Well, the kinda did. Sort of. The original city attorney’s letter is here. They don’t really respond to the issues in the letter, I can’t tell if they gave them the information that the city needed or not. I kinda don’t think they did. The city attorney was specific about what they needed, the Edgewater was general and accusatory instead of moving things along to a conclusion. I’m expecting a law suit, that is what this response feels like, instead of someone actually trying to get it done. Maybe I’m just a little too cynical about the tactics of the Edgewater folks, but this doesn’t seem like something that is going to happen.
Michael P. May, Esq. City Attorney
City of Madison
City-County Building, Room 401
210 Martin Luther King, Jr. Blvd. Madison, WI 53703Re: Correspondence on Edgewater Project
Dear Mike:
We have received your letter of December 1, 2011. It is unfortunate that after over 18 months of efforts on the part of Landmark X, LLC (the “Developer” or “Landmark”) we sit at a position where it appears the City of Madison has made the choice to not honor its obligations created through the City Council.
Landmark received approval of the final Planned Unit Development Ordinance for the Edgewater Project on May 18, 2010 (the “PUD Approval”). On the same evening, the City Council adopted the resolution authorizing $16,000,000 of Tax Increment Financing for the Project (the “TIF Resolution”). The Developer has worked in good faith and expended significant amounts of time and money since May of 2010 to satisfy all of 75 conditions of the PUD Approval. As stated to Mayor Soglin in correspondence from Landmark on November 30, 2011, the satisfaction of the PUD Approval conditions have been memorialized by that certain Escrow Agreement dated as of April 12, 2011 by and between Landmark, the City of Madison and Preferred Title Company.
In addition to the satisfaction of the PUD approval conditions, Landmark has also endeavored to satisfy the 22 conditions of the TIF Resolution and has satisfied all conditions except those which are to be delivered as part of the Project financing closing or require action of the City. Your letter of December 1 states that Landmark has failed to provide “evidence that it had satisfied the conditions to proceed” with the TIF Loan. However, it is only the failure of the City to continue to work in good faith with Landmark which stands in the way of satisfaction of any conditions. Lastly, your letter and the letter from the Mayor to the Developer of November 15,
2011 appear to stipulate additional conditions for the funding of the TIF Loan. Additional contingencies or conditions not specified in the TIF Resolution that the City may now be attempting to add are only an unreasonable and intentional delay of the Project.The Developer and City staff spent a significant amount of time earlier this year working together to develop a TIF Loan Agreement which would provide the parties a vehicle by which the funding of the $16,000,000 TIF Loan could (and can still) occur in 2011. The current draft of the TIF Loan Agreement, much like any other commercial loan agreement, would require the City to disburse the TIF Loan for the Edgewater Project only upon the closing of the Project financing. We also incorporated the concept of an escrow account within the TIF Loan Agreement. The escrow account would be established where the City of Madison customarily keeps its accounts and would remain within the control of the City. This would allow the City to fund the TIF Loan per its 2011 Budget, but still assure that no funds of the City of Madison would be available to the Developer until the closing occurs and only be utilized in the manner for which they are intended and approved. The escrow concept was incorporated into the TIF Loan Agreement to specifically address these issues and in anticipation of the City needing a vehicle to facilitate funding of the TIF Loan within the 2011 Budget year.
The TIF Loan Agreement is substantially complete. The Developer made efforts this past summer to engage with City staff to finalize and execute the TIF Loan Agreement, but was informed by staff that the City would not take action on the TIF Loan Agreement at that time. Now the City is claiming that there is insufficient time to complete the TIF Loan Agreement for funding of the TIF Loan within the 2011 budget year. We disagree. As we were this past summer, we are prepared to immediately commence work to complete and execute the TIF Loan Agreement.
Your letter describes two clear alternatives by which the City could have the funds available to provide the $16,000,000 it has budgeted for 2011. The first alternative is the City funding the TIF Loan amount through an appropriation from the General Fund of the City, presumably a form of short-term internal borrowing. The second alternative is the City seeking an outside short-term borrowing prior to year-end. Then, under either scenario, the City refunding the form of short-term borrowing through City’s annual borrowing in 2012. The TIF Loan Agreement provides the mechanism to take advantage of these alternatives outlined.
The Developer is willing to cooperate with the City to the greatest extent possible on either alternative the City may choose. This can include the Developer staging the timing of the disbursement of the TIF Loan funds into the Project until such time as the subsequent borrowing has occurred. This would allow the City to secure the funds in 2011 and satisfy its requirements under the TIP Resolution, while not putting the funds borrowed on a short-term basis at risk unless the City would choose not to include the $16,000,000 in its 2012 annual borrowing. We currently have a meeting set on Wednesday, December 7 with City staff to work to address the TIP Loan Agreement. Despite our request last week to meet as soon as possible, and the need to have resolutions for the December 13 Council meeting completed prior to December 7, this was the first date made available by City staff. We will discuss in our meeting with City staff how else Landmark may be helpful to the City in whichever alternative it shall choose.
Thank you for offering the alternatives under which the City could meet its obligations for funding the $16,000,000 TIP Loan in 2011, and which would allow the Edgewater Project to be developed with the commitments previously approved by the City Council. Notwithstanding obstacles such as a challenging financing environment and a frivolous lawsuit, the Developer has not waivered in its commitment to the Edgewater Project and communicated openly and clearly over the past year with elected officials of the City of Madison and City staff of its intent to move forward with the Project, while operating in reliance that the City will meet its obligations. The Developer has worked in earnest to satisfy all conditions of the PUD Approval and the TIP Resolution. The Developer has made a substantial, non-refundable deposit on its financing commitment. The Developer expects the City to work in good faith in meeting its prior commitments with respect to the Project, and anything less is nothing but an attempt by the City to avoid its obligations.
Very truly yours
Michael S. Greencc: Robert P. Dunn (via e-mail)
Mayor Paul Soglin (via e-mail)
Dave Schmeidicke, Finance Director (via e-mail)
Steve Cover, Planning and Development Director (via e-mail)
Anne Zellhoefer, Assistant City Attorney (via e-mail)
