By Shereen Siewert
WAUSAU — City leaders on Tuesday will consider a proposed partner change for a $20 million riverfront project, even as financial challenges continue to mount for a key investor in the project.
Iowa-based Frantz Community Investors has been working to develop about 16 acres owned by the city between the Eye Clinic of Wisconsin and Bridge Street. The package for phase one of the Riverlife Village, approved in July 2016, calls for $2.74 million in grants and loans to support the developer and $2.27 million in infrastructure costs such as sidewalks, lighting and stormwater management.
Members of the economic development committee on Dec. 21 unanimously approved a change in the financing structure for the project. Barker Financial, which provided construction financing in the early stages of the project, is withdrawing from the plan and being replaced by an entity called Quantum Ventures. The substitution is subject to final council approval on Tuesday.
During the meeting, Economic Development Director Chris Schock told committee members that the change is “simply an update.” But so far, little is known about Quantum Ventures. The company’s webpage has scant information about the organization and lists just one project under development — Wausau’s Riverlife. No officer names or other information about the company are listed.
The company did not appear in a search of the Wisconsin Department of Financial Institutions as a registered corporation in the state, and the phone number listed on the company’s website goes to the voicemail of a man who identifies himself as Bobby Kraft. Messages left at the number were not immediately returned.
In city documents, Quantum Ventures lists three principals: Founder/CEO Jason Sharkey, Senior Project Manager Michael Frantz, and Strategic Engagement Advisor Clay Doherty, who is based in Washington, D.C.
In an email to Wausau Pilot and Review, Doherty said Quantum is a client of his and “as such, I support their communications, marketing and stakeholder engagement.”
Sharkey’s LinkedIn profile lists him as a medical device distributor.
Mike Frantz told members of the committee that it is “not unusual to finalize the ownership structure” during the early phases of a project.
Frantz has been plagued by financial difficulties in recent months and is currently named as a defendant in at least two open lawsuits in Wisconsin, one of which is connected to a failed Green Bay hotel renovation.
Frantz initially began renovations on Green Bay’s Hotel Northland in 2013 after submitting a $3.1 million bid to buy the vacant building from the Wisconsin Historic Preservation Corp. The $44 million project was financed through a combination of grants, tax incremental financing and loans. But in November 2016, Huntington Bank withdrew $12.8 million in funding to finish the project, and the deal fell apart.
Wausau Economic Development Director Chris Schock said Frantz has been open and up front with city officials about his struggle with Hotel Northland.
“They (Riverlife/Frantz) continue to meet their development agreement benchmarks- including completion of the geopier foundations by end of December which was a requirement of the development agreement,” Schock said.
Other players have also changed since the development agreement was initially approved. Paul Pappageorge, who is listed as chief financial officer in Frantz’s original proposal for the city, is no longer involved, Schock said.
Pappageorge, too, has a troubled financial history, including being personally named in a $127 million 2011 FDIC lawsuit in connection with the failed Mutual Bank of Harvey. The bank’s failure was one of the largest in the U.S., according to the FDIC. It is not clear if city leaders knew of Pappageorge’s financial background before selecting Frantz as the developer for Riverlife.
“I believe (Pappageorge) was an employee of Frantz previously, but is not involved in the project currently,” Schock said.
Former council member David Oberbeck said he hopes the council on Tuesday will ask plenty of questions and avoid rushing into any final decision.
“The question is, why are the players changing?” Oberbeck said. “Has the financial risk increased? This should lead to more vetting so that all parties are protected.”
The city has currently disbursed $290,078.50 in pre-development loan funds as part of the development agreement, according to Schock.
“Those are direct project expenses which are collateralized to the City and include the completed, state-approved plans by Mudrovich Architects and the engineering work by Ayers Associates,” Schock said.
Oberbeck said city leaders must also consider Wausau’s substantial increase in debt.
“Without this project, what other private investment is in the future to pay down the public expenditures in the tax increment district?” Oberbeck said.
The Wausau City Council will vote on the amended developer agreement during its regular meeting at 7 p.m. Tuesday, Jan. 9, at City Hall.