A Wausau committee declined a commercial rehabilitation loan for a downtown property owner seeking to fund 100 percent of its window awning upgrade, a request at odds with city policy.
Compass Properties approached Wausau Community Development seeking 100 percent of its $156,320 project to replace awnings at the Heinemann building located at 300 N. 3rd Street, but commercial rehabilitation loans are intended to provide gap financing, not replace traditional bank loans.
Under current commercial rehab loan criteria, the city typically requires the borrower to commit at least 10% of their own funds, with the city’s contribution being 15%-25% and the remaining balance to be financed by the lender of the organization’s choice. The maximum loan amount, at 25%, would be $39,080. Community Development Manager Tammy Stratz said the city does not have that kind of money in its commercial rehab pot. Approximately $100,000 is available, thanks to the two loans repaid in January.
“The difference with other commercial rehabilitation loans is they are looking for a majority of the funding on this one,” Stratz told Wausau Economic Development Committee on Tuesday. “The commercial rehabilitation loan is supposed to be gap financing mechanism. We don’t want to compete with banks.”
The request for a loan was eligible since it involved renovating the exterior, Stratz said, asking the committee for direction on the matter.
The Economic Development Committee declined to make exception to commercial rehabilitation loan guidelines.
Instead, the committee directed Community Development to examine the existing criteria guiding Wausau’s commercial rehabilitation loans and make recommendations if any change was necessary to reflect current construction costs. The committee also suggested that the staff hold a dialogue with the owner of the property, and see if they are willing to wait until the loan criteria were reviewed. Compass GM Mark Craig made the request on behalf of Heinemann Ventures, an arm of Compass Properties.
If Compass chooses not to wait, they will have no choice but to except a loan for 25% of the costs, the amount that would not exceed the existing loan ceiling.
Committee member Lisa Rasmussen said the body should not make an exception for the business entity as it would take the city down “a slippery, icy slope” and noted that normally commercial rehabilitation loans were not approved by this committee but by Community Development staff.
The Dist. 7 alder said any exception for a business entity would be unfair to everyone who received the loans in the past and sends a negative message to future. “I don’t want to make the exception for any one entity – no matter who.”
She also questioned the justification for 100% of public money involvement since it is a building owned by the private sector. “So it stops being a partnership if we pay the whole thing,” Rasmussen said.
She added that the staff has two choices: either issue the loan under current guidelines or defer the decision for now in order to evaluate and bring recommendations after a market analysis that would justify raising the city’s share of the commercial rehab loan.
Committee member Tom Kilian supported Rasmussen’s stance, saying he would only support approval of a standard guideline amount if the committee were to make any decision and that he would not be supporting any exceptions. Committee Chair Sarah Watson then asked staff to examine guidelines and bring recommendations to the committee.