Wausau fails to approve extension on downtown development as negotiations continue
By Shereen Siewert | Wausau Pilot & Review
A proposed extension for a downtown Wausau housing complex is in limbo, as the developer continues securing its funding and the city seeks ways to minimize taxpayer impact related to project delays.
An amendment discussed Monday during a special meeting of the council would have delayed groundbreaking until spring 2024 and opening to 2025. The Foundry on 3rd will create 154 market-rate apartments and commercial space, relying on more than $10 million in public assistance. T. Wall Enterprises, the team spearheading the project, specified an estimated $44 to $48 million cost for the project at the time of approval.
Representatives from T. Wall and Wausau Opportunity Zone made a case for the delay, citing the difficult lending environment that exists today due to rising interest rates and fewer borrowing opportunities. The conversation comes as T.Wall plans more than 1,300 apartments, a parking garage, single family homes and other spaces in another city – Green Bay. According to the Green Bay Press Gazette, T. Wall paid $4.5 million for the plan site in an auction and seeks $10 million in upfront assistance from a new tax increment financing district there to support the project they envision.
But the financial stack for Wausau has not yet come together, and T. Wall’s agreement with the city relies on reverse TID financing – which means the group does not see the money up front.
In his comments, Chuck Ghidorzi, on behalf of WOZ, acknowledged his role in prohibiting a city-hired team from accessing the property to remove soils with demonstrated contamination and vowed that taxpayers would not foot the bill for the added costs associated with that decision.
Though the specifics discussed in closed session by council members are not public, that pledge appears to be at the center of at least some of the ongoing negotiations. Following a closed session that lasted more than an hour, council members came back with a new motion, asking to hold action on the amendment as written and direct city staff to work with WOZ to pay costs related to delays on the project. By not taking action on the amendment, the agreement will default on Sept. 1.
But the council is also asking the city not to take action on the default itself, but rather continue working toward a new agreement within 60 days.
WOZ is the group that owns the property. The Wausau City Council in October 2019 approved the group’s proposal to purchase the mall with $1.6 million in taxpayer-funded incentives that included a $1 million forgivable loan and transfer of city-owned assets to the LLC for $1. Those assets include the former Sears building, which the city purchased in 2017 for roughly $650,000.
The funding request grew significantly after WOZ made the decision to close the mall on Jan. 31, 2021 and submitted a request for demolition and street construction. Those incentives pushed the city’s expected participation in the project to more than $6.3 million, not including the Foundry development.
Dist. 5 Alder Gary Gisselman said he voted no on the original proposal and will continue to do so. “I just don’t think the large aspects of this proposal really speak to the housing needs of the cithy of Wausau…and in my district, I don’t think the people are really in support of a high end development. I think we have to be aware of the living conditions of the lives of the people in the city and I will continue to vote no.”
Dist. 8 Alder Sarah Watson, who teaches economics, said setting a new deadline for June 2024 gives the council the right to say at that time, “no more.”
“So if we leave this session today and say this is going to be something we expect by the end of June, you know, that gives the developer a little perspective saying that we’re not going to give them another amendment. There’s not going to be a second.”
Tom Kilian, of Dist. 3, reminded his colleagues of past red flags related to other developments including the Riverlife project and said the city has had some problems in the past with public private partnerships. He pointed not only to the trouble with Riverlife, but also with past insistence on helping fund the former mall owner, CBL, prior to the company’s bankruptcy and FBI investigation.
“Clearly, we can see in retrospect, just what a poor kind of decision and assessment was done…and we’re seeing flags now – and hey, they’re red,” Kilian said. “So maybe unlike the past, we should take the time and do what we told the public we were going to do in the last meeting and that was seek informatio from outside counsel.
“It would not only be reasonable but in the best interest of our community and the taxpayers if our development partners did the same.”
In a statement sent to Wausau Pilot & Review, Dist. 4 Alder Doug Diny said the effort to recover excavation costs should not distract from the real goal: to get developer “skin in the game.”
“The focus must remain on T.Wall performance, T.Wall capacity, and T.Wall future commitment,” Diny said.
He went on to say that nobody can just “call dibs” on a prime piece of downtown property indefinitely for free.
“The city should seek compensation via an option to hold or a performance guarantee that allows transparent indication of T.Wall’s commitment and capacity to perform,” Diny said. “I don’t think it is unreasonable to expect consequences for failure to perform; or might the same scenario unfold later leaving the city again with little remedy?”
The deal will be revisited at a later date – but remains in the works at this time.
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