Subdivision agreement moves one step closer

Village of Fredonia and Northern Ozaukee School officials are nearing an agreement with Hillcrest Builders that would pave the way for work to begin on a highly anticipated subdivision on the village’s north side.

Hillcrest owner Oyvind Solvang told the village’s Finance Committee last week that he has reached a tentative agreement with the school district to swap a half acre bordering the northeast corner of the district’s athletic fields for 1.5 acres of school land at the northwest corner of the district campus. 

Hillcrest would also make a $25,000 payment to the school district, Solvang said.

The deal would require the builder to reduce the number of lots by three, but it also would reduce the amount of street being constructed by up to 400 feet, offsetting the lost revenue for Hillcrest.

“That would decrease the cost somewhat significantly,” Solvang told the committee, which is made up of village trustees.

Northern Ozaukee Supt. Dave Karrels said last week that the Hillcrest proposal is still under review and has not been approved by the NOSD School Board.

Reaching an agreement with the school district on the land swap is key to advancing the project, which calls for building 100-some houses and condominiums on either side of North Milwaukee Street and north of the school campus.

On Oct. 1, village trustees and Solvang went over a draft developer’s agreement that calls for the village to operate as the developer’s “bank,” as Solvang put it.

That means the village would borrow money at an interest rate lower than what’s available to Hillcrest to pay for the project’s infrastructure — such as streets, sidewalks and gutters — and engineering work and then be reimbursed by the developer as lots and homes are sold.

A limitation on that approach, however, is that a municipality’s indebtedness cannot exceed 5% of total assessed community value.

The village’s current borrowing limit is only $3.5 million because of outstanding debt related to the Fredonia Avenue reconstruction and for work at the wastewater treatment facility.

Not all of that capacity would necessarily be available for the Hillcrest project, either, because the village has other borrowing priorities.

For example, at the same meeting, the committee reviewed a five-year capital plan that lists more than $5 million in potential borrowing for streets, sidewalks, sewers and fire equipment next year and nearly $8.5 million through 2025.

Solvang said his project would require a significant percentage of those funds.

“A million dollars goes very quickly with these kinds of things,” he said.

That’s going to require trustees to prioritize projects in the 2021 budget and leave enough borrowing capacity to fund the development, officials said.

“I think the majority of the (Village) Board is on board,” Village President Don Dohrwardt said.

“The only question is what’s that number,” Trustee Richard Abegglen said.

An alternative would be for the village to issue revenue bonds, which do not count against the village’s borrowing limit, Public Works Director Roger Strohm said. That’s because revenue bonds are a class of municipal bonds issued to fund public projects that repay investors from the income created by the project.

Solvang said he hopes to “move dirt” in spring, beginning in the area north of the schools, and suggested that the developer’s agreement include a commitment by him to sell a minimum number of lots or homes per year.

“If that number is five, for example, but we only sell three, Hillcrest will buy the other two,” he said.

Solvang and village officials agreed to review the draft agreement and meet again in the coming weeks.