.
Other alderpersons challenged Blundy's assertions.
"We need people to come to the square. The brewpub and this additional project will bring them there," said Brett Adams. "The (brewpub) developers need to get this project going so they can make some money before the brewpub opens."
Brian Butler said competition is healthy.
"Plus, we only have 10 years left on our square TIF district," he added. "If we don't do this TIF agreement, nobody is going to buy those buildings and they're going to deteriorate. This is an opportunity we can't pass up."
TIF funds are created by the raises in property taxes paid annually by properties within a TIF district. Instead of going to taxing bodies like the city, school districts and the park districts, the money goes into the TIF fund.
Five Points Washington asking for a break
Five Points board president Sherril West made a presentation to the council on Monday about the history of the unique multi-purpose facility, its popularity (eight million people have come there in 16 years) and the financial challenges it's facing, especially because of infrastructure replacement.
The Five Points board is asking the city council to approve a proposal to waive the final $600,000 of the $1.25 million Five Points owes the city for a $5 million bond the city issued toward the construction of the 16-year-old facility.
The city passed a .25 home rule sales tax increase in 2006 to cover bond payments. The money generated by the sales tax has often exceeded the bond payment due.
For example, in the 2022-23 fiscal year, the .25 sales tax generated $545,204 and the bond payment was $355,943.
The remaining funds can be used for any city purpose.
The council will discuss Five Points' proposal next Monday at its committee of the whole meeting.
