The Museum of Contemporary Art will soon own the former Wausau Club building, after the City Council approved the sale of the property from an LLC to a nonprofit that will run the museum.
The Council made the decision on Nov. 15, three days before the initial scheduled closing, by waiving the right of first refusal to repurchase the property on 309 McClellan St. The city also consented to the transfer from Jim N.E. Cricket LLC to MOCA, Inc. The closing date for the $600,000 purchase is likely being rescheduled and will happen around Thanksgiving.
David Hummer, who runs the museum along with his wife is listed as the seller representing the LLC. He is also listed as the buyer representing MOCA, Inc. Additional details surrounding the transfer or the plans for the museum moving forward were not immediately available. Hummer did not respond to an email inviting him to comment.
The City Council stopped short of waiving payment of taxes on the property through August 2037, which is required by the restrictive covenants of the Memorandum of the Right of First Refusal. The provision of the right of first refusal is part of the agreement because the Hummers took a property rehab loan of $89,000 from the city when the museum first launched.
The loan allowed the couple to renovate the property and transform it into the Wausau Museum of Contemporary Art, which brings internationally recognized artists and their work to the city. The McClellan Street property had fallen into disrepair after The Wausau Club’s closure and needed extensive renovations when the Hummers bought the building.
Community Development Manager Tammy Stratz told Wausau Pilot & Review that the Right of First Refusal is signed by the city’s clients when receiving a Commercial Rehab loan with the city.
“The goal is that if we are using taxpayer dollars to assist with the rehab of a commercial building, we want to see that real estate taxes are paid during the time of the loan,” Stratz said. “So the Right of Refusal says during that time, the lien holder cannot sell to a non-profit or tax-exempt entity.”
That provision has now been waived, clearing the sale to the nonprofit. The LLC has continued to make the payment on the loan.
The museum operators say they were assured by former Economic Development Director Chris Schock that the museum would never be taxed, only to learn later that Schock did not have the authority to make such a promise. Once the nonprofit formally owns the building, they will apply for a tax-exempt status.
Council members disagreed on whether the nonprofit should be required to continue the museum’s payment in lieu of taxes, or PILOT, after the transfer of ownership. The Department of Community Development had recommended a PILOT payment of $6,000, which is equal to the city’s portion of the approximate $15,000 a year owed to four tax-collecting entities.
City Attorney Anne Jacobson said the council cannot waive off the tax payment unless the restrictive covenants in memorandum are eliminated, irrespective of the tax status of the nonprofit.
“If you transfer to a nonprofit, (they) continue to make tax payment for 20 years,” said Jacobson.
Alder Lisa Rasmussen, citing the anxiety the couple experienced in getting the nonprofit to own the museum property and “being at the end of the rope” in the process, made a motion to waive the PILOT payment altogether. Alder Tom Kilian, however, said the city should continue to enforce the written agreement on the payment even as he agreed to the transfer of the property. Both alders held to their previous positions expressed at the Economic Development Committee meeting on Nov. 1, when the committee approved the transfer from then LLC to the nonprofit and also recommended waiving the PILOT payment, as staff advised.
The city attorney said the council cannot act on the PILOT payment since it was not part of the resolution, even though she acknowledged the ED Committee was incorrectly advised on the PILOT payment.
“This does not address amending the restrictive covenants in any way and if we want to do that, you want it to be a separate motion,” Jacobson said. “But this resolution does not include any sort of amendment to that recorded memorandum to eliminate that restrictive covenant that requires whatever entity owns that property for the next 15 years is going to pay taxes whether they are tax exempt entity or not.”
The attorney began by saying she was concerned the resolution granted some kind of tax exemption status to this particular entity – MOCA, Inc. – which the council has no authority to do. That’s a decision an independent assessor makes, Jacobson said.
Alder Rasmussen then amended her motion to direct staff to create appropriate documentation to remove transfer deed restriction covenants for 20 years. That amendment failed 5-6. A subsequent motion by Alder Gary Gisselman to send the matter back to the ED Committee also failed, 3-8.
ED Committee member Sarah Watson implored her colleagues not to send the measure back to the committee, which will discuss the attorney’s memo and bring some recommendation for the City Council to act on. The original motion passed 9-2, with Alders Kilian and Lou Larson voting no.
Community Manager Stratz told this newspaper that once the museum owns the property, Hummer can go through the steps to see if the entity can become tax exempt.