By Shereen Siewert
A taxpayer-funded aid application for a proposed $44 million development in Wausau makes important statements about the project’s potential impact, but lacks key details, including a financial needs analysis, project summary, cash flow projections and other documents required by the city.
T. Wall Enterprises, the Wausau Opportunity Zone developer selected for the former Wausau Center mall redevelopment site, envisions a five-story building along part of Washington Street that includes 154 apartments with mixed-use retail space on the ground floor.
In a July 12 memo to city council members, Wausau Director of Development Liz Brodek wrote that TIF’s request is intended to help the city determine “the amount of public participation necessary for the project to go ahead”. But the document itself doesn’t spell out those details, or explain how the project would bring in $10 million “in disposable revenue to support the local economy,” as the developers promise. The application does not promise any local job creation.
T. Wall, in his application, asserts that assistance is needed and meets the legal “but for” requirement for TIF expenses due to an increase in construction prices over the past three years. “The project can only proceed for TIF as our construction costs have increased incrementally by 90.5% since pre-COVID,” the request reads. “We used to build multi-family communities for $105,000 per unit in 2019 and now construction costs are over $200,000 per unit.”
According to information provided by the Gordian National Construction Cost Database, costs for multifamily construction have increased, but nowhere near the 90.5% rate cited in T. Wall’s TIF application. Nationally, the construction price of an 8 to 24 story apartment building, in February 2022, increased by approximately 8.3%. For apartment buildings with 4 to 7 floors, the construction price increased by 10.4% and by 17.5% for buildings with 1 to 3 floors. While the cost of some materials continues to rise, other components of the construction price, such as plywood and lumber, are down from a year ago, according to Gordian.
The other numbers specified in the document list a series of numbers that do not obviously correspond to WOZ’s claim of a $44 million investment in the project, nor do they include the required percentage of the project. total use of funding. The application shows building construction and renovations at $36,695,000 and “emergency” funds at $2,210,000. Under Funding Sources, T. Wall lists $33,308,000 as a “construction finance” loan, $8,05,900 as “developer equity”, while “other TIF aid” is listed as a “TIF loan” assigned to $0. A separate entry shows a construction loan of $33,308,263 with an additional “TIF loan” of $6,216,000.
When applicants request the city’s participation in a project, they must include financial analyzes to demonstrate the need for TIF assistance. Applicants are required to submit two scans – one with and one without TIF assistance, indicating the minimum return needed to continue the project. But no such document appears to have been submitted.
Applicants are also required to provide a project summary in the form of a letter addressed to the City of Wausau which includes a description of the project itself, profitability projections, funding overview, summary of increase, total development costs, an amount of TIF assistance requested and a statement explaining why the TIF is essential and why the “except for” provision will be respected. Failure to clearly provide the “but for” explanation will “delay action on your application,” the document says.
No such document was included.
A set of required pro formas, identifying revenue and expense projections, appear to have been forwarded to a third party, Ehlers, rather than uploaded to the city’s submission system. Ehlers Public Finance Advisors was hired to perform a funding gap analysis required for the project, at an expected cost of $5,000, a decision that took some board members by surprise.
“I understand that T. Wall sent pro forma numbers directly to Ehlers (not the city) to avoid further delaying the variance analysis,” Brodek told Wausau Pilot & Review.
The tax increase funding request, which was hidden from the public until late Tuesday night, was submitted to the city in May. Wausau Pilot & Review received the document through an open records request.
In a follow-up email, Wausau Pilot & Review requested the actual amount of TIF assistance requested as well as supporting documentation for the claims made in the request, but Brodek referred these questions to T. Wall representatives. . “As for a lot of your other questions, I think they’re best answered by Terrance or someone on his team,” she wrote.
Mr. Wall did not respond.
In a disclosure statement for The Foundry on 3rd Development, LLC, Terrence Wall admitted that he obtained a construction loan from Wells Fargo in 2008 for a Mesa, Arizona development that resulted in a lawsuit in justice. In 2009, Wells Fargo applied for new loan margin for the full amount of the loan, seized collateral in January 2011, and sold the properties “at a time when the economy was nearing a low point,” it said. Wall. A judgment of approximately $2.7 million was filed against Wall, who said the judgment was appealed and fully satisfied. Wisconsin court records do not show an appeal, but reflect a foreign judgment for that amount in a case that was satisfied in 2016.
Dist. 10 Alder Lou Larson said he and at least one other council member are asking a full committee to discuss the development in more detail, citing concerns about the lack of transparency in the process.
“Too much is happening without our approval,” Larson said.