By Shereen Siewert
WAUSAU — City officials are seeking council approval to postpone payment on a $750,000 loan by four years to prevent increasing deficits in the riverfront tax increment district.
The five-year promissory note, provided to the city by the Alexander Foundation, was issued in August 2013 to purchase property at 1010 N. First Street from McDevco for riverfront redevelopment purposes. Under the terms of the original agreement, the Foundation agreed to a 2.75 percent interest rate, but interest would be deferred for five years.
The principal payment would be due Aug. 16. But, during a Jan. 23 finance committee meeting, Wausau Finance Director Maryanne Groat said she approached the Alexander Foundation to request a four-year deferment given the fact that the riverfront is taking longer to remediate and develop than was originally expected, and the foundation’s board of directors approved the city’s request.
Groat told the committee she made the request after looking at the city’s bond rating. Moody’s Investor Service in November downgraded Wausau’s credit rating amid concerns over the city’s continued high debt load and plans for additional borrowing.
One of the concerns outlined in the Moody’s report is significant deficits in tax increment districts, Groat told the committee. Because the principal payment of $750,000 would come from Tax Increment District 3, the deficit in that district would increase if the payment was made.
“I don’t know that it would impact our credit rating but it wouldn’t improve the financial position of the tax increment district,” Groat said.
The interest cost based on that $750,000 is $20,625 per year, Groat said. The city can prepay at any time.
“Our intention would be to pay it off once the increments start coming in, so that would be probably 2020,” Groat said.
If the council approves the new terms, the note will be extended to August 2022.