By Shereen Siewert
WAUSAU — Taxpayers will foot the bill for more than $2.7 million in unpaid construction costs racked up by a former developer who once spearheaded the Riverlife Villages Phase I plan, according to statements made Friday by Mayor Rob Mielke.
If the council approves paying the entire amount of two liens filed by The Samuels Group, that will put the taxpayers’ investment into the project at more than $6.8 million. That amount does not include additional expenses such as closing costs and environmental mediation, nor does it include lien amounts from at least one additional prime contractor embroiled in the project.
During his annual “State of the City” address on Friday Mielke said the money had already been allocated to the project as incentives, which means the expenditure will not require a budget amendment. Council members previously approved incentives of about $2.74 million in grants and loans to support the developer and $2.27 million in infrastructure costs to support the entire riverfront development, including park space and other amenities. All the funds will come from tax increment district financing.
“The money that had already been assigned to that, we had to use it in a different way than what we wanted to,” Mielke said. “But we did the right thing in making sure those lien holders were taken care of.”
Mielke later clarified that the council has not yet approved the lien payments, but will discuss the matter May 14. That is the same date he expects the project to be formally awarded to Riverlife Wausau, LLC, a local development partnership between Bob Ohde Construction, Mitch Viegut and Dr. Fernando Riveron. The council already discussed the matter behind closed doors, but officials have so far not offered a public explanation of the decision to satisfy liens with taxpayer dollars rather than forcing the former developer to do so. Legally, Mielke said, the city does not have to satisfy the liens.
But doing so paves the way for the stalled project to restart. In January, the council awarded the project to Oregon, Wis.-based Gorman and Company in favor of the local development group. But a development agreement was never signed, and Gorman is now withdrawing from the project. Mielke said Gorman has been working with Ohde’s group to share ideas and plans.
“It’s going to be basically a handoff,” Mielke said. “It’s a good thing.”
Liens from The Samuels Group, the primary contractor on the project, were filed Sept. 19 in Marathon County Circuit Court for $704,372.65 and $2,092,780.45. In addition to the Samuels Group, Ayres and Associates, an Eau Claire firm that was contracted directly by the former development team to design and install a geopier foundation system for the project, filed a primary contractor lien Aug. 30 in Marathon County Circuit Court for $38,503.84. Court documents show Ayres performed work valued at $120,590.17 and has so far been paid $83,086.33. Several additional subcontractor liens have also been filed.
The project has been in the works for nearly four years, involving a range of adjustments and changes to the players involved in the project. The city initially released a request for proposals in July 2015, which garnered two responses. The project was awarded in February 2016 to Frantz Community Investors, a team that consisted of Mike Frantz, Tom Frantz, Andy Frantz, Paul Pappgeorge and Mitch Hallgren.
Then in December 2016, city officials signed 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. Dave Barker of Barker Financial, LLC, was introduced as a lender and equity partner in the project on Aug. 1, 2017. Fourteen days later, Frantz Community Investors, LLC, was administratively dissolved, according to Iowa state records, and Barker Financial became the developer of record in September 2017.
The situation changed again in January 2018 when the city council approved a resolution to add Mike Frantz’s new company, Quantum Ventures, LLC, as part of the development team. Two months later, Frantz announced he bought out Quantum Ventures CEO Jason Sharkey after a Wausau Pilot and Review investigation revealed Sharkey’s role in a 2006 real estate Ponzi scheme in Denver, for which Sharkey is continuing to pay restitution after a two-year diverted sentence. At the same time, Frantz also announced plans to expand the commercial development by adding two additional stories to the building, pushing the overall cost of the project to $27 million.
But Wausau Pilot and Review later learned that no exit agreement was ever signed by Barker and the city never had a current signed development or ground lease agreement with Quantum Ventures. Mike Frantz of Quantum Ventures spoke to the council on multiple occasions in 2018 as the developer in charge of the mixed-use development. Both Barker Financial and Quantum Ventures are named in multiple construction liens filed against the project but only Barker is being held responsible for a portion of the amount owed.
Under the terms of an agreement approved in January by the Wausau City Council, Barker Financial will also be required to repay about $450,000 in loans and other unspecified costs. It is not clear if Barker has made any payments to date or how the city intends to hold Barker accountable if no payments are made.
Mielke said he expects construction to resume on the Riverlife Phase I project in June and be completed next year.
