The Village Board on Tuesday took the next step forward in its multi-faceted agreement with Kohl’s Corp., which will eventually give rise to the company’s new corporate headquarters in Menomonee Falls.
The board gave Village Manager Mark Fitzgerald the green light to issue a $10,000,050 promissory to advance a series of property exchanges with Kohl’s. The promissory note and property transaction was part of the ago by the Village Board. It’s part of the overall financing for the taxing district that Kohl’s will build in.
The $10 million note will be utilized in the following:
- $6.9 million will be used to purchase an existing 54,000-square-foot office building adjacent to the future Kohl’s building in Woodland Prime. Falls will turn ownership of that building over to Kohl’s and it will become a part of its corporate campus
- $2 million covers a grant incentive to Kohl’s
- $650,000 will be used to cover capitalized interest
- $500,000 will cover a relocation costs for the office building owner to replace the one the village is purchasing.
In exchange for the 54,000-square-foot office building off in TID #10, the village will take ownership of the Kohl’s distribution center. Kohl’s will lease the building from the village for free, but will pay taxes and utilities until the company relocates to its new building. The distribution center will house the village’s Public Works Department in the future.
Falls will also over to Kohl’s for its future headquarters. The real estate transactions will all be completed by the end of the month per the development agreement.
Although the real estate transactions will close later this month, Kohl’s still has three years to submit a commencement notice and officially begin construction. Once that notice is submitted, it will set the clock in motion for a completion date.
Fitzgerald said the village issued a short-term promissory note to kick-start the project and will borrow long-term once the note comes due in 2015. At that time, the village will borrow long term as incremental value begins to trickle in from the new development.
That’s how the village handles funding in most taxing districts Fitzgerald said.
“In the early years of a taxing district we take out short term notes with capitalized interest to get the (taxing district) going,” Fitzgerald said. “We borrow long term after the district stabilizes and starts generating incremental value.”
In the long term, the village plans to gain a full return on its investment by 2031 by collecting additional tax revenues generated by the development. In the end, the village expects to bring in $62 million in incremental value.