VIROQUA, Wis. — The Viroqua City Council has moved decisively to greenlight the major infrastructure phase of the 22-acre Hanson Farm development, securing bids totaling more than $3.19 million to build out the roads, utilities and storm water management needed for over 100 planned housing units and significant commercial space.
The development, often referred to as the Hanson property, is located on Viroqua’s north side, situated in the heart of the city’s commercial district, just north of Culver’s. The entire process began in 2023 when the Viroqua Development Association (VDA) purchased the farmland and buildings for $650,000 to address the area’s high housing demand. The city subsequently bought the property from the VDA.
The project is considered highly important to the city, aiming to provide a mixture of workforce housing, duplexes, townhomes, and rowhouses, with proposals for over 100 units accepted by the city. The development is structured as a multi-use site that also includes commercial lots along State Highway 14.
Design and Development Path
After considering multiple possible designs and layouts by consultant Kurt Muchow of Vierbicher & Associates, the master plan for the development was approved by the City Council. The plan features commercial sites along State Highway 14, originally intended to be sold first to generate early revenue. Local businessman LaVon “Spanky” Felton later proposed a conceptual development for the commercial lots that would preserve the “farmstead theme,” including the existing dairy barn, silos, and pine trees.
On the residential side, at least four developers have proposed plans for the housing parcels. Those proposals ranged from twindo style construction, to row houses to multi-family housing.
Challenges and Contingencies
In may the city was notified by the DNR that excessively high levels of methane were detected around the old city dump just south of, and adjacent to, the development. The issue presented a potential obstacle to the development. This issue caused some delays, though City Administrator Nate Torres noted that the city is committed to addressing the required mitigation. Once the methane issue was discovered the city hired a consultant to advise on mitigation to meet DNR requirements. The consultant developed a three step plan that using a trench on three sides of the site to collect gas and vent it up rather than out.
Step one of that plan has been completed along the east side of the site but the cunsultant and the DNR have not been able establish how effective that step has been and the work is ongoing. Despite the challenges, the City Council chose to proceed with the infrastructure plan on August 26. City Administrator Torres expressed confidence the methane issue will get resolved and at least two of the potential developers have made commitments to move forward. That gave the city leadership and the council confidence that the financing for the development has enough backing to build out infrastructure starting this fall.
Financing the Infrastructure
The Hanson Farm development falls under Tax Incremental District (TID) number seven, created in 2019 and expected to run until 2040.
How the TID Works:
A Tax Incremental Financing (TIF) district is a mechanism that allows the city to use all the new property tax revenue generated by development within the district’s boundaries (the “tax increment”) to pay for the upfront infrastructure improvements like streets, utilities, and site preparation. These funds are separate from the general fund and can only be used for specific purposes, such as development within the TID or community projects within a half-mile radius. TID 7 expenditures include landfill remediation ($700,000 budgeted), developer incentives, and the land purchase costs.
Because the new tax base is still gearing up, the City requires interim financing while the TID district is develops enough cash flow to sustain itself. The city’s financial advisors recommended a State Trust Fund loan as interim financing, given its competitive taxable rates. The long-term goal is to refinance this loan into a permanent tax increment revenue bond around 2028, once the actual tax revenue generated by the finished construction is clearer.
The financing plan, developed with financial advisors from Ehlers and Assoc., centered on using the State Trust Fund (STF) as an interim financing tool. This was necessary because the tax incremental district (TID 7) needs time to generate value from new construction before permanent long-term financing can be secured.
Why the State Trust Fund Loan?
The city’s goal was to secure tax-exempt debt to obtain lower interest rates. However, bond counsel reviewed the development agreements which contained language regarding minimum assessments and guaranteed tax increment and determined that to keep this language, the financing had to be executed on a taxable basis.
The State Trust Fund loan was the optimal choice for taxable debt because it offers competitive taxable rates, often better than what banks can provide. The STF does not differentiate its rates based on tax-exempt or taxable status.
The STF loan is structured as a fixed-rate loan with structured amortization
. Key features include:
• The State allows the city to make interest-only payments for the first two years (2027 and 2028), with the first payment due March 13, 2027.
• The loan can be prepaid without penalty between January 1 and August 31 of any year.
• The long-term strategy is to refinance this interim STF loan into a potentially tax-exempt tax increment revenue bond once the actual tax increment revenue from the Hanson Farm development is clear (likely around 2028 or 2029).
Detailed Financing Options
Financial advisors presented two structured options—a 10-year term and a 20-year term—for the approximately $3.19 million interim loan needed to cover the infrastructure contracts. A key difference between these two financing options was the projected interest payments during the initial two interest-only years (2027 and 2028), which accounted for an estimated difference of about $64,000.
Advantages and Disadvantages:
Option 1: 10-Year Term (Approx. 5.5% fixed rate)
• Advantage: This option would lead to lower interest payments in the initial interest-only years (2027 and 2028). The lower rate compared to the 20-year term could save the city approximately $64,000 in interest costs over those first two years.
• Disadvantage: Starting in 2029, the annual principal and interest (P&I) payment would be significantly higher (around $660,000). This forces the city to commit to refinancing by 2028 to avoid the large payments.
Option 2: 20-Year Term (Approx. 6.25% fixed rate)
• Advantage: This option provides a “security blanket”. If development were slow to materialize and broader market interest rates rose dramatically, the city would be locked into the 6.25% rate for the full term. Furthermore, the annual P&I payments starting in 2029 are lower (around $365,000), giving the TID more time to generate increment before refinancing becomes essential.
• Disadvantage: The interest rate is higher, resulting in approximately $64,000 more in interest payments during the first two years compared to the 10-year option.
The Decision to Move Forward
City Administrator Nate Torres noted that while the idea is not to lock into the full 20-year term, maximizing interest savings early was desirable. Mayor Justin Running agreed that if they could not get favorable payment terms for years 29 and 30, the city would need to choose the 20-year term to ensure flexibility.
Ultimately, the Common Council voted on September 23, 2025, to pursue Option 1, contingent on negotiation results.
Council Vote and Contingency:
Council member Cindy Hubbard made the motion: “I’ll make a motion that we go the 10 year term, contingent on getting better deal, and if unable to, then go with a 20 year term”. The motion passed, setting the city on a course to pursue the 10-year term unless negotiations for reduced 2029 and 2030 payments fail, in which case the city would default to the 20-year term.
The official action on approving the loan resolution, once finalized, is expected at a subsequent meeting, but the financing wheels are now in motion.
Accepted Bids and Work Schedule
Bids for the infrastructure were received on September 25, 2025. The City Council approved two primary contracts on September 23, 2025, contingent on the financing plan and finalization of development agreements.
Contract A (Hanson Development Infrastructure)
- Low Bidder: Badger Environmental.
- Amount: $3,075,891.58 (Base bid plus all alternates).
- Work Included: The base bid covers road infrastructure (streets, water, sewer, storm water management) for Roads A, B, and C, and the construction of a large storm water basin. Alternates accepted included the remaining residential roads (Road D and Park Road), installation of private utilities, and sidewalks along Road D.
Contract B (Railroad Avenue Stormwater)
- Low Bidder: Gerke Excavating.
- Amount: $116,440.02.
- Work Included: Construction of a regional stormwater pond on the adjacent Railroad Avenue development area. This work was necessitated by a development agreement with Chad Olson’s Live Action Storage project.
Vote to Accept Bids (Sept. 23, 2025):
- Contract B (Railroad Ave): Motion to approve the bid to Gerke Excavating for $116,440.02 was made by Seth McClurg and seconded by Todd Spaeth. (Vote result: Passed).
- Contract A (Hanson Farm): Motion to approve the bid to Badger Environmental for $3,075,891.58, contingent upon approval of development agreements and financing, was made by Seth McClurg. (Vote result: Passed, with roll call showing unanimous approval).
Future Work Schedule
With bids accepted and financing secured, dirt moving is expected to begin soon. The contractors will immediately focus on site grading, installing underground utilities (water and sewer mains, designed to loop the water system), and constructing the storm water ponds.
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