By Shereen Siewert
WAUSAU — The developer in charge of a multi-million dollar riverfront project is defending his organization’s role in the project after announcing the CEO of his organization would step down.
Mike Frantz, senior project manager of Quantum Ventures, spoke to the city’s finance committee Tuesday, hours after Quantum issued a news release stating that Jason Sharkey would no longer be a part of the project. Quantum, the developer of the Riverlife Village, has been under fire since a Wausau Pilot and Review investigation revealed that Sharkey served a diverted sentence in Denver, Colorado for his role in a $8.3 million fraud scheme.
Frantz, fielding questions Tuesday about Quantum’s ability to finance the project, reassured city leaders and said he will expects to secure senior lenders this month.
“I’ve had 20 developments over x years and one of them didn’t work,” Frantz told members of the finance committee on Wednesday. “I’ll take that track record.”
In his comments, Frantz was presumably referring to the troubled Hotel Northland project in Green Bay formerly spearheaded by Frantz’s former company, Frantz Community Investors, which is also the developer the city originally chose for the Riverlife Village.
But Frantz did not mention other FCI projects that stalled for financial reasons, several of which were detailed in a February 2017 USA TODAY NETWORK-Wisconsin report.
In Newton, Iowa, a community of 15,000 people roughly 30 miles east of Des Moines, city leaders in 2017 scrambled to find a new development partner for a historic hotel restoration project after a “lack of progress” by Frantz Community Investors. That came two years after FCI was chosen to spearhead the $10 million project, which included a $75,000 Main Street Iowa Challenge Grant. The much-celebrated project, which would have added 35 market-rate apartments, commercial space and an upscale restaurant to the building, fell apart when FCI was unable to secure financing for the development, according to reports in the Newton Daily News. There, the city was forced to buy back the building.
And in Fort Madison, Iowa, the state’s Economic Development Authority in January 2015 awarded a $3 million forgivable Community Development Block Grant loan to renovate three historic buildings badly damaged by floodwaters in 2008, choosing FCI as the developer for the project.
Less than two years later, as the buildings stood partially renovated and completely empty and after disbursing more than $1.5 million, the city halted its payments to FCI. City Manager David Varley said the project failed because the funds were mismanaged.
Frantz was also briefly involved in a Fond du Lac hotel renovation but was forced to turn over the property to Barker Financial when, mired with complications in the Hotel Northland project, he was unable to repay the loan.
A June 2016 analysis of the original FCI proposal performed by Ehlers at the city’s request and furnished to all council members cautioned the city that the project could have a “relatively low level of return” even with TID participation. As a result, the final agreement includes a shortfall guarantee that forces the developer to repay any portion of the loan not covered by tax increment revenues.
The Ehlers analysis was also critical of the city’s 99-year ground lease for $1 per year, calling the terms “excessive,” and cautions that the proposal leaves the city responsible for any pre-existing environmental conditions, the cost of environmental remediation, and maintenance for all roads and utilities. Those are all costs that could potentially increase the city’s financial burden, according to the Ehlers report.
Wausau Economic Development Director Chris Schock, in a Wednesday morning radio interview on WXCO, said the project remains on schedule for completion in 2019. The project broke ground in 2017, and much of the foundation work has been completed in recent weeks.
“Now that the foundation work is complete, Mr. Frantz said last night, you know, they’re going to be kind of stopping as they finalize their kind of final financing package, and then they will obviously start the next phase of construction,” Schock said. “From our perspective it’s something that happens in every city. It’s been a fairly logical process.”
At Tuesday’s meeting, Mike Frantz was sharply critical of “certain members of the media,” who he said unfairly and inaccurately portrayed Sharkey’s role and who chose to ignore the facts of the case.
“Let me be very clear,” Mike Frantz said, reading a prepared statement. “The only conviction Jason has had is in the court of Wausau public opinion.”
As reported in the original Pilot story, Jefferson County prosecutors charged Sharkey with five counts of securities fraud and one count of theft in 2007. He received a two-year deferred sentence in April 2008. Two owners of Klytie’s, the company Sharkey worked for, also were indicted.
Sharkey was allowed to move to Wisconsin midway through his deferred sentence and was monitored by probation agents, according to a spokeswoman for the Jefferson County District Attorney’s office. Charges were dismissed when his term was completed as part of a plea deal, facts that were also disclosed in the Pilot’s original reporting, published with cooperation from The Denver Post.
Mike Frantz also blamed the media for investors who are now second-guessing investing in Wausau, “not because of Jason but because of how Wausau treated him.”
Frantz expects to present his financing package to city leaders on March 27.