When is a loan not a loan?

Four Progressive Dane alders made headlines with this letter on August 7. Here is the full text, with thanks to David Ahrens, Samba Baldeh, Rebecca Kemble and Barbara McKinney-Harrington. Look to the August 24 Board of Estimates meeting and Common Council on September 1 for some resolution to the city’s efforts to subsidize Edgewater developer Bob Dunn, who faces substantial construction liens on that project, and Exact Sciences, including free downtown parking.George Austin, JDS Project Director.

Natalie Erdman, Director, PCED

Michael May, City Attorney

Matthew Mikalojewski, Director, Economic Development

David Schmedicke, Director, Dept. of Finance

August 7, 2015

Greetings:

On July 29, JDS LLC submitted documentation that purports to be a TIF application for two projects, and office building for Exact Sciences (EXAS) and a hotel. These documents consist of spread sheets and a statement on TIF policy issues. The data provides some analysis of the costs and revenues related to the office building and  hotel.

However, these documents do not constitute a TIF application because they do not specify a gap. There is reference to a “city contribution for “land” for $13,937,000 and a “contribution” towards a “Jobs/TIF” for $12,000,000. However, the application does not request a TIF loan. As such it is impossible to conduct a requisite “gap analysis” without stating the proposed gap and request.

The application is so rife with omissions (in addition to the lack of a “gap”) and inconsistencies that it not necessary to catalogue all of them. Some examples:

• There appears to be two applications. Indeed, under Phase 2 of the Office Building spreadsheet, it notes, “see separate application for the hotel.”

• There are no parking costs or information on stalls in either application other than a note in the hotel application that they expect parking to net $248,000 per year.

• The application omits governmental loans and grants from other sources such as the state WEDC.

• At the July 27 BoE meeting, Council members were told that JDS LLC would provide documents providing “proofs of intent” by lenders and equity shareholders for these projects by July 31. To date, nothing has been received on the actual financing of this project other than the developers’ reliance on the city’s contributions of nearly $26,000,000.

• In the Office Building spreadsheet, the total costs to the city are given as $25,937,000 (Jobs/TIF and Land). This is a substantially different statement of the city’s contribution and financial participation than in prior presentations. This contrary estimate leads to question the reliability and validity of the “application” as a whole.

The Preliminary Agreement of July 7 cites the requirement that a “complete TIF application be submitted by July 31  (7.1.a.iii). It is clear that a TIF application for either one or both projects has not been submitted and that JDS LLC is not in compliance with the Agreement.

Given the scarcity of consistent and relevant information from JDS LLC and EXAS on the TIF proposal, we think it would be invaluable for Mr. Gromacki, TIF Coordinator, to participate in the presentation and discussion in the Monday, August 10 Board of Estimate meeting.

 Sincerely,

 David Ahrens, Alder, 15th District

Sambeh Baldeh, Alder, 17th District

Rebecca Kemble, Alder, 18th District

Barbara McKinney-Harrington, 1st District