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Work to start at Doc Atty’s

City grants building permit

By Angie Landsverk

Three years after the Waupaca Common Council approved a special use permit for a microbrewery, distillery and winery in a vacant downtown building, work is now set to begin there.

On Oct. 30, the city issued a building permit for the Doc Atty’s project at 109 N. Main St., after both the city and partners in the project signed an amended developer’s agreement.

Construction is to be completed by June 1, according to Brennan Kane, the city’s director of community and economic development.
The property is the former Edgewood Arts building.

Dr. Jan Bax and Robert Forseth are the original partners in Doc Atty’s.

Phillip Pawelski has since become a partner in the project as well.

In October 2014, Bax and Forseth requested a special use permit to operate a brewery, winery and distillery there.

At the time, their plan included renovating both floors of the building.

They have since changed the scope of their project.

Kane said it now includes the renovation of the basement and first floor into a restaurant with a brewery, distillery, winery.

At this time, the second floor will not be renovated other than minor HVAC and electrical improvements, he said.

They will invest $1.2 million into the restoration of the building.

The project is moving forward following years of discussion and months of negotiations between the city and the developers.

In 2015, the common council authorized city staff to submit a grant application through the Community Development Investment Grant program.

The Wisconsin Economic Development Corporation (WEDC) authorizes and maintains the program.

Last year, the city was awarded a grant not to exceed $225,739.

The city worked with representatives from Doc Atty’s for several months to determine the viability of their proposed project and its business plan.

A year ago, the council directed city staff to continue those negotiations and prepare a developer’s agreement.

Last February, the council approved a developer’s agreement.

Letter of credit
The agreement included that Doc Atty’s must provide a letter of credit in an amount not to exceed $225,739, the amount of the grant.

Bax then asked that the letter of credit requirement be eliminated from the agreement and replaced with a personal guarantee.

An independent review for the city showed Bax had sufficient assets to repay the grant dollars.

Bax also asked that the developer’s agreement the council had approved in February be reconsidered.

That topic went before the council in July and August.

Bax told the council a letter a credit reduces the opportunity for cash flow.

Ald. Paul Mayou, one of the owners of T-Dub’s Public House, said the developers initially accepted the idea of a letter of credit.

“But apparently it does not work now,” he said.

Mayou said there are currently more jobs than there are employees for them.

“If you look around town, there are ‘Help wanted’ signs everywhere,” he said. “I don’t think we should be subsidizing.”

Bax said WEDC likes their plan and wants to see it happen.

Mayor Brian Smith said, “They are not going to get the grant money until they put $1.2 million into the building.”

Smith said he also understood why Bax asked that the letter of credit be replaced with a personal guarantee.

“It took six years in my accounting business before I had to stop borrowing money to make payroll,” he said. “If you tie money up that they could be using to meet expenses, you are asking it to fail.”

On Aug. 15, the common council voted 5-3 to change the developer’s agreement from a letter of credit to a personal guarantee of all members of the LLC and one grant payment to the bank within 30 days of the opening of the business.

Lori Chesnut, Steve Hackett, Eric Olson, Dave Peterson and Scott Purchatzke voted yes, while Paul Mayou, Mary Phair and Chuck Whitman voted no.

Phair wanted the two parts of the motion separated, saying she felt strongly a letter of credit needed to be in place.

Alan Kjelland abstained from the vote and the discussion because Forseth is his attorney.
Paul Hagen was absent that evening.

Developer’s agreement
Another matter related to the developer’s agreement also went before the council that night.

In July 2016, the city entered into an agreement with WEDC to receive the $225,739 grant to go toward the Doc Atty’s project.

“What we signed and what WEDC signed were two different things,” the mayor told the council.

The agreement the city signed and sent to WEDC said if Doc Atty’s were to go out of business within five years or move the business out of state, the grant would have to be repaid.

The agreement signed by WEDC had the word “and” instead of “or” in it.

“There’s a big difference between ‘or’ and ‘and,” Smith said.

City Administrator Henry Veleker contacted WEDC regarding the difference in the wording.

WEDC agreed its agreement said “and” and told the city it would need to accept that wording with an amendment to the agreement.

Veleker sought the grant agreements for other communities.

The other agreements did have the word “or” in them, Veleker told the council.

“Our agreement is unique to other agreements in the state,” Smith said. “WEDC is aware of it and OK with it. Why they changed it, we don’t know.”

The mayor said a grant was being offered to the city to help improve a business in its downtown.

“To me, it looks likes WEDC is doing us a favor,” Smith said. “It is grant money WEDC is going to pay out to some community. Why not us?”

He told the council to think about what the grant can do for Waupaca’s downtown.

Chesnut said she thanks the businesses who did projects on their own, without grant dollars.

“Absolutely. Absolutely. I totally agree with you,” the mayor said.

The council voted 6-2 to accept an amended agreement with WEDC, replacing the word “or” with the word “and.”

Hackett, Olson, Peterson, Phair, Purchatzke and Whitman voted in favor of it, while Chesnut and Mayou voted against it.

Kjelland again abstained.

The council then voted 7-1 to changed that wording in the developer’s agreement as well.

Mayou voted no, and Kjelland abstained.

Following the council’s action, the city asked WEDC for an amendment to the existing agreement between the two of them, so it could then complete the developer’s agreement with Doc Atty’s.

Once WEDC agreed to the amendment, the city and Doc Atty’s partners signed the agreement.

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