They just don’t want to follow the rules, and the alders want to continue to back them on that. This came out on bad news Friday.
December 14, 2011
Michael S. Green
Michael, Best & Friedrich, LLP One South Pinckney St.
PO Box 1806
Madison, WI 53701-1806RE: Edgewater Project
Dear Michael:
Thank you for your letters of December 7 and December 13, 2011, and for meeting with Assistant City Attorney Anne Zellhoefer on this project. Please refer to my letter of December 1, 2011. In that letter, I listed the outstanding matters related to Edgewater. Among the conditions are the proof of a Financing Commitment and providing the City with executed Construction Contracts.
We have not received a response to the lack of a Financing Commitment, including the
$41 million gap in financing. We have not received the Construction Contracts, although they were promised to be delivered to the City on December 2, 2011.Once these conditions are met and City staff has reviewed them, we can turn to the other items listed in my December 1 letter.
Sincerely,
Michael P. May City AttorneyCC: Mayor Paul Soglin
Anne Zellhoefer
Steve Cover
And the news that went with it is that Bob Dunn is thinking about suing us. For what, doing our jobs? Some alders even wondered aloud that we might be treating Dunn differently.
Ald. Mark Clear, who was standing listening to the press conference and recording it, said afterward that “there was not anything that was a surprise” in the media event, but added that he wondered if the documentation the city was requiring was typically requested at this stage of the process.
In a phone interview before the press conference, Ald. Bridget Maniaci — like Clear, a strong supporter of the project — claimed that the city has been dragging its feet and “throwing lots of monkey wrenches into the process.”
I don’t think we’re doing anything different, but most of this is done by staff after the council votes, so its a little hard to know. However, this is a huge deal, there is $41M missing. As well as confirmation of the construction costs – to confirm that they actually need the money. These aren’t little deals, this is huge. It’s not a matter of picky paperwork, there are major gaps – in proving that gap – that they need the $16M. What if the construction contract came in a few million less, then the city and the taxpayers could save a few million dollars. It’s reasonable, even mandatory that we get this kind of information. I tried digging through the policies and documents to find it in writing that we needed this information, but I think its so basic that we didn’t bother to write it down explicitly, but here’s some language that leads us to needing this information.
From our tif policies
4.1 (6) “But for” Standard. Each project must demonstrate sufficient need for the City’s financial assistance, so that without that assistance, the proposed project would not occur. Every other financial alternative is to be exhausted prior to the use of TIF, including equity participation, other federal and state funds, bonds, tax credits, loans, etc. TIF assistance will be utilized as gap financing. Each project must demonstrate probability of economic success.
and
(7) Equity Greater, Equal to TIF. TIF assistance shall not exceed the amount of equity provided by the
Developer. Equity is defined as cash or un-leveraged value in land or prepaid costs attributable to the
project. Donated Developer or Construction Management fees shall not be constituted as equity investment (See 3.2 Non-profit developers).
I think the first language shows that we need to have proof of the need, and part of that is proving your costs – through the construction contract – to show the gap. The second paragraph shows that we need to see where their $41M in equity is coming from and that it can’t come from developer fees. Again, we need to see the proof of equity to make sure our rules are being followed.
From the resolution the council voted on
6. Disbursement Agreement Concerning Public Access Project. Disbursement of the Sixteen Million and 00/100 Dollar ($16,000,000.00) TIF Loan shall conform to a disbursement agreement and such disbursement must be authorized by the City Comptroller contingent upon review and approval of construction draws by a Supervising Architect retained by the City.
I’m guessing we need to see the construction contract to figure out what this schedule might be, especially given the fiscal not on that resolution.
The $16,000,000 Edgewater project funding gap is attributable to the construction cost of a public access component, comprised of a plaza structure constructed over the 1970’s addition to the Edgewater overlooking Lake Mendota, a staircase and waterfront amenities.
Again, the gap comes from the construction costs, so we need to see the construction contract.
I’m not sure what Clear and Maniaci are thinking, but this is typical and just good public service to ensure that the money is there and the calculations were correct. My questions is, what does Dunn have to hide? Why can’t he produce the construction contract? And where is his $41, you’d think if he had it, he’d be nearly bragging about it, since most developers don’t have that kind of equity for their projects. Something seems fishy here. I’m glad the city is doing its due diligence and not taking the developer at their word.
