By Keene Winters
This is a public response. In recent days, I have had a number of inquires asking for more details about my suggested strategy for handling the RiverLife Village problem. Rather than try and address them all individually, I thought a follow-up column would be useful.
As things stand now, the City of Wausau, Barker Financial, LLC, Quantum Ventures, LLC, the Samuels Group and its subcontractors all have legal “guns drawn.” If the shooting starts and this disintegrates into litigation, the project will stall, and the costs will go up. Riverfront development could be tied up for years.
The next step needs to be a careful one. The City of Wausau has the power to defuse or inflame the situation. Here is how I envision bringing the situation under control:
- Step 1: Satisfy the liens filed by the Samuels Group and their subcontractors by lopping-off about $3 million-worth of the city’s sixteen acre riverfront property. It is an offer they cannot refuse, even if it leaves them “land rich” and “cash poor.” I will address that issue toward the end of this column.
- Step 2: After giving up the land, the city can enumerate its losses. It just transferred $3 million or so in property to satisfy liens by the contractor and subcontractor. It also advanced Mike Frantz $372,462.50 to pay bills he could not pay in 2016 and 2017. Now, there is a firm total for the loss of $3.4 million.
- Step 3: Approach Barker Financial with a reasonable offer. From where I sit, it appears that Barker’s role in the project was to be a placeholder on the development agreement until Frantz could organize a replacement company for Frantz Community Investors, LLC. Their primary sins in this matter are that they trusted Mike Frantz and that they failed to complete the paperwork to withdraw from the project. Tell them the city has $3.4 million in losses that should be paid by the developer of record. Offer to settle and exchange hold harmless agreements for $372,462.50, recovering for the city the money their partner borrowed. That’s a chance to settle and avoid court for roughly ten cents on the dollar. It’s not going to get any better than that. Remind them that if they still feel aggrieved, the city will not stand in the way of their attempts to recover the $372,462.50 from their erstwhile partner, who spent the money and dragged them into this.
- Step 4: Approach Michael Frantz with the same $3.4 million figure. Tell him that all can be forgiven if he withdraws from the project, signs the appropriate releases and leaves town. That may seem incredibly generous. However, Frantz has no money. Any claims the city files against him would likely be subordinate to a long line of other creditors. Having him and his gallery of LLCs and alledged partners go away is key to untangling this knot.
- Step 5: With all the middlemen gone, sit down with the general contractor and figure-out a way to get the buildings built. Samuels will probably need cash. The city has $2.74 million budgeted for the project and $290,000 worth of building plans that it owns. The city could offer some cash and the building plans in exchange for (1) the return of excess land not used in this phase of the project and (2) a development agreement that outlines the minimum matching contribution for the Samuels Group.
This should be a “win-win.” Because of city assistance, Samuels will gain a profitable venture.
Because the general contractor can actually do the work, the city should end-up with a taxable waterfront development that comes in roughly as planned and on budget. Given where we are at right now, that would be a welcome outcome.
What stands between us and success? I believe it is political courage on the part of the rank and file council members. They need to insist that the city go this route, avoid lawsuits and focus on the goal of getting new property on the tax rolls. To date, they have been led-around like sheep by the city staff, the mayor and the committee chairs. After all, the city borrowed money for this venture, it needs new tax revenue to make those payments.
The council should remember that the city’s hands are not clean in this affair. It is not the victim. It has now come to light that top city officials knew about Frantz’s insolvency for at least the past eighteen months. They actively sought to conceal that fact by paying his outstanding bills in 2016 and 2017 under the table. Meanwhile, they were telling the public that the financing was sound and the developer was meeting all of this benchmarks.
That makes the city complicit in promoting the fiction that Frantz had money. That left the Samuels Group and its subcontractors busy working on credit and making improvements to city-owned land. The city apparently did nothing to warn Samuels that they might not get paid. It seems to me that those actions undercut the city’s legal position in this matter. Once the council solves the immediate crisis, it would do well to investigate and hold accountable those people involved in promulgating misleading information.
I sincerely hope that this is the last time I have to write about this project. I would like to get back to my series on 21st Century vision for Wausau.
It will take more than an editorial to fix things. The city council and the citizens of Wausau are going to have to demand that this crisis be resolved by removing the developers and working directly with the general contractor.
I admit that I am not a legal expert, and I am not privy to all the inside details. It just seems to me that focus is the way out of this chaos. Get rid of the middlemen and work the general contractor to get something built. To do anything else is just a detour to accomplishing the city’s goals.
Editor’s note: The views of our readers and guest columnists are independent of this newspaper and do not necessarily reflect the views of Wausau Pilot and Review. To submit a letter, email [email protected] or mail to P.O. Box 532, Wausau, Wis., 54402-0532.
