By Shereen Siewert
WAUSAU –The viability of a multi million dollar riverfront development is still unknown as few details have emerged about a new financial partner for the project, approved last week by members of the Wausau City Council.
The first phase of the Riverlife project, a multi-phase development of a roughly 16-acre parcel along the river’s edge, includes incentives of about $2.74 million in grants and loans to support the developer and $2.27 million in infrastructure costs. Construction is underway, and developers report having secured letters of commitment for five apartments, a condo, a townhouse, and 17,000 square feet of commercial space to be leased.
As construction continues, so do efforts to secure final financing to complete the projects. One partner — Barker Financial — withdrew from the project and was replaced Jan. 9 by Quantum Ventures. That change, city leaders say, was an expected one, as Barker was only intended to provide bridge financing early in the construction process.
City council member Dennis Smith was one of two people who voted against approving South Dakota-based Quantum, based on a lack of information about the group’s identity and background.
“For all we know, they could be some guy working in his pajamas in somebody’s basement,” Smith said. “We know absolutely nothing about this new person except that he supposedly has deep pockets.”
Little is known publicly about Quantum Ventures, though Senior Project Manager Michael Frantz, who has been involved in the project since July 2016, told council members he will submit additional documentation about the group. The organization’s website, which once featured the Riverlife project and listed a Milwaukee address and phone number, is now under construction and lists no other identifying information about the group except for the organization’s name.
And despite Frantz’s promises on Jan. 9 to register Quantum in Wisconsin “tomorrow,” so far, the Wisconsin Department of Financial Institutions shows no such registration.
South Dakota state records show Quantum Ventures was registered there on Sept. 7, 2017 in the state as a limited liability company. (See registration, embedded below.)
The registered agent named on the registration documents is Dakota Agent Services, which lists an address “where the company conducts its business” as 110 E. Center St., Madison, South Dakota. But that address actually belongs to a company called MyDakotaAddress, which offers mail forwarding services for companies and individuals needing to “establish South Dakota residency,” according to the organization’s website.
A search shows that at least 250 companies, mostly LLCs, are registered to that address.
None of Quantum’s three principals — Founder/CEO Jason Sharkey, Strategic Engagement Advisor Clay Doherty, or Mike Frantz himself — are named in the South Dakota registration document. Rather, the only name that is listed is that of David DeLoach, a former attorney who lives in Dana Point, Calif. who operates a corporation-forming company. DeLoach’s organization, called Corp95, specializes in creating so-called “shelf corporations” for businesses and investors that need to form a new company quickly.
Companies and individuals can “order” shelf companies through Corp95 that are fully anonymous to the public; come with a federal tax ID number; are guaranteed to have no owed taxes, debts, or pending litigation; and come with engraved corporate kits that include bylaws, a corporate seal and share certificates.
And South Dakota is one of Corp95’s top four recommended states for forming a business because it allows for “the most privacy of ownership than in any other state,” according to the company’s website. The state is one of a handful that does not require that its businesses maintain any physical presence in the state.
The issue has prompted some members of the public to be openly critical of the city’s process in selecting developers for key projects. Resident and former Marathon County Board member Joanne Leonard on Jan. 9 urged the council to take a hard look at this and other projects that impact taxpayers.
“You have nothing to lose but more money to players we know little about,” Leonard said.
Unlike Wausau, some communities, such as LaCrosse, now rely on redevelopment authorities made up of industry professionals to add another layer of expertise and accountability for major redevelopment projects. Typically, redevelopment authorities do not include city employees or members of the city council. The committees help vet RFP applicants and present recommendations to council members and city officials to help guide in the decision-making process.
Dave Johnson, a banking professional with decades of experience in the industry, said a committee of non-city employees, with the right experience, could be a useful tool for Wausau in the future.
“This way, they will increase the odds of success,” Johnson said.
Though questions remain about the project’s capital stack, Frantz said he is committed to bringing the Riverlife project to fruition and has a “sphere of influence and investors” to make the project work, despite ongoing financial and legal battles in several open Wisconsin cases.
Council President Lisa Rasmussen pointed out that 85 percent of the project is being funded by the private sector. Further, Rasmussen said, the project is currently meeting established benchmarks, with clawback provisions established in the developer agreement that minimize the city’s risk.
Finance Director MaryAnn Groat said the city will receive evidence that financing is all in place “before another penny goes out the door.” As of last week, the city had disbursed $290,078.50 in pre-development loan funds as part of the development agreement, according to Economic Development Director Chris Schock.
“We have not received that evidence yet, but we will, before we start issuing any checks,” Groat told the council.QV-Deloach-B0038-7752(1)