News from Voters with Facts
Update: Closed Sessions – Subject of the April 21 and July 7 Closed Meetings Revealed
Posted: Wednesday, July 16, 2014
During an interview with the Leader Telegram (click here to read the story), City Attorney, Stephen Nick, revealed the subject discussed at the two closed City Council Meetings. He confirmed as fact that which Voters of Facts had surmised through a process of elimination – the subject of the closed meetings was the private developer’s request for subsidies (or as he put it a “contribution”) to build student housing downtown. The attorney defended the decision to discuss the matter behind closed doors based on negotiation of other aspects of a development agreement, which the newspaper quoted him as describing as:
“Timing of that contribution, the project’s schedule, when the private building would start paying taxes and other points are part of negotiations”
With the possible exception of the unknown “other points”, there is little there that falls into the category of “required for bargaining”. Timing of the subsidy is hardly a point of negotiation, but is at the option of the City. The project’s schedule is up to the developer, subject to it meeting various existing requirements, like securing a building permit. Tax payment timing is already defined by the laws and regulations of the City and does not require a special term, unless the plan is to offer deferred property tax payment along with the requested assessment concession. The developer had asked the City to assess the building at a value of $21.5 million rather than its market value of $26 million. Both are like the requested $5.9 million “contribution” – gifts from the city to a private for-profit entity that, by their very nature, do not require bargaining and the discussion of which in a closed setting is a violation of the State of Wisconsin's Open Meeting laws.
Closed Sessions - Citizens File Verified Open Meeting Law Complaint
Posted: Tuesday, July 15, 2014
As promised in our July 12, 2014 post on Closed Sessions, volunteers with Voters with Facts did review available procedures to insure that future City Council meetings are open to the public. The best option was a Verified Open Meeting Law Complaint procedure under which the District Attorney is asked to enforce the Open Meeting law. Several volunteers along with other citizens who believe strongly in the principles of representative government each filed a Complaint on July 14. Additional complaints are expected to be filed in the next couple of days. Click here to see a sample of the complaint filed. Click here to read Voters with Facts' July 14, 2014 press release, which provides additional details about the procedure.
Another Closed Session on Confluence - July 7, 2014 City Council Meeting
Posted: Saturday, July 12, 2014
In response to the July, 7, 2014 VoterswithFacts Press Release that challenged the legality of the proposed closed City Council session on the Confluence (click here to read the release) and the email from a VoterswithFacts Volunteer to the Council’s President, Kerry Kincaid (click here to read that email), the City attorney provided an emailed memo. Click here to read the entire memo. In that memo he contended that the closed session on the Confluence was perfectly proper, because there had been previous hearings and media coverage of the Confluence project and the city had provided notice of its plan to conduct a closed session. That response flies in the face of the State ex rel. Citizens for responsible Dev. v. City of Milton case (found here) that had been cited in the press release, the companion website post referenced in the VoterswithFacts press release (click here to read that post) and the letter from the volunteer. Click here to read Voters with Facts response to the City Attorney’s memo.
During the City Council Meeting, the members voted 9 to 1 to enter into the closed session without any discussion. The sole “no” vote was from Councilman David Strobel. Councilman Duax did not attend.
Of concern is the City Council’s denial to Eau Claire citizens of their rights to representative government. Since the April 1 election, there have been only two sessions on the Confluence project, both of which were conducted as closed meetings. The City Council President actually removed from the public hearing agenda, contrary to the City Council’s own procedures, a hearing on the expenditure of a sizable sum to design a $10.3 million parking ramp, despite the fact that the ramp has not been approved and the fact that no funding mechanism exists that would pay for the ramp if it were approved. Normally, the media would be protesting the Council’s actions. With the exception of talk radio, in particular WOGO and WWIB, there has been virtually no coverage.
The stated policy of the Open Meeting Law is as follows:
In recognition of the fact that a representative government of the American type is dependent upon an informed electorate, it is declared to be the policy of this state that the public is entitled to the fullest and most complete information regarding the affairs of government as is compatible with the conduct of governmental business. [WIS. STAT. § 19.81(1) ]
Volunteers with Voters with Facts believe that it is vitally important that the City’s representative form of government be maintained. Accordingly, available procedures to enforce the Open Meeting Law are currently under review. Unless some action is taken soon, it appears that representative government in Eau Claire will cease to exist.
North Barstow Parking Lot Update – Public Input and Contract
Posted: Monday, July 7, 2014
Despite the fact that the public was promised an opportunity to participate in the design of the proposed North Barstow parking ramp, it appears, at least as of this date, that requests for input have been limited to the groups who have a financial interest in the development of the ramp. Click Here to see the invitation for the Open House on the project to be held at the RCU during the cocktail/dinner hour from 6:00 to 8:00 p.m. on Thursday July 10. Since members of the public have a stake in the project as taxpayers, farmers market patrons or vendors, and/or as visitors to the area, Voters with Facts encourages anyone who is likely to park in the Phoenix Park area to attend the Open House.
Voters with Facts have also secured a copy of the ramp design contract that the City entered into with the design consultant, BWBR. Click here to see the contract.
Of concern are the following:
a) The City staff stated that the total contracted design cost was $404,200, when in fact there are several additional items that are not included in that cost. Certain additional items are spelled out in the contract, like reimbursable expenses and the design of an enclosed parking garage. With these items, the cost increases to $451,900. To the extent there are other designs requested, these will further increase the cost. One desired item mentioned during the Council hearing, the design and estimate for a fifth floor, is not listed in either the base assumptions or in the list of known additional costs. Presumably, the cost to design the fifth floor will become an extra.
i) Expenses are not included in the $404,200 price. Per the contract, any expenses incurred will be billed at cost plus 10%. The estimate in the contract is $6,000-$7,000 of reimbursable cost. There is, however, no limit either in items deemed as expenses or the amounts charged. Costs like food and beverages served at the open house and the three multi-day workshops with citizens (five days worth) will presumably be covered as expenses (See Attachment C to the contract – page 1 - Compensation).
ii) As written, the contract appears to cover only the design of a four story structure, despite the fact that the Council was advised that a fifth story addition would be included as part of the design project and estimates would be provided both to build the structure with and without the extra story. If the contract needs to be modified for the design of an additional story, the design cost will increase. (See Contract Articles III(C) and V, and page 1 of Attachment C - First Assumption).
iii) There is an additional $40,000 of contract management fees that the City staff failed to include in the cost summary found in the City Council packet distributed prior to the June 10, 2014 meeting. Click here and go to page 236 to see that cost summary. BBWR broke the contract management cost into two parts - $40,000 if the city chose to handle the project internally or $40,000 plus an additional cost of $15,000 if it asked BBWR to provide the service. BBWR disclosed that it would use Market & Johnson, to handle that portion of the project. The $15,000 was included in the City’s cost summary, but the base fee of $40,000 was missed. (See third Assumption – Attachment C)
The total cost based on the contract is thus not $404,200, but $451,900. (the figure of $404,200 found in the summary plus the missed $40,000 contract management cost plus reimbursable expenses of $7,000 plus 10% of those expenses). And that does not appear to include the design of the 5th story.
b) The City Council was led to believe that the design contract was divided into phases and that the contract could be cancelled after each phase; once cancelled, the amount charged would be the amount shown in the contract for the phase or phases completed. That is incorrect. The costs associated with the phases in the contract are simply estimates. The contract is in fact based on hours spent at the consultant's billing rates. The $404,200 contract price is simply a maximum for the base effort (it does not include either expenses or the additions mentioned in a, above). If the City were to decide not to build the ramp, the consultant under the terms of the contact would apply the billing rates listed in the contract against the actual hours spent on the task. The charge could very well be significantly higher than the estimate for the phases that had been completed. Had the Council members understood the actual terms of the proposed contract, they may very well have refused to authorize the City staff to enter into the agreement.
i) The contract was quoted on an hourly basis up to a maximum of $404,200 plus additional services as outlined in Attachment C. Items included as additional charges in Attachment C are expenses and the $40,000 cost to design a closed in parking garage. See Article V of the contract.
ii) Termination for Convenience requires the City to compensate BWBR not at the phase value, but “for just and equitable compensation for any satisfactory work completed.” See Contract Article VII(B). BWBR’s hourly rates are provided in the contract, presumably for this purpose. See Attachment C, page 2 - Billing Rates.
iii) Specific phases were not actually priced even though they appear to be in the summary provided in the packet. Note the quotation of a separate lump sum fee for BWBR’s contract administration ($55,874), which will be utilized during each phase of the contract. Likewise, contract management (CM) services will be utilized through all phases, and they too are a lump sum ($40,000). See Attachment C – Compensation.
Eau Claire City Council Plans Another Closed Session on the Confluence Project during its July 7, 2014 public hearing
Posted: Sunday, July 6, 2014
Despite a promise to provide transparent vetting of the Confluence Project, the Eau Claire City Council has not had a single open meeting on the project since the April 1, 2014 Referendum. It plans to hold another closed session on Monday, July 7, this time “to provide direction regarding terms and conditions of a development agreement for the Confluence mixed-use and performing art center projects.” To see the material from the City Council Agenda/Packet, Click Here.
As with its April 21, 2014 session, the justification for this closed session is based on Section 19.85(1)(e), the negotiation exception to the State Law requiring open meetings:
e) Deliberating or negotiating the purchasing of public properties, the investing of public funds, or conducting other specified public business, whenever competitive or bargaining reasons require a closed session. [Emphasis added]
Surely, deliberating or negotiating is premature in this instance given that:
a) There has been no hearing on the nature of the development agreement, which has not been identified.
b) There has been no determination of whether the type of development agreement contemplated is needed or desired.
c) There is presumably, as it has not been identified, no funding to support the development agreement.
Moreover, case law indicates that a closed hearing at this juncture is not legal. See State ex rel. Citizens for responsible Dev. v. City of Milton, 2007 WI App 114 in which the court stated the following:
The use of the word “require” limits the exception to those situations where the government’s competitive or bargaining reasons leave no other option than to close meetings. Thus a government may have a valid reason for desiring to close its meetings that nevertheless fails to establish closed meetings are required. While a private entity with which the government is negotiating might request confidentiality, and such a request might provide a reason for a government to desire holding closed meetings, that request does not require the government to hold closed meetings to preserve the government’s competitive or bargaining interests. [Emphasis added]
That Milton [the City] fears the possible disruption of its plans is no reason to avoid public debate through secret meetings. Indeed contentious issues are those most in need of public discussion. [Emphasis added]
By a process of elimination, VoterswithFacts in its analysis of the April 21, 2014 closed meeting (Click here to review that analysis) concluded that the subject of the closed hearing had to be Haymarket Concepts, LLC’s request for a $5.9 million subsidy to build the proposed student housing building. Haymarket Concepts is a partnership made up of Commonweal Development (the principal developer of the North Barstow project), Market & Johnson (the principal construction contractor of the North Barstow project), and the University Wisconsin Eau Claire’s foundation. In a public meeting held on September 10, 2013, Dan Clumpner, one of the principals of Commonweal, described the student housing project and indicated that there was a group (presumably the Haymarket partners themselves) prepared to invest in the project. He stated that with a $5.9 million city subsidy, investor returns would be marginal despite the plan to charge students at a rate that exceeded traditional university housing rentals. Per Mr. Clumpner, without the subsidy, it would not be able to find investors for the project. Mr. Clumpner is also on record proposing in lieu of or in combination with a direct city subsidy from the TIF, the use of a “pay as you go TIF.” Under that type of TIF, the developer would cover all or a part of the $5.9 million subsidy up front. In future years, the city would reimburse it for the portion of the subsidy that it fronted along with interest. The source of the payments would be property taxes from the buildings in the TIF district. Effectively, the developer becomes a bondholder. From the taxpayers’ point of view, it is still general obligation debt that must be repaid and it is still a subsidy.
The subsidy raises the following concerns:
a) Why would the City subsidize Commonweal, Market & Johnson, and the University Foundation to build private apartment-style housing, at rental rates that the average student cannot afford? The private sector is already building this kind of housing without city subsidies among which are Metro Crossing and the apartments at 522 Water Street. Why should Haymarket receive subsidies when its competitors funded their properties without city assistance? Subsidies provide Haymarket with a competitive advantage over its competition, which seems to be neither fair nor wise if the City truly desires future economic development from the private sector.
b) Property taxes from the student housing building are supposed to be covering the $5 million city pledge for the proposed Confluence Performing Art Center. With the $5.9 million subsidy in addition to the $5 million pledge, the City would be expecting property taxes on a building assessed at $21.5 million to subsidize $10.9 million dollars of debt plus interest. At a 2% property rate and a 3% interest rate, it would take 36 years to repay that kind of debt from property taxes. That is hardly a sensible fiscal proposition.
c) Just how marginal is the return to the private investors? What kinds of assumptions are being made in terms of occupancy rates to maintain a return that presumably is barely adequate? If margins are too thin, the payment of the property taxes upon which the project is premised may not materialize.
d) Given the purpose of the facility (to provide university housing) and the fact that one of the principals (UWEC Foundation) has close university ties, how long will this property actually pay property taxes? If the returns are in fact marginal, will the University purchase the building once the TIF has run, making it a tax exempt property? That would mean the entire three block area (first blocks of South Barstow, Eau Claire Street and Graham Avenue) will have been transformed from an area paying property taxes to one that is tax exempt. The typical City development agreements in TIF districts require that the property remain taxable during the period of the TIF, however, there is no requirement that it remain taxable once the TIF expires.
e) Will the partners of Haymarket LLC be asked to co-sign the deal? In other recent transactions, the City Redevelopment Authority has accepted the signature of a limited liability company like Haymarket. For example, in the case of the JAMF building, the contract is with Pablo Properties, not its principals (JAMF and Zach Halmstad). Haymarket LLC is a corporation formed to handle the Confluence, only. As such, its balance sheet will be very limited and it may not have the wherewithal to handle its debts and obligations should the partners ultimately decide to walk away.
Eau Claire City Council Considers and Approves 2014-2016 Economic Policies and Priorities as well as $7 Million of New General Obligation Debt
Posted: Monday, June 30, 2014
The City Council scheduled a public hearing on Monday, June 23 to discuss the proposed 2014-2016 Economic Policies and Priorities. Click here to see the agenda item and the supporting packet material. As proposed, the draft policies and priorities is a laundry list of nine separate categories with a total of 61 projects, many of which contain sub-projects. The draft supports a second major downtown development (E2 – the DECI/Barstow BID Master Plan located on Farwell and East Grand and Graham - http://www.downtowneauclaire.org/pdfs/downtown_masterplan_FinalNew.pdf ) and the replacement of downtown surface parking with more parking ramps (E6 - above and beyond the proposed $10.3 million ramp on North Barstow). The draft also advocates a variety of expenditures which includes City investment in target industries (B3), expanding the availability of state of the art communication technologies, including fiber optics, throughout the community (C1 and D1), pursuit of more public/private partnerships to build arenas, and convention centers (H4), and support for RDA in its ongoing purchase and destruction of private business property (D3 and E5). It also contains such unconstitutional objectives as discriminating in favor of minority entrepreneurs (C6) (specifically calling out women and ethnic groups). Two council members (Catherine Emmanuelle and Kathy Mitchell) thought that discrimination was important to “bridge the achievement gap for women and people of color”. If you are a white male, which specifically includes a disabled white male (Council made it crystal clear that the disabled were not part of the favored group), you are excluded from favor. Likewise, the only post secondary school graduates that the city considers it a priority to retain or invite into the community are those from UWEC or CVTC (G1).
During Monday’s public hearing, volunteers with Voters with Facts provided their concerns about the draft policies. The first speaker commented on the high level of debt and, in turn, increases in property taxes that would result for functions that could and should be handled by the private sector (for the text of the complete statement, click here ). A second speaker provided an in depth analysis of the fostering of special interests that occur whenever government takes a hand in economic development (for the full statement, click here). While reviewing the proposed Confluence-type projects for Farwell Street, Graham and East Grand Avenues, a third speaker described the unfortunate consequences of fostering special interests that resulted from the promises of State and City subsidies to the Haymarket Partners, which has in turn led to three full blocks of empty buildings on South Barstow Street, Eau Claire Street, and Graham Avenue. All of the buildings on the first block of Barstow and one of the Eau Claire Street Buildings now need to be razed (for the complete statement, click here ). A fourth speaker addressed specific concerns about Redevelopment Authority Expenditures and the loss of private business stemming from the RDA’s actions to date (for the complete statement, click here ). A fifth speaker when expressing alarm about the draft's preference for parking ramps over surface parking in downtown Eau Claire used the proposed North Barstow parking ramp to illustrate the impact of special interests. In the case of the North Barstow ramp, after receiving an emailed letter from the major developer in the North Barstow area (click here to read the email), the Council decided that it would spend the dollars for a design of the ramp through the design drawing stage (estimated at more than $200,000) before holding a public hearing to decide whether or not to build the ramp (for more details click here ). Council President Kincaid cut the speaker off and did not allow her to complete her presentation. To read the text of the full statement that she had planned to deliver (which she subsequently provided to the City Council’s clerk) click here. A sixth speaker questioned the logic of the City’s downtown planning, pointing out that costs entailed are unsustainable. For the text of his statement, click here.
During the City Council Meeting on the following day (June 24, 2014) the Council discussed and then voted on the Economic Policies and Priorities. Other than a few very minor amendments of the wordsmithing variety, the Council approved the policies as written. There was no discussion of the concerns identified by the volunteers of Voters with Facts beyond a blanket statement without explanation by Catherine Emmanuelle that she disagreed with them and a statement by Bob Von Haden that “support” does not necessarily mean that the Council would be funding these initiatives, in particular with respect to E6, “support for parking ramps over surface parking, where appropriate”. He was later contradicted by the city Economic Development Administrator, Mike Schatz, who indicated that he deemed the list to contain the policies and priorities of the Council, which he would “encourage to happen”. The Council passed the Economic Policies and Priorities as amended 10 to 1. Only Monica Lewis voted against the measure.
During that same meeting, the Council voted unanimously, without any substantive discussion, to increase the City’s general obligation debt by an additional $7+ million dollars. Click here to see the agenda item and supporting packet material covering the new debt. Without this increased debt, the City is unable to handle basic government functions, like the street, storm sewer, building, and public equipment improvements for which the new debt is being issued. The need to service increased debt, will provide the basis for and will result in an additional city property tax increase in 2015.
PARKING RAMP UPDATE – June 10, 2014 City Council Meeting
Posted: Wednesday, June 18, 2014
Several of the Eau Claire City Council members had made it clear that they considered it irresponsible to enter a $400,000+ contract to design the proposed $10.3 million North Barstow parking ramp prior to making the actual decision to build the ramp. Two members placed the matter on the June 9 public hearing agenda. Under Council rules, either the Council President or the City Manager may remove any agenda item, however, cannot remove an item that has the support of two council members. Nonetheless, the Council President disregarded the rules and removed the agenda item from the public agenda. The item remained on the Tuesday (June 10) Council hearing agenda. To see the Tuesday agenda item and the supporting packet, click here.
There was considerable pressure on the Council to avoid a public hearing, in particular from the major developer of the North Barstow construction, Commonweal. In fact, Commonweal, not only advocated entry into the contract without a public hearing, but also the elimination of public hearings on any development matter. Click here to read the email from Commonweal’s Principal to each Council member that was sent on the day of the meeting.
Discussions on talk radio and two Leader Telegram articles indicated major community concern about both the Council President’s refusal to allow an item to be heard publicly and her decision to remove an item from the agenda contrary to City Council rules. Likewise, 265 petitions that volunteers with Voters with Facts collected from Farmers Market patrons expressed preference for surface parking versus ramp parking and opposed the building of the proposed ramp, the removal of the existing surface parking, and the proposal to pay over $400,000 to design the ramp.
Why then did the very Council members, who had attempted to secure a public hearing put forth and second a resolution during the Tuesday, June 10 meeting agreeing to proceed with the first half of the design project without the public hearing? If the two council members thought that it was irresponsible to expend $400,000+ to design a ramp prior to deciding whether to build it, why would they suddenly conclude that it was appropriate to proceed with a design contract at half the cost? Either sum ($400,000+ or $200,000+) is a significant amount of money. Of note is the fact that their resolution did include a provision which REQUIRED A PUBLIC HEARING on the basic issue (whether or not to construct the ramp) once the $200,000+ was expended. That requirement was not a part of the Council City Council President’s proposed resolution for the $400,000+ design project. Did the Council President plan to bar as well a public hearing on the basic question - the construction of the $10.3 million ramp? Such a plan would be consistent with the developer’s emailed request and would supply the rationale behind the resolution put forth by the two Council members.
Tuesday’s council meeting consisted largely of discussions of whether the lesser sum had been budgeted; whether the breakout by year found in the TIF budget had any significance; and whether the bid would need to be amended or could be handled via a phased approach. The actual merits of the ramp itself were not discussed, despite the fact that there are many significant questions, in particular the absence of the parking that would be needed for the alleged purpose of the ramp – to support the employees, clients, and customers of the hoped for $8.5 million office and the 2.5 million retail buildings. After RCU's and JAMF's needs are met, the ramp provides only 49 additional parking spots, 22 more than the available surface parking provided by the existing RCU parking (141) the additional spots from the corner of Hobart and Wisconsin (200), and the Post office (157).
Click on the links below for the developer’s paper and sketches advocating the ramp:
Click here for Voters with Facts' response.
In describing the services of the parking ramp design firm, the city engineer did indicate that the plan was to involve both potential users and the community in the specific details of the ramp, e.g., location of doors, stairwells, and elevators. As a result, there will not only be a significant sum spent (potentially over $200,000) for the design, but also a significant amount of staff and community time invested. This time and money will be expended despite the fact that no public hearing has been held or decision has been made to determine whether a ramp should be built. With so much time and treasure invested in the project, can it be viewed objectively at the point in time the hearing is held to determine whether it makes sense to proceed?
The Council members voted 10 to 1 (Monica Lewis was the lone holdout) to proceed with the first three and some portion of the 7th and 8th phases (which are part of the earlier phases included in the design of the parking ramp). Click here for the text of the actual resolution, the phases, and the dollar amount associated with each phase.
Update on June Board if Regents Meeting
Posted: Wednesday, June 25, 2014
As anticipated, there was no announcement after the Board of Regents' June Meeting on the status of the Confluence Project. Discussions on the items included in the proposed 2015-2017 capital budget will remain confidential until the August meeting. In the interim, discussions between the Regents and the administration will continue.
Board of Regents Will Meet on June 5th and 6th to Preview and Discuss the 2015-17 Capital Budget, Which Includes the Confluence Project
Posted: Sunday, June 1, 2014
ISSUE: Has the Community met the guiding principles the Board of Regents set forth as conditions to funding the State’s half of the Confluence Project?
Background: On October 5, 2012, the Board of Regents approved the concept of the Eau Claire Confluence Project, however, with the proviso that the development must follow five guiding principles if the UW-Eau Claire and the UW System Board of Regents were to be involved. Click here to see the resolution.
The $25 million of State money is critical to the project. More than a year and a half has passed since the resolution was approved. Despite the passage of so much time, only one of the five principles has been met.
The guiding principles and their statuses follow:
The entity or entities that will own and operate the private components of the Project's arts facilities must provide satisfactory proof of an independent guarantor or surety of the financial and operational obligations of the entity or entities.
a) There is no defined owner at this time of any of the space beyond the classrooms, set and costume rooms. These are designated for UWEC. The ownership of the rest of the building is unknown beyond a draft document prepared on March 21, 2014 (“the March 21 Draft”) that was obtained through a volunteer’s open records request to the City – click here for the draft.
b) There is no actual financial obligation for the community’s $25 million share of the capital for the project. Instead, there are pledges that are either unenforceable or subject to major conditions:
i. The City’s pledge of $5 million is subject to multiple conditions, many of which are subjective in nature, making the pledge illusory. Click here to see the pledge.
Note the following in the pledge document:
- The 2nd condition requires that non-city (which includes the County pledge below) and non-state funds provide not only $17.5 million of capital funds, but also a $2.5 million endowment fund -- a total of $20 million. Additional funds are to be available to maintain operations thereafter.
- The 6th condition requires that a sustainable operating revenue stream be implemented and approved by all parties involved. The City, the entity providing the pledge, is in a position to void the pledge simply by making the subjective determination that the revenue streams are not “sustainable.”
- The 8th condition requires a guaranteed tax incremental valuation for a proposed $21.5 million mixed-use [student housing] building. The annual property taxes from the building, which itself requires a yet to be approved City subsidy of $5.9 million, is the source of the $5 million the City is pledging for the performing art center.
- The 9th condition requires the approval of amendments or creation of a new TIF district to enable the tax incremental funding referenced in condition 8.
- There is no guarantee here - merely an indication that the City does not have the means to provide the requisite funding. The City is seeking guarantees as well, and has imposed conditions for its involvement.
ii. County’s Pledge of $3.5 million is subject to many of the same conditions found in the City's pledge. It also requires the City's payment of at least $3.5 million of its $5 million pledge. Click here to see that pledge.
iii. U.S. Government’s New Market Tax Credit of $3.0 million – the New Market Tax Credit program expired on 12/31/13 and, as of this date, has not been renewed. Click here to view the law. Bills to extend the Credit were introduced in the Senate in June of 2013 and House in April of 2014 and were referred to the applicable committee. Click here for the Senate bill. Click here for the House bill.
iv. Private Donations of $16.5 million – Publicly announced pledges to date are just over $5 million (see http://communityfortheconfluence.org/confluence-arts-center-reaches-5-million-in-pledges/). Several are multi-year pledges, e.g., the largest from RCU is $200,000 per year to be paid over a five-year period. Pledges are not guarantees, but merely an intent to fund. Circumstances may change and the contributions may not materialize.
c) There is no assurance if the facility is built, that the requisite operating funds will be available. No organization at this point exists to run the facility beyond the nine person “Confluence Council” appointed by a City Task Force. The Council is intended to operate outside the public arena. Several of the members have conflicts of interest. None of the Confluence Council meetings or actions will be subject to Wisconsin’s open meetings or open records laws. The Task Force has cloaked the Council with authority and provided as suggestions a draft set of bylaws, a mission statement, and a list of duties. Click here to see the Task Force's handoff to the Confluence Council.
d) The authority of the City Task Force to itself create and appoint the Confluence Council is an open question that VotersWithFacts is in the process of investigating via a volunteer's open record request to the City that, at this point, has only been partially fulfilled. Click here for the document which created the Task Force and describes its duties.
e) There is no operating funding or source of funds for the Confluence Council, beyond the assumption in the March 21 Draft that $200,000 of room taxes (that do not exist) will be appropriated on an annual basis. The draft budget also assumes the continuity of funding provided by existing city room taxes that currently support the Eau Claire Arts group and Visit Eau Claire.
The Project's operating agreement must ensure that neither UW-Eau Claire nor the Board of Regents will be liable for more than their prorated share of operational costs.
There is no operating agreement at this point in time, only draft bylaws for an organization with a questionable legal status, i.e., the Confluence Council, described above.
The value of the public component of the Project's arts facilities must be directly proportional to the amount of the state investment in that component, as confirmed by independent audit.
At this point, the public component is, at best, conditional or simply not there. There is nothing to audit. Here is where it stands:
$5 Million City Pledge is subject to nine conditions, many of which are triggered by the City’s subjective determination. Even the funding for the pledged dollars is subject to conditions as it is to be sourced with tax incremental funds requiring the building of a mixed-use building of at least $21.5 million (8th condition) and the amendment of an existing or creation of a brand new TIF (9th condition).
$3.5 Million County Pledge is a bit more secure in that the funds will be borrowed and the bonds will be a direct general obligation of the county and its taxpayers. It too, however, is subject to some of the same conditions as the City's pledge. In addition it requires the City's delivery of at least $3.5 million of its $5 million pledge.
$3 Million Federal New Market Tax Credits – As mentioned above, the New Market Tax Credit program no longer exists. It expired on December 31, 2013 and may or may not be extended. That is up to the United States Congress. If Congress does extend it, there are conditions under the program which must be met in order to secure the loans. Thus, this portion of the funding is subject to Congress' decision to extend the credit and the ability to meet the conditions.
$16 Million of Private Donations, i.e., the $13.5 million of philanthropy along with the $2.5 million endowment required by the City's conditions - As indicated above, there have been public announcements of pledges of more than $5 million of the requisite $16.0 million (or requisite $19 million if the New Market Tax Credit is not extended). Many are paper pledges only, and several are premised on payment over multiple years. These are not contractual commitments.
The Project's development process must be conducted in cooperation with the State Department of Administration and in compliance with all project delivery requirements relating to fair competition and transparency.
Given the desire to place the project on a specific private tract of land owned by a private entity, the project does not meet the "fair competition and transparency" requirement. By its very nature (in a flood plain), the land is less than ideal for the proposed purpose and it is inherently more expensive to build on it than a tract that is further from the river, e.g., land that the University currently owns. The City and University would both prefer to use a specific developer (Commonweal – one of the Confluence Council members with a potential conflict of interest) and building contractor (Market & Johnson). The preferred developer and building contractor together have a two thirds interest in the land. The University of Wisconsin Eau Claire’s Foundation owns the remaining one-third interest.
The state's investment in the art's facility portion of the Project must not exceed $25 million.
The University of Wisconsin Eau Claire and the Eau Claire Community have respected the cap that the Regents set and are requesting the maximum $25 million of State funding for the project. This is the sole principle that has been honored.
CONCLUSION: More than a year and a half after the Regents provided the guiding principles for moving forward with the Confluence Project, only one of the five principles has been met.
City Council Vote Postponed for Spending $404,200 on Design for Uncertain Parking Ramp - May 13, 2014 City Council Meeting
Posted: Wednesday, May 14, 2014
The decision to spend $404,200 to design and prepare bid packages for a North Barstow Parking ramp has been deferred to the June 10, 2014 City Council Meeting. The majority of the Council appeared ready to make the expenditure, despite the fact that it had not discussed nor reached a decision on the basic question of whether or not the ramp itself should be built. The concerns raised below by Voters with Facts were not discussed.
The Council voted 6 to 5 to check to see whether there was money in the budget to cover the $404,200 design fee before making a decision. Council members voted as follows:
To check the budget first: David Duax, Eric Larsen, Monica Lewis, Dave Strobel, Bob Von Haden, Andrew Werthmann
Click here to see the Tuesday, 5/13/14 agenda and packet material on the ramp.
Questions that should be raised:
1) Why would the City spend $404,200 to design and secure definitive costs on an parking ramp that has yet to be discussed by the City Council, much less approved?
2) Is $404,200 a significant sum to our City? In terms of annual city property taxes ($8.72 per $1,000 of assessed value) it is equivalent to:
a) 322 homes (assessed at the median value of $147,200), which at 12 per block is almost 27 blocks of homes.
b) $47.5 million of assessed value – almost $10 million more than the entire amount of incremental assessed value of the property currently in the North Barstow Tax Incremental Financing District.
c) 84% of the taxes paid by Oakwood Mall – the highest property tax payer in Eau Claire.
3) Does the City have the dollars to fund the entire project? The short answer is “no” – click here for more information.
Why then would it spend $404,200 to secure a design and firm quotations on a ramp that it does not have the funds to build?
4) What are the stated reasons for constructing the ramp and are they valid?
Reason 1: The ramp is required to meet the City’s contractual obligation to JAMF and RCU to build a parking ramp:
Truth: There is no such contractual obligation:
a) Click here to see the JAMF (Pablo Properties) building contract. See page 4 section 5(d) – there is no obligation whatsoever to provide parking because the parties signing the contract, RDA and the City Manager did not have the authority to obligate the City. That fact was acknowledged in the contract by virtue of the promise to use “best efforts” to acquire the post office and obtain the necessary approvals. Moreover, the “best efforts” were for either a ramp or surface parking and the number of spots was 210.
b) RCU Contract is in the form of an amendment included as Exhibit A to the JAMF Contract. The City’s obligation can be found in paragraph 5(A) and was limited to that which the RDA and the City manager have authority to provide - the paving of a temporary surface parking lot on Block 7, the lot next to the Post Office across the street from the Livery on the corner of Barstow and Wisconsin. In the contract it agreed to provide RCU with 120 parking spots on that lot. Section 5(B) of the contract contained a similar “Best Efforts” clause to the one in the JAMF contract concerning securing the land and providing surface parking or a ramp. The Block 7 lot was been paved and the City’s actual obligation has been met.
Reason 2: JAMF and RCU requested 520 stalls.
Truth: The number of spots requested by JAMF was 210 and for RCU was 120 – that totals 330, not 520.
Reason 3: Contract or no contract, because JAMF and RCU are important citizens, the City nonetheless should help JAMF and RCU and build the ramp as it is required to accommodate their needs.
Truth: The premise behind the reason is highly questionable as it suggests that it is appropriate to provide preferential treatment to some citizens over others. That premise, however, does not need to be discussed as there is already plenty of available parking – Block 7 (paved lot across the street from the Livery on Barstow and Wisconsin) holds 200 cars; the Railroad Lot directly across the Street from the RCU between Farwell and Barstow holds 75, and the Post Office’s South parking Lot or the Haymarket Square Parking lot each can easily accommodate an additional 55 vehicles, to reach the 330 figure. Moreover, JAMF’s requirements are based on estimated needs over a five-year period. As with any five-year plan, it is just that, a plan, which may or may not materialize.
Reason 4: The Parking Ramp will be needed to support the Confluence Project.
Truth: It is true that Confluence project did play a significant part in the parking ramp discussion. Note, for example the following passage from the RDA Minutes from the February 20, 2013 meeting when the parking ramp idea was first broached:
Phase 4a (option) – Create a structured parking ramp at post office site and mixed-use building, the Block 7 could be further developed without concern for parking issues. This parking ramp would also help with the parking issue regarding the Confluence Project
Click here for the full February 20, 2013 RDA minutes.
There are many sizable hurdles that that must be overcome before the Confluence project can go forward: the August vote by the Regents authorizing the project; State appropriation of $25 million for the 2015-2017 period, which will not occur until May 2015 at the earliest; and the raising by private donation of $19 million.
*Includes $3,000,000 of funds that were to be secured from the Federal New Market Tax Credit Program. That program has expired and it has not been renewed by Congress.
**Raising a $2.5 million endowment fund is a condition of the City's Pledge. Click here to see the City Pledge
Would it not be wise to postpone design and final costing, at least until those hurdles are overcome?
Reason 5: Without the Parking Ramp, Block 7 (corner of Barstow and Wisconsin across the street from the Livery) cannot be developed and its full value realized.
Truth: A rational investor would conclude quickly that the corner of Barstow and Wisconsin should continue as a parking lot, as the cost of the parking ramp (projected at $10.3 million) plus the annual cost of operating the parking lot (not yet disclosed) far exceed the value of developing that corner – the city had hoped that a person would build an $8.5 million building on block 7 [see Section III, page 6 of the TIF #8 budget - click here to view].
If the $8.5 million building were built, the lot would generate for the city property taxes of $72,300 per year beginning in 2033, resulting in a return on the City’s investment in the parking ramp of 0.7%. And that assumes zero operating cost for the parking ramp as well as zero future capital costs for the ramp. Both assumptions are contrary to fact. As far as the cost to pave the corner of Wisconsin and Barstow ($185,000), it has already been expended and cannot be recovered.
5) What will happen to the Farmer’s Market? To pay for the parking ramp and the other infrastructure costs, every open space in the area will need to be covered with a building. The current plan is to offer the fourth floor of the parking ramp to the public (at a fee during the week). That is hardly convenient when carrying bags of produce, bakery goods, jugs of syrup, potatoes, fruit, or meat. For additional information click here.
Update: CLOSED Confluence Discussion at the April 21, 2014 City Council Meeting
Posted: Wednesday, April 23, 2014
Council members (David Duax, Monica Lewis, David Strobel, and Bob Von Haden) asked that the first update on the Confluence Project be discussed in the open, recommending that only those portions of the update that dealt specifically with bargaining or competition be handled behind closed doors. The Wisconsin open meeting statute does provide an exemption from the open hearing requirement in cases in which the Council needs to discuss bargaining and competitive bids. There was a fair amount of discussion during which the other Council members indicated their belief that the entire discussion should be behind closed doors to enable the Councilmen to be good stewards of the citizens' tax money. The Chair stated that she had received many comments that she was intepreting as approval to conduct the Confluence discussions in secrecy, as those citizens stated that they had full trust and confidence in the Council.
The city attorney, Mr. Nicks, indicated that he expected that closed sessions like this one would become a regular feature of future council meetings until the Confluence Project was completed.
Mr. Von Haden also asked that adequate time be provided if and when the Council had concurred in proposed terms on the project to enable the public and Council members to do a full review (i.e., something other than the standard Friday afternoon release followed by a discussion on Monday and vote the next day) of the proposed terms. There was no response to his request.
A vote was then taken. Kincaid, Emanuelle, Klinkhammer, Larsen, Mitchell, and Xiong all voted for a closed session; Duax, Lewis, Strobel and Von Haden voted against the closed session. The closed session was held and the meeting was not reopened to the public. As a result, there was no summary of the results of the closed session or of those portions of the discussion, which covered items other than bargaining or competitive bids.
Despite the fact that the session was a public meeting, it was CLOSED to the public based on exception (e) to the Open Public Session law, which pertains to the need for privacy due to bargaining or competitive reasons (section 19.85(1)(e).
To the Closed Session portion (p. 129) of the 04-21-14 City Council Packet click here.
There has also been very limited press coverage of the decision to handle the first update of the Confluence Project since the election behind closed doors. The television reporters left at 9:00 PM, before the Confluence discussion began and, as a result, did not report on the discussion during Monday's evening news. Channel 18 did provide a short piece the following evening, speculating that the negotiations pertained to which responsibilities and costs would be covered by the City and which by the developers. The Leader Telegram reporter provided a couple of Tweets on the discussion on Monday evening and did write a story the following day, however, that story although accessible through Google online, was not published in either the newspaper or the official online version of the newspaper.
Confluence Related Expenditures Discussed at the April 7, 2014 City Council Meeting:
Posted: Saturday, April 12, 2014
The City staff is proceeding with plans for a 520-stall parking ramp at the site of the current post office. It hired a consultant (Walker Parking Consultants) to put together a concept. The plan is to finish the design in 7 months, allow 2 months to bid the work and 11 months for construction, with the intent to complete the ramp in March 2016. Projected cost: $9.7 to $10.3 million – that’s $2 to $2.6 million higher than the original estimate referenced on www.confluencereferendum.com.
To view the portion of the 04-07-14 City Council packet related to the Parking Ramp, click here.
1) Why now?
This information was obtained from http://www.eauclairewi.gov/departments/public-works/parking/parking-lots-ramps
Performing Art Center - $5.0 million
Student Housing - $5.9 million
Plaza - $2.6-$4.1 million
Parking Ramp - $9.7-10.3 million
Total City Confluence Debt - $23.2 to $25.3 million
To pay off this new TIF debt along with that which has already been incurred, a total of $80-$89 million of incremental construction is required. Where will this come from, as there has only been $40 million committed to date?
2) Who will pay?