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PostPosted: Wed Dec 03, 2008 6:37 pm 
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We're curious how you feel about how the city should handle the issue presented in this story that was published in the Dec. 2, 2008, Tomahawk Leader:

Building sale loss vs. new jobs
City Finance Committee seeks appraisals
after offer is $400,000 below deal 3 years ago

It’s certainly not a seller’s market.

But how much should a seller be willing to sacrifice in today’s market?

And, does that change when tax dollars are involved?
Those are some of the questions the city of Tomahawk Finance Committee is faced with as it weighs the disadvantages of selling a city-owned building for less than assessed value versus doing so in exchange for business growth and more jobs.

Emil Johnson and the city signed a memorandum of understanding in September 2005 that Johnson would lease-to-buy the then-vacant former Harley-Davidson North Plan off North Fourth Street for $651,900. Monthly lease payments were set at $3,112, with a five-year balloon payment due Dec. 31, 2010.

Johnson opened a new manufacturing business, Universal Industries, LLC, at the 227 Oneida Dr. location in 2006. The business has thrived and currently employs 28, with an annual payroll exceeding $1.2 million. The firm also has added some $173,000 in improvements since occupying the building.
Business expansion has become necessary to meet growing customer demand, Johnson says. The intention is to double the current size of the structure in 2009, which will likely result in 20 to 25 additional jobs.

Both the city and the Tomahawk Development Corp. have expressed no interest in constructing an addition, and Johnson says he “can’t own half a building,” so he approached the city’s Finance Committee about allowing him to purchase the 15,000-square-foot structure and its accompanying 22 acres.

After exploring the market price of comparable buildings in other communities, Johnson put today’s fair market value of the real estate at $250,000.

Justifying a $400,000 loss did not sit well with committee chair Jeff West, however.

“You agreed to $659,000 three years ago. … The taxpayers have that amount of money invested. To be fiscally responsible, I have to try (to recoup that amount),” West stated.

Creating 28 jobs that previously didn’t exist, and potentially creating another 25 high-paying jobs – “that’s got to be worth something,” Johnson said.

While other committee members were similarly concerned about the monetary loss, committee member Rejeana Ebert also noted the building isn’t worth anything if it sits empty for a long time.
“We are not asking for any grants, working capital financing or any other help from the city. We only want the opportunity to buy the building for its current fair market value and expand operations in the Tomahawk community,” a letter from Universal Industries dated Nov. 5 said.

Lincoln County Economic Development Director Jack Sroka indicated the only possible comparables he had dealt with were two industrial buildings in Merrill that have sold in the last four years at prices just under $20 a square foot.

The committee ultimately agreed to seek two independent appraisals before discussing the option further. Estimates were they would cost between $2,000 and $5,000 each.


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PostPosted: Fri Dec 05, 2008 5:00 pm 
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I think that it is hard to justify a 400,000 dollar loss. There also is no guarantee that the 25 jobs created would be filled by people that live in Tomahawk. In many cases residents from Merrill and Rhinelander come to work in Tomahawk and contribute little to the towns economy. Although, losing the jobs that are currently provided by the business would be detrimental employees that do live in town, and possibly contribute to its dwindling population. This is a hard one to call. How much does the town need the money? We don't know how long this economic slump will continue. It might be years until the buildings worth returns to what it was three years ago. Ultimately, I believe that the "possible" potential benefit of 25 more families contributing to the towns economy and paying local taxes is worth more to the community businesses and school district than the loss of the 400,000 dollars today....... Just my opinion.

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PostPosted: Fri Dec 05, 2008 11:56 pm 
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Real estate values over the past few years in part were inflated by easy credit, low qualification standards. However I'd rather own 100 acres in Tomahawk than General Motors stock!

Why not find a compromise price between the overly inflated price of a few years ago & the current "market value"? I'm having a mental block to think if the term, but couldn't the city consider the property to have some tax relief?

Why discourage a growing business from expanding in Tomahawk? Harley & PCA are nice employment hubs. It couldn't hurt to add another.

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PostPosted: Sat Dec 13, 2008 9:34 pm 
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Buying and selling anything is not all that difficult.

Things are only worth what someone is willing to pay you today, not what you paid for it yesterday, and certainly nothing in real estate is worth today what it was 4 years ago.

Remember, every new $1 in payroll created generates $7 in economy in your community. So if they are doing $1.2 million a year, that is going to create $8.4 in overall economic impact a year to the local economy.

As of someone from Rhinelander or Merrill coming in and taking a few of those jobs, I would ask how many Tomahawk residents are working in Rhinelander or Merrill? A whole lot more then 22 I bet.


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PostPosted: Mon Jan 26, 2009 1:13 pm 
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I believe it is better to sell at a loss than to just let a large building remain there empty... what does anyone get from that?
The seller gets no money and just has to keep paying taxes on that building.
If it were me i would sell and take the loss rather then let a building sit there empty and keep having to pay out while someone else might be able to get a company going and be able to hire even a hand full of people.


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PostPosted: Tue Feb 24, 2009 1:27 am 
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countrygirl49 wrote:
I believe it is better to sell at a loss than to just let a large building remain there empty... what does anyone get from that?
The seller gets no money and just has to keep paying taxes on that building.
If it were me i would sell and take the loss rather then let a building sit there empty and keep having to pay out while someone else might be able to get a company going and be able to hire even a hand full of people.


Last time I read the paper it said that the fire dept was interested in the building. So, sitting empty is a moot point.
Marshfield fire is building a new station for $7million. Wow, what a savings this could be for us. If the current occupant pickes up and moves, how many employees would follow? Like he wouldn't keep his good working, trained employees if they still wanted to work there. How many employees are putting money back into the tomahawk economy?


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PostPosted: Wed Feb 25, 2009 5:30 pm 
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An update on this news item:
Feb. 10, 2009, Tomahawk Leader

City turns down Universal Industries’ proposal to purchase Oneida Drive facility

By Jed Buelow
Tomahawk Leader City Editor
jbuelow@tomahawkleader.com

Citing the offer isn’t half of what the former Harley-Davidson facility and grounds were appraised at, the Tomahawk Finance Committee last week rejected a purchase bid from Universal Industries.

Universal Industries, which handles highly specialized welding contracts, is seeking to buy from the city the 15,000-square-foot Oneida Drive building and 22 acres it is located on off North Fourth Street. Based on its assessment of similar buildings in other regional communities, the company had made a $250,000 offer.

A spokesperson for the company has said the business is growing and to accommodate its clients’ requests, an additional 15,000 square feet needs to be added to the facility. Cost to construct the addition has been estimated at around $700,000 to $850,000. An additional 20 to 25 new positions would also be added to the company’s current staff of just under 30 support and highly specialized welder and fabricators.

An independent appraisal conducted by the city last month put the cost of the building and grounds at $570,000. The committee rejected the proposal based on the $320,000 difference.

Committee chair Jeff West said Universal Industries could make another offer, but noted the company had signed a rent-to-purchase agreement with the city in 2005 at a cost of $651,900.
The contract is set to come due with Universal Industries taking over sole ownership of the building and grounds in 2010.

West noted other businesses have approached the city about purchasing the building. The Tomahawk Volunteer Fire Department has also expressed interest in moving into the building.

If an agreement can be reached between the city and Universal Industries, the company has noted it would begin expansion in 2009. The city came into possession of the facility and grounds after Harley-Davidson noted it had plans to expand to its current Kaphaem Road facility.


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PostPosted: Wed Feb 25, 2009 6:29 pm 
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sounds to me like they are using the old "If you don't give in we will move game" If they have already signed an agreement they are bound to it, and it would cost them a lot to move and start up in a new location. The City needs to stand their ground and watch them come back with a better offer.

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PostPosted: Sat Mar 07, 2009 9:51 pm 
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Looks like the city has stood it's ground. Strong work.

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