City seeks $300,000 from unpaid TIF revenues
Clintonville considers legal action against Angelus/Aster
By Bert Lehman
The Clintonville City Council approved allowing City Attorney April Dunlavy to research legal recourse against Angelus/Aster to recoup the more than $300,000 the city claims it is owed.
Dunlavy told the council that Sept. 2 was the last correspondence the city received from the attorney for Aster regarding the money the city says it is owed.
Aster previously bought Angelus and became a tax-exempt entity. Angelus had a TIF development agreement with the city.
“I think you need to authorize our city attorney to proceed with some type of legal action on this,” Kell said. “We have over $300,000 of unpaid TIF revenue that was awarded to that company for that project and there are no means of recouping that now that they’re tax exempt.”
Kell said he didn’t know what kind of success the city would have, but the development agreement clearly required that the money be repaid.
Alderwoman Mary-Beth Kuester asked if Dunlavy would need outside help resolving this matter. She made a motion to authorize Dunlavy to proceed with legal action, with the possibility of seeking help from someone with expertise on the subject. Alderman Jim Krause seconded the motion.
Alderman Brad Rokus said he’d rather have Dunlavy report back to the council what options the city has for legal action.
Alderman Steve Kettenhoven added that he doesn’t want to see the city invest more money without knowing what it can get back, and what that probability is.
“I think that’s the city attorney’s job. I don’t think she should have to seek further help. I think we should just let her proceed,” Kettenhoven said.
Kuester amended her motion, taking out the portion regarding seeking help from someone with expertise on the subject. Krause amended his second.
The council approved the amended motion by a 7-1 vote. Rokus voted no.
There was nothing new to report regarding the raze order the city filed against a piece of property on 11th Street.
City Administrator Chuck Kell told the council he has been in contact with the party interested in developing the site once the building is razed and the property is available to the city.
“I think this individual quite frankly was looking for more than we can provide, especially at this point in time,” Kell said.
Kell said the party is interested in building a laundromat on the site. It would require a $150,000 investment in a building.
“Because this isn’t in a TIF district, what that would mean is that the city’s collection of taxes on the site going forward would be about $1,300 a year,” Kell said.
To demolish the current building, if city crews are used, it could cost the city $20,000 to $30,000, Kell said. This would result in a 15 to 30 year payback period.
Kell said he thinks the city could provide the interested party the site for free, but the party is also looking for TIF incentives. With TIF incentives unavailable at this time, the party would need loans to build a new building on the site.
“I don’t view it as a real solid deal right now,” Kell said. “I think there is the potential for him to do something.”
Alderwoman Mary-Beth Kuester asked if it was possible to start the development, and in two years, when another TIF district can be created, more investment can be made into the project.
Kell said he did speak to the party about a second phase to the project and the party was interested in that.
“But I think you need to realize going into it that we don’t necessarily have a strong payback,” Kell said.
Kell suggested the council think about this and be ready to make a decision at the October council meeting as to what to do with the property.
“Something needs to happen one way or another,” Kell said.
Kell provided the council with an update about Ellen’s Café, which recently closed. He said the city has received notice that the business has filed for Chapter 7 bankruptcy.
A meeting for the creditors is scheduled in Green Bay on Oct. 15. He recommended that the city attorney attend this meeting.
Ellen’s Café had received a $25,000 loan split evenly between Waupaca County and the city of Clintonville. The city is currently owed $10,242 on its portion of the loan.
“It doesn’t appear there is a chance that business will ever open again,” Kell said.
The collateral the city has for the loan is the business’ equipment, Kell said.
“I understand that is also the collateral for the county and the bank,” Kell said.
Kell informed the council that due to changes in the state budget there have been changes made in how tourism fund money can be spent.
Currently, the city collects a hotel room tax, and a city committee decides and recommends to the council how that money should be spent. Kell said the new law takes away the current provisions that gives the municipal governing body discretion on how the money is spent.
“Going forward, if we are going to continue to collect that money, we’re going to have to turn it over to another agency to decide how it’s spent and the council will have absolutely no say in that decision making,” Kell said.
Kell said the money can be turned over to a tourism commission, which the city doesn’t have. The commission then turns the money over to a tourism entity. Or, the city can turn the money over directly to a tourism entity. But that entity was supposed to have been created prior to 1992 as a non-profit organization.
Kell added that any entity that receives the money from the city has to spend 51 percent of its revenue on tourism development and destination marketing. He said he wasn’t sure if the Clintonville Area Chamber of Commerce would meet that qualification.
This change will also require more reporting requirements for the city, Kell said.
“We’re going to have to prove that it’s being used in accordance with the new law, even though we won’t be the ones deciding where the money goes,” Kell said.
Council President Lois Bressette asked what happens to the money the city has already collected.
Kell said the city could distribute that money before the law takes effect.
One of the reasons for the law change is many communities were not using the money for tourism, Kell said.
“They were using it to lower their general fund budgets,” Kell said.
He said Clintonville was spending the money correctly.
The council unanimously approved spending up to $50,000, using 2015 capital funds, to conduct a storm water study for Spring Street in the city’s industrial park.
Kell said the plan is to have the study done on the watershed regarding the specific water issues on Spring Street. The study should be completed over the next three to four months.
Any improvement recommendations will come back to the council for implantation in spring of next year.
Kell said the water issues don’t just happen in the spring, they also happen during heavy rains.
“I think it’s pretty important we do something,” Kell said.