Editor’s note: This version of the story includes information about the council’s Oct. 1 meeting and packet for clarification purposes.
By Shereen Siewert
In addition to a $1 million forgivable loan the group that purchased Wausau Center mall will also receive seven annual tax increment financing grants from the city totaling more than $2.2 million, according to city documents obtained by Wausau Pilot & Review.
The grant amounts bring the total incentives for the group to more than $3.9 million. The first grant is due on July 15.
City leaders approved a preliminary agreement with Wausau Opportunity Zone, LLC, in October, paving the way for the group to purchase the mall for $3 million. The two-page proposal included in public documents called for a $1 million forgivable loan and transfer of city-owned assets to the LLC for $1. Those assets include the former Sears building, which the city purchased in 2017 for roughly $650,000, but not the HOM Furniture property. The proposal passed by a vote of 8-1.
But after the October vote, the roughly two-page proposal presented in public meeting packets eventually morphed into a 51-page agreement that includes the annual $327,000 grants, a detail that was relayed to all city council members but was not widely discussed in public meetings or included in public information packets.
In the packet for the council’s Oct. 1 special meeting, the fiscal impact statement “lists potential developer payments annually of $327,000” but does not say the number of years such payments are to be made. During the meeting, Dist. 1 council member Pat Peckham asked City Finance Director MaryAnne Groat for clarification on the $327,000 number, which did not appear in any local media reports and was not included in any news releases about the mall purchase. In response, Groat explained that the money is meant to “aid in operational costs while redevelopment is underway.”
“So, to keep the place afloat?” Peckham asked.
“Yes,” Groat responded.
Wausau Pilot & Review received a copy of the final agreement through an open records request. Scroll down to read the entire document.
The full council did not vote on the final agreement, according to an email from City Council President Lisa Rasmussen, but did not expect to after giving the green light to city staff to move forward with the plan.
“The council voted on the terms and authorized finalization and execution of the relevant agreement, lease terminations, etc.,” Rasmussen wrote. “The City Attorney issued a communication to the council as the mall deal was closing with a detailed explanation of the agreement and terms to keep them informed.”
The final agreement also includes a hold harmless clause providing environmental indemnity to WOZ — and subsequent holders of interests of record — for any existing environmental contamination or violation of and non-compliance with environmental laws.
Wausau was already aware of environmental concerns when purchasing the former Sears building, said Rasmussen, who called the environmental agreement a “standard clause.”
“I’d expect such a clause, since it is not very feasible or easy to do soil boring work beyond a Phase 1 study on the mall while the building is sitting on top of the site and functioning,” Rasmussen said. “You can’t exactly go drill borings in the floors of the shops that are trying to do business there…To recap, the city knew what was there when they bought up 8 blocks of downtown for the mall, they have owned it 40 years, and we know what was operating in the mall, under which we have been the land owner all along.”
The Mall is located within a so-called “opportunity zone,” designated as such through the federal tax cuts and job acts of 2017. The program aims to drive long-term investment into designated, economically distressed areas across the country, while offering potentially lucrative tax incentives to real estate investors.
Under the terms of the program, investors can defer capital gains on a previous investment if the money is reinvested into an “opportunity zone” asset. Investors can also take advantage of additional assistance such as tax increment district (TIF) funding.
See a description of the opportunity zone program here.Executed Purchase and Development Agreement – Wausau Center Mall – Final…