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Complications mount as Riverlife deadline nears

in Breaking News/News

By Shereen Siewert

WAUSAU — Potential developers have until 4:30 p.m. Friday, Aug. 3, to propose a new plan for the troubled Riverlife development even as questions and complications mount for the current players in the project.

A request for proposals (RFP) issued May 25 by city officials assumes the current development agreement with Barker Financial, LLC, will be terminated, though Barker still has a limited window to cure the default. Wausau Pilot and Review has issued an open records requests for copies of all proposals received to date and will update this story when they are received.

As city officials await the next step, the planned development continues to face financial and legal challenges. More than $3.2 million in liens have been filed against Barker Financial, LLC, in court filings that also name Quantum Ventures, LLC, the entity several council members long believed was the developer of record for the project.

City documents show that in September 2017, the council approved a resolution to replace developers Frantz Community Investors and Wausau RiverLife, LLC, with Barker Financial, LLC. Mike Frantz signed as the manager for FCI and RiverLife, withdrawing from the project, while David Barker signed for Barker Financial, making Barker the project’s new developer. A goundbreaking was held at the site weeks later.

Then on on Jan. 9 members of the council appeared to approve a change in the developer from Barker to Quantum Ventures. But neither a signed exit agreement with Barker nor a signed developer agreement with Quantum has ever been executed, according to City Attorney Anne Jacobson, leaving Barker as the responsible party.

Jacobson explained that the action the council took in January followed the resolution included in the packet: “BE IT RESOLVED, that the Mayor and other proper city officials are authorized and directed to work on behalf of the City of Wausau to amend the existing development agreement and groundlease to include Quantum Ventures.”

“Barker is not off the hook,” Jacobson said, in a May phone call.

Meanwhile, financial challenges continue to mount for Quantum’s Mike Frantz, who is named in three separate open civil cases in Wisconsin including a $559,335.89 judgement filed against him in Iowa that was transferred in June to Walworth County Circuit Court.

The RPF is seeking developers interested in taking over the current Phase 1 project or proposals for developing other areas of the land. Under the terms of the current developer agreement, the city maintains ownership of the architectural renderings created by Mudrovich & Associates and would retain ownership of the land itself.

Proposals will be scored on the basis of set criteria that includes points for the developer’s credentials, financials and track record, according to city documents. Consideration will be given to cost, level of investment, functionality and other factors. A selection committee will oversee the final selection, and the developer or team must also complete a city Tax Increment Financing application if city resources are requested.

In a May email to Wausau Pilot and Review, Council President Lisa Rasmussen said the RFP release is parallel to the legal time frame that Barker has to cure the defaults in a proactive step, so the responses will be ready if Barker is unable to proceed.

“While we remain hopeful that Barker Financial is able to cure their defaults and complete their project in accordance with the agreement, if that is not the case, the RFP will allow us to consider other interested parties and options to develop the area to its highest potential,” Rasmussen wrote. “I am also glad that the new vetting concepts are included in the RFP to insure that we are getting the best information possible from any future proposers.”

According to the RFP, signed by Mayor Robert Mielke, the marketability of the area appears strong “due to its pre-leasing momentum and heavy local interest.”

But critics say the “pre-leasing momentum” has been overstated, making the project appear stronger than it truly is. The project currently has letters of intent for seven of the 57 residential units and about 18,000 square feet of the nearly 60,000 square feet of commercial space planned, according to the most recent figures supplied to the city by Mike Frantz.

An initial review of any and all proposals received is expected Aug. 7 and members of the economic development committee are expecting an update on the project the same day.


Riverlife Village: An Updated Timeline

July 10, 2015: The city of Wausau issues a request for proposals (RFP) to develop the city’s east riverfront.

November 2, 2015: The city’s RFP period closes. Two vendors bid on the proposal: S.C. Swiderski, LLC, of Mosinee and Frantz Community Investors, LLC, of Iowa.

December 15, 2015: In January 2015, the Iowa Economic Development Authority awarded Frantz a $3 million forgivable Community Development Block Grant loan to renovate three historic buildings in Fort Madison, a city of 11,000 in the southeastern corner of the state. The agency froze Frantz’s grant disbursements on Dec. 15, 2015 when it became clear the projects would not be completed by the end of 2016, a requirement of the loan. (A simple Google search would have revealed this.)

December 24, 2015: Frantz Community Investors, LLC, issues a check to Guru’s of Luxury for $153,483 for work performed on the Northland Hotel project in Green Bay. Frantz asks Guru to hold the check until the new year, according to court documents.January 8, 2016: Guru deposits the check from Frantz, which bounces, prompting a lawsuit currently pending in Brown County Circuit Court. (Case was filed Jan. 31, 2017).

February 23, 2016: Wausau chooses Frantz Community Investors (FCI) as developer of the Riverlife project. The Frantz Community Investors team, according to city documents, consisted of Mike Frantz, Tom Frantz, Andy Frantz, Paul Pappgeorge and Mitch Hallgren. Pappageorge, who is listed as chief financial officer in Frantz’s original proposal for the city, also 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. Pappageorge is no longer involved in the project, but was part of the team approved by the initial vetting process.

June 28, 2016: Ehlers, a consultant for the city, provides a review of the FCI business plan and a set of financial projections performed by Baker Tilly for FCI. The analysis warns city leaders of a potential low level of return on the project; as a result, the final agreement included a shortfall guarantee. The Ehlers report, furnished to all council members, was also critical of high residential rent levels and the city’s 99-year-old ground lease for $1 per year.

July 12, 2016: Final approval is given to the FCI plan.<

November 2016: Gregory and Carol Hamman sue Michael Frantz in federal court over an unpaid promissory note with $4 million in damages claimed. The lawsuit is later dismissed on a technicality. https://casetext.com/case/hammann-v-frantz

December 13, 2016: Wausau Riverlife, LLC, is formed by Mike Frantz.

December 19, 2016: City officials sign a development agreement with Frantz Community Investors, LLC, and Wausau RiverLife, LLC, with Mike Frantz signing as manager of both. How Wausau RiverLife, LLC became a party to the development agreement is unclear, and is not mentioned in any minutes or meeting documents on the city’s website.

December 27, 2016: Wausau writes a check to Wausau RiverLife LLC for $290,078.50, which was used to pay five payment requests from Mudrovich & Associates for architectural and engineering designs. There is no mention in the Board of Public Works meeting minutes approving the payment.

July 20, 2017: During a Board of Public Works meeting, Finance Director Maryanne Groat explains to Public Works Director Eric Lindman that all “developer payments are considered by the Board of Public Works, which gives the city attorney a chance to review (them) and the opportunity to review the developer agreement.” Groat explains the payment is based on preliminary costs that Frantz encountered putting together the construction plan. The payments are also meant to ensure that the architectural drawings will become an asset of the city if “the project does not go through,” according to meeting minutes. Lindman then moves to approve “developer payments” to Baker Tilly Capital, LLC for $68,884 and to Ayers for $13,500 during a Board of Public Works meeting. Neither Baker Tilly nor Ayers is a developer in the project, but rather subcontractors that are being paid directly by the city. The motion passes.August 1, 2017: At an Economic Development Committee meeting, Mike Frantz introduces Dave Barker of Barker Financial LLC as his “lender and equity partner.”

August 14, 2017: Frantz Community Investors, LLC, is administratively dissolved, according to Iowa state records.

September 5, 2017: At an Economic Development Committee meeting, Community Development Director Chris Schock asks that the development agreement be amended to include Barker Financial since they are the new partner. It is not clear if city officials are aware at this point whether FCI is no longer a legal entity.

September 7, 2017: Mike Frantz, together with Jason Sharkey and Clay Dougherty, form Quantum Ventures LLC as a South Dakota limited liability company. Sharkey is named as CEO.September 12, 2017: The city council approves a resolution to replace FCI and Wausau RiverLife LLC with Barker Financial, LLC, as the new developer for the project. MIke Frantz signs as the manager for FCI and RiverLife, withdrawing from the project. David Barker signs for Barker Financial, the project’s new developer.

October 5, 2017: The city holds a groundbreaking ceremony at the site of Riverlife Village.

January 9, 2018: The city council approves a resolution to replace Barker Financial as the developer with Mike Frantz’s new company, Quantum Ventures, LLC. No exit or entrance agreement is on record with the city.

March 5, 2018: A joint investigation by Wausau Pilot and Review and the Denver Post reveals Sharkey has past criminal charges connecting him to a $8.3 million Ponzi scheme in Colorado, for which he received a diverted sentence and continues to pay restitution. Frantz also announces plans to expand the commercial development by adding two additional stories to the building, pushing the overall cost of the project to $27 million.

March 7, 2018: Council President Lisa Rasmussen calls for changes in the city’s vetting process in response to the discoveries about Sharkey’s criminal history.

March 13, 2017: Mike Frantz announces he has bought out Quantum Ventures CEO Jason Sharkey.

March 27, 2018: In a news release, Mike Frantz introduces Rainy Investments LLC as his new 50 percent co-developer and investment partner. No mention is made of Barker Financial.

April 10, 2018: The Samuels Group, the prime contractor for Phase I of Riverlife, sent letters of intent to the city of Wausau indicating an unpaid debt of $1,785,885.89 incurred in the project, according to City Attorney Anne Jacobson. The city is given 30 days to cure the debt.

April 28 and May 4, 2018: PGA Inc., a subcontractor working on the project, sent letters to the city of Wausau claiming they are owed $134,149.

May 7, 2018: Economic Development Director Chris Schock tells the Longfellow Neighborhood Group the Riverlife project is on schedule and work will shortly resume.

May 8, 2018: The city council goes into closed session to discuss legal strategy on potential action involving Phase I of the Riverlife Village project. No action is taken.

May 14, 2018: The Samuels Group, Inc. files liens totaling more than $2.7 million against the project in Marathon County Circuit Court, naming both Barker Financial, LLC and Quantum Ventures, LLC.

May 15, 2018: The city issues a notice of default to Barker Financial and vows to issue a new RFP for the development project in the near future.

May 25, 2018: The city issues a new RFP seeking potential developers to take over the project. A window for Barker to cure the default still exists.

June 18, 2018: Foundation Service Corporation, a specialty contractor with a home office in Hudson, Iowa files a lien in Marathon County Circuit Court seeking $294,133.53.

July 18, 2018: PGA, Inc. files two liens in Marathon County Circuit Court seeking a total of $134,149 against the project.

Aug. 3, 2018: Proposals are due to the city in response to the May 25 RFP by 4:30 p.m.

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