City OKs TIF deal for marina condo project

Agreement calls for developer to receive $365,000 loan to deal with soil problems on construction site
By 
KRISTYN HALBIG ZIEHM
Ozaukee Press staff

 Tuesday approved an amended developer’s agreement that spelled out the terms of a $365,000 tax incremental financing loan to developer Stephen Perry Smith, who will use the money to remediate soil issues on the marina district land the city sold him a year ago that he is currently developing.

The amended agreement, which was approved on a 5-2 vote with Aldermen Pat Tearney and John Sigwart dissenting, solidifies the council’s commitment last month to provide the loan to Smith, who is developing the three-building, 11-unit Lakepointe condominium project at the east end of Washington Street.

Smith sought the money after encountering poor soils on the land, telling officials he knew when he bought the land that it had some soil issues, but the extent of the problem was not discovered until construction began.

Without the TIF loan, he said, he would be forced to put the second and third phases of the project on hold. The first phase is largely completed.

 City Administrator Mark Grams said he spread the payments to Smith out over a longer period of time than initially sought by Smith, saying he wanted to ensure work on the project is started before the city hands over the money.

 The agreement calls for Smith to receive as much as 31%, or $113,150, after an occupancy permit has been issued for the first phase of the project, another 31% each after the footings and foundation for the second and third phases have been installed, and 7% after the occupancy permit has been issued for the third phase.

“What I like about the way you have this phased is it encourages him (Smith) to see it through,” Sigwart told Grams. “I think it’s sound.”

The money can only be used to remediate soil issues on the property, the agreement states, and before any funds are released, Smith has to provide receipts and invoices proving the payments are going toward the soils issues.

Sigwart asked that Smith provide the city with an initial cost estimate for the work so officials are sure the funds are used only for the unexpected, additional costs of dealing with the soils issues, a clause Smith agreed to and that was included in the agreement.

The city would obtain the funds for the TIF loan through a State Trust Fund loan, with the debt service payments coming from increased taxes on the property.

If there is a shortfall, the agreement states, Smith must make up the difference.

Smith told the council his request is a one-time deal.

“We will not be coming back, you can hold me to that,” he told aldermen.

Gasper said he would like the city to examine what can be done  in the future to avoid situations where a developer seeks TIF funding after a project has begun.

“I’d much rather that in the future we look to identify these problems on the front end (of a project) ... not after,” he said. “I think we’re likely setting a bad precedent.”

Tearney said the concern about setting a precedent is the main reason he voted against the agreement and the TIF loan.        

Two residents urged the council to reject the amended agreement.

Kim Haskell, 767 W. Grand Ave., said the document states that Smith had said the project would not be completed without the funds, something she said is false. Smith, she said, had merely said he would delay work on it.

Her husband Dwayne said that by approving the loan after the city sold the land to the developer proves that written documents don’t count.

Providing funding for a developer “would be very painful,” he added, if the city doesn’t help residents whose property was significantly damaged in the recent floods.

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Wisconsin’s largest paid circulation community weekly newspaper. Serving Port Washington, Saukville, Grafton, Fredonia, Belgium, as well as Ozaukee County government. Locally owned and printed in Port Washington, Wisconsin.

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