Waupun Industrial Park Expansion

Questions or comments about the project may be directed to the City Administrator by emailing kathy@cityofwaupun.org.

Project Scope:  Expansion of Waupun Industrial Park is underway to support a development that calls for construction of a three-phase project that includes a state-of-the art feed production facility, grain handling operation, and a soybean processing facility to be located on 67 acres of land in the Waupun Industrial Park.

1. Phase One Feed Production:  Construct a commercial building and related structures and fixtures for the operation as a feed mill for the storage, processing and distribution of animal feed, and related agricultural products.  Construction to commence in 2022 with project completion by December 31, 2024.
2. Phase Two Grain Storage and Handling.  Construct facilities for receiving, drying, storage and sale of grain.  Construction to commence in 2022 with project completion by December 31, 2024.
3. Phase Three Soybean Processing.  Construct a soybean processing facility (7.5M bushels processed annually) and related structures and fixtures for the cleaning, crushing, and processing of soybeans for the sale of soybean oil and soybean meal.  Anticipated construction to commence in 2023 with project completion by December 31, 2025.

Developer of Project:  United Cooperative is headquartered in Beaver Dam, WI and is a full-service cooperative offering feed, grain, agronomy and energy services to patrons throughout much of Wisconsin, northern Illinois, and upper-Michigan, eastern Iowa, southeast Minnesota.   

Economic Impact:  Anticipated investment in the three-phase development is $100 million, including land acquisition, site development and building construction.  The Developer guarantees $33.5 million in minimum tax valuation for all three-phases of development over the life of the TID.  In a preliminary economic impact analysis, project multipliers show a network of producers directly benefiting from the project and the potential to develop ancillary business opportunities through the supply chain.  Beneficiaries of this investment would include local farmers, bankers, equipment and machinery manufacturers and implement dealers, as well as other value-added agriculture processors, and businesses in the construction and logistics service sectors. 

Site Selection:  The proposed site is served by rail (WSOR) and has highway access to US 151 from STH 26.  The site is located in close proximity to a large percentage of dairy farms and soybean production in Wisconsin.  In 2018, the proposed site was selected for the State’s first soybean processing facility, but that project subsequently ran into hurdles with trade disputes and lacked needed capital to finalize development.  City Staff continued to pursue opportunities to develop a similar project and began conversations with United Cooperative in 2020.  Prior to proceeding, United Cooperative completed a site feasibility study and engineering site design and determined the Waupun location remained the most feasible site for the proposed project.

Job Creation/Wage: Approximately 50 full-time skilled operations and management positions are anticipated with production staff earning an average wage of $22/hour.  The estimated annual payroll is $3 million when all phases are operational. Many local contractors will be used during the construction phase.

Traffic Counts: Rail service via Wisconsin and Southern Railroad; Estimated Traffic: / 4 to 5 train cars per day; an estimated average of 60 semi-trucks per day with a peak of 200 during harvest.  Trucks predominately routed via US 151 North and South bound with exits at State Highway 26 which will minimize the amount of truck traffic and wear and tear on City roads/infrastructure.  Planned intersection with Shaler Drive will be added to STH26 to support Wilson Drive extension.  WI-DOT has reviewed a preliminary traffic investigative review and determined that current infrastructure with additional turn lanes supports proposed development.  Developer’s Agreement requires developer to work with the City and share costs of future infrastructure expansion as business grows if WI-DOT requirements evolve.

Environmental & Safety:  The developer and the City understand that importance of safeguarding the environment.  As such, the Developer’s Agreement provides detailed provisions to ensure health and environmental safety standards.  Notable provisions within the agreement include:

1. Air Quality:  The Developer will be required to meet all air quality standards as set forth by WI DNR, as well as city of Waupun Ordinances as it pertains to smoke, dust and particulate matter.  Note that the 2018 project required the use of hexane, which would have been used to extract oil from the soybean and generate soybean meal.  The proposed project differs in that is uses a mechanical crush process and does not use hexane.  The Developer’s Agreement does not permit the use of hexane in the proposed soy processing facility.
2. Ground Water:  The facility will be subject to a Storm Water Pollution Prevention Plan, a Spill Prevention Control and Countermeasures Plan, and a Facility Response Plan.
3. Odor:   A majority of the operation involves processes familiar to the City of Waupun with other businesses performing similar operations within the City’s Central Business District.  In 2018, a group of representatives from the City of Waupun visited a soy processing facility in Zeeland, MI.  The group had an opportunity to evaluate the perimeter of that facility.  There were no noted air odors emitted from the facility.  As a safeguard, the Developer’s Agreement contains a provision to respond to and mitigate odor complaints if something unforeseen presents from facility operations.
4. Noise:  Developer is responsible for complying with applicable performance standards in City Ordinances as it pertains to sound, vibration, and glare.  In 2018, a group of representatives from the City of Waupun visited a soybean processing facility in Zeeland, MI.  The group had an opportunity to evaluate the perimeter of the facility.  There were no noted air or noise concerns emitted from the facility. 
5. Decommissioning of Facility:  The development agreement contains provisions for decommissioning of the facility in the event that United ceases operation of any of the facilities on the property.

Financial Obligations:  The Developer’s Agreement outlines financial obligations of both parties as follows:

1. Creation of TID:  As part of this project, the City of Waupun will create a Tax Increment District (TID) to support extension of public infrastructure that will expand the Waupun Industrial Park. 
2. City Installed Infrastructure:  The project requires the extension of Wilson and Shaler Drives; extension of sanitary sewer, water, electric and storm water utilities, roadway improvements (including gravel base, asphalt pavement, as well as curb  gutter along Wilson and Shaler Drives); and, new intersection improvements at STH 26.
3. Municipal Obligations:  The estimated costs of the infrastructure improvements is $3.1 million and will be paid for by increment generated from the proposed development.  Total project costs, including land, storm water, professional services, interest and incentives are estimated at $9.4 million.  Note that the City has applied for and is pending an announcement on a $2.4 million grant from the Economic Development Administration (EDA) to support this project, which would reduce the City’s overall cost to develop public infrastructure if awarded. 
4. Land Sale:  The Developer will acquire an estimated 65 acres of city-owned land at a cost of $20,000 per acre for a total land sale of $1.3 million.
5. Guaranteed Minimum Tax Valuation:  The developer guarantees a combined minimum property valuation of $33.5 million annually over the life of the TID (achieved through phased development: Phase 1 and 2 $21.5M; Phase 3 $12 M), estimated to generate approximately $13 million over the life of the TID.
6. Incentives: The City recognizes the importance of expediting development of the three-phased project and understands without support this project will not proceed, but for TID contribution.  As such, the City has negotiated a tiered incentive structure based on occupancy and a pay-go shared increment structure as follows:
   • Occupancy incentives tied to timely phased development (Phases 1 and 2 completed by December 31, 2024, and Phase 3 completed by December 31, 2025) capped at $1.3 million.  The incentive allocation for each single phase of development is calculated based on percentage of valuation of the total project.
   • Additional Pay-go incentives providing 80% of available increment after annual City Debt Service is satisfied, capped at $2.5 million.
   • PILOT Payment:  If in any year, increment generated from the project is insufficient to cover City Debt Service, the Developer will pay the City a Payment in Lieu of Taxes (PILOT) payment to cover the debt service payment and no pay-go incentive will be paid in that given year. 

Staff Recommendation:  Staff recommends approval of the development agreement terms as negotiated with United Cooperative.  The City of Waupun is heavily dependent on government and other public sector jobs.  The area’s largest employers include the Wisconsin Corrections System, Waupun Public School System and Agnesian Healthcare.  Wisconsin ACT 10 and ongoing changes to funding for both public schools and healthcare systems has impacted the local economy.  As part of a strategic planning process, the City of Waupun identified the need to diversify the local economy and the Ag, Food and Beverage sector was identified as one of three target industry sectors.  Additionally:

1. Current zoning is M2 and supports development of this project as an allowable use.
2. City staff have outreach from neighboring businesses who support development of the project.
3. Envision Greater Fond du Lac conducted a preliminary analysis and determined the economic impact from the project when fully operational would be estimated at $100M, including direct and indirect jobs. 
4. Expansion of the Waupun Industrial Park will open additional shovel-ready land for development, needed to diversify the City’s economic base.
5. The local economy would strengthen as area producers receive a higher cash basis paid for their beans and pay a lower cost of soybean meal for animal feed.
6. There would be ancillary industries that could prosper from the creation of a soybean processing facility. These include, but are not limited to, Refining, Biodiesel, High End protein plants to produce soy concentrate, a plastics industry utilizing soybean oil, Lecithin manufacturers. An expansion of the local truck fleet is likely to result in increased local fuel sales and truck service. In similar circumstance in South Dakota, the building of a crushing facility led to the creation of a soybean research center, increased feed milling, and expanded dairy and livestock activities.

Next Steps:

1. An information portal will be opened on the City of Waupun website.  Citizens will have opportunity to submit questions and/or comments on the proposed project.
2. The final developer’s agreement will be available for review on or before June 7, 2022.
3. Staff will conduct a final project review on June 14, 2022 where community questions will be answered; That same evening action will be taken by the Common Council to approve/deny the final development agreement.
4. A site plan review will be completed by the Plan Commission and building permits will be issued based on approved state plans submitted to the City of Waupun Building Inspector.
5. Creation of a new Tax Increment District will begin.