By Shereen Siewert
City leaders declined this week to make a decision on whether to recoup all or part of development agreement funding for a noncompliant business, an issue that was widely discussed internally by members of the previous administration.
Instead, the Economic Development Committee will meet in closed session at a later date to allow for a discussion with legal counsel on the matter, which involves roughly $241,000 in funding including $200,000 from Tax Increment District 3. The agreement with Collaborative Domestic Solutions Center-Wausau LLC was finalized on February 14, 2012 under then-Mayor Jim Tipple, and called for the company to create 200 jobs within five years. The agreement matured in 2017, under the leadership of then-Mayor Robert Mielke and then-Economic Development Director Chris Schock.
City documents show the jobs requirement was never met. At the end of the five-year term the company reported just 103 jobs, down from a high of 159 and sharply lower than the 200-job requirement. City Attorney Anne Jacobson, during Tuesday’s Economic Development Committee meeting, said officials were aware in late 2018 that the company, which was acquired by CGI Group Inc. before the agreement matured, was out of compliance but did not take formal action. CGI was unaware of the agreement at the time of purchase.
Further, a demand letter dated Jan. 4, 2019 drafted by Jacobson was never sent, she said.
“For some reason I was asked to hold off on it until Chris could get ahold of someone at the company and then I never heard anything back,” Jacobson told the committee Tuesday. “By the end of 2018, we knew they hadn’t met the requirement. Staff was kicking around options, but we were told not to send the letter. Chris kept asking for more time.”
A visibly upset Lisa Rasmussen, who was president of the City Council in 2018 and 2019, said she felt as though the Economic Development Committee was put in a position in which they appeared “asleep at the switch for four years.” Rasmussen noted that the Committee should be the entity that directs action such as revising development agreements, and urged finding a solution that indicates the city takes development agreements seriously.
“(Staff) knew, over five years ago, that this was out of compliance and they did not tell this committee,” Rasmussen said. “As soon as that letter was drafted someone should have come into this committee.”
But city documents show the Economic Development Committee should have been aware of the jobs requirement issue. A spreadsheet included in the June 4, 2019 meeting packet showed Collaborative Consulting was not in compliance. The spreadsheet shows the organization received total grants and loans equaling $2,995,000, including $40,000 in downpayment assistance.
“Director followup 10/20/17, 11/13/17 and 12/8/17, will follow up at future ED,” the spreadsheet reads. The spreadsheet showing the deficiency was also brought before the committee in June 2018, city documents show.
Dist. 4 Alderman Tom Neal called the agreement itself, which was drafted before the city began sending such agreements to outside counsel and reviewed by the ED Committee and full council, “terribly written” and said he didn’t know how the agreement was ever approved.
According to a memo by Economic Development Manager Sean Fitzgerald, who was not employed with the city at the time the agreement was made, the city agreed to forgive 20 percent of the grant at the end of each year CDSC remained in the city. Though the agreement holds “parties and their successors” accountable, Neal pointed out that the document’s language suggested the company had a full five years to reach the job requirement. That could potentially limit the city’s efforts to reclaim funding, if they choose to do so.
“I’m ticked off as much as anyone but I don’t know what legal standing we have to say we should get $241,000 back,” Neal said.
Rasmussen pointed out that other funding went unchecked including a $20,000 Community Development Block Grant and a $15,000 MCDEVCO training grant, among others.
“Where was the followup from other entities?” Rasmussen said. “It’s not just us…all of us came up short.”
In his memo to the committee, Fitzgerald said “staff” is recommending the city waive the remaining commitment for CGI, a global company with more than 76,000 consultants and professionals and more than 400 locations worldwide, after “appraising the economic, workforce development and civic contributions CGI and its staff have made to the Wausau community – as well as its intentions for continued growth of its Wausau office location.”
Ultimately, the Committee approved a motion by Rasmussen to put the matter on a future agenda for a closed session to flesh out an appropriate response.
“I’m not willing to shrug this off,” Rasmussen said.