By Shereen Siewert and Damakant Jayshi
A group of local business representatives and other stakeholders on Tuesday spoke strongly in support of an estimated $44 million Wausau downtown redevelopment project, despite a lack of information about taxpayer participation in the plan.
The Greater Wausau Chamber of Commerce collected more than 100 signatures from business leaders after circulating a petition directly asking for support. Those names were submitted to the City Council. Dave Eckmann, who is president and CEO of the Chamber, is also president and CEO of Wausau Opportunity Zone, Inc., which owns the former mall property targeted for redevelopment.
The property lies within one of several Wausau areas identified as a federal “opportunity zone,” part of the federal tax cuts and job acts of 2017. The 2017 tax law created a tax break to encourage investment in low-income areas (“opportunity zones”) but, as high-profile real estate investors rush to profit from it, critics are raising concerns about the policy because it includes no requirements to ensure that local residents benefit from investments receiving the tax break. Critics say that means the tax break can amount to a “subsidy for gentrification” in many areas instead of, as intended, for providing housing and jobs for low-income communities, according to the Brookings Institute.
During Tuesday’s Committee of the Whole meeting, Development Director Liz Brodek cited a strong need for housing, offering data that show Wausau is short as much as 10,000 rental units. This project would add 154 units to the city’s inventory as a mix of affordable and high-end housing, but not all would be earmarked for low-income residents, which was the intent of the tax law.
The project’s financial cost to the city’s taxpayers, expected in millions of dollars, is still unknown, leading some alders to express ongoing concern and questioning whether those supporting the project fully understood the financial implications to taxpayers.
The city’s share is being sought through a process called ‘reverse’ tax incremental finance, or TIF. A reverse TIF district has no upfront funding from a municipality, but helps pay for projects by returning a portion of generated tax revenue to the developer over a number of years. By contrast, in a traditional TIF district, the municipality pays money to a developer for a project. The money is then repaid over time though the additional tax revenue generated by that development.
Brodek said staff is still working out the details of the project, The Foundry on 3rd, with the T. Wall team. The five-story building will include retail and commercial space, co-working space, an interior courtyard green space and 154 urban apartments ranging from micro-units to three-bedroom units, according to JLA Architects.
Chuck Ghidorzi, Managing Director for WOZ Inc., said the company is willing to invest $44 million. It is not clear how much of the $44 million price tag will be borne by the city’s taxpayers. Ghidorzi, who is President & CEO of Ghidorzi Companies, did not clarify.
Eckmann, in a commentary to alders on Tuesday, said the project is part of an overall vision to revitalize the area.
“Successful communities develop a quality environment that attracts and retains talented people…which causes companies to take notice and expand into locations where they can access top talent,” he said.
Tyler Vogt, owner of Malarkey’s in downtown Wausau, spoke strongly in favor of the project and urged the council to move forward. Mark Craig, property manager for Compass Properties, dismissed the criticism by the public as “noise” and “negativity.”
But that drew the attention of Dist. 3 Alder Tom Kilian, who represents the district in which the property lies. Kilian said many citizens have expressed apprehension about the redevelopment and suggested that critics may have a better institutional memory about the past than many in the room. Kilian noted the significant overlap between those who spoke in favor of the downtown project on Tuesday and those who supported a 2016 “CBL mall deal” for millions of dollars before CBL filed for bankruptcy and was investigated by the FBI. The City Council voted in February 2016 to provide a $4.1 million, 20-year unsecured loan to CBL to renovate part of the mall, which was torn down last year.
Vogt and Craig are among those who had also pushed for the 2016 bailout package as a way to save the mall. Craig also encouraged the group to support the proposal.
Kilian clarified that he supports private sector activities but is not in favor of the government intervening in such activities. “But inviting public money invites government involvement, and the primary objective of using public money should be the public good,” Kilian said. He added that 77% of the residents who live in and around the area are low-income and yet the proposal speaks of spending millions of dollars and in the future to “government-subsidized decadence.”
Dist. 10 Alder Lou Larson questioned T. Wall’s commitment and its past history with the City of Wausau. He asked whether staff performed appropriate background checks to ensure the company is the right one for the project and said there has been no transparency regarding the project, with negotiations that have so far been shrouded in secrecy.
Brodek said that WOZ, as a private property owner, sought out a developer that met their criteria and selected T. Wall Enterprises for that role.
Mayor Katie Rosenberg defended the project and city staff by saying it “is going the way it should.” She told the council members that there are people who want the proposal to be litigated in papers but “we are doing exactly what we should be doing – having this discussion here.” The mayor added the alders “get to say what’s in there, what you care about.” The matter would go to the city’s committees, Rosenberg said.
Alder Lisa Rasmussen also lent support to the downtown redevelopment. She said many communities are adopting similar developments and said she believes that the city is on the right track.
President and CEO of T. Wall Enterprises, Terrence Wall, said the company as built similar downtown projects in other communities and they have been successful and helping bring customers to other stores in downtown. “I assure you of the highest quality development that you will find,” he told the COW.
Brodek said the city must work to expand its tax base and bring some disposable income into the downtown area to ensure services are not cut. She added the city is also working on affordable housing projects.
At one point, Brodek said that they were not presenting any proposal to the City Council because they were unsure it would get a committee or City Council’s approval. This prompted Alder Gary Gisselman to question whether the current proposal was so weak that it would fail.
Brodek said they are working on it and will bring it to the council once they are confident about it. The project is, notably, the first phase of a multi-faceted plan for downtown that will likely require additional taxpayer participation, along with millions in infrastructure improvements.
“We expect a development agreement to be prepared and coming to Economic Development and Finance Committees, as well as this Common Council, in the next two months or so,” Brodek wrote in her July 12 memo to the City Council. She repeated that line of approach at the COW meeting on Tuesday.
The matter will not be reviewed by the Wausau Economic Development Committee next month.