During a joint meeting between the city’s Redevelopment Authority (RDA) and Committee of the Whole last night, a proposed second application for Wisconsin Housing and Economic Development Authority (WHEDA) Tax Credits for a multi-unit development at the former Fox Point property, fell to the wayside as a result of a lack of a second motion to proceed on the matter.
The request was made as a joint venture between the Merrill Area Housing Authority (MAHA) and Madison-based Horizon Development Group.
The matter was first brought to the table during last week’s monthly meeting of the RDA.
During that meeting, Scott Kwiecinski explained the reason for the failure of the first WHEDA application, which was submitted as a result of the city approving an initial development plan for the Fox Point property last fall.
That plan called for a 60-unit development, featuring townhome-style units with attached garages constructed beneath the living units. Units in the Horizon proposal would also consist of 1, 2 and 3 bedroom options, featuring forced-air heating and cooling, and ground floor private entry.
The original proposal would come with a price tag of $9.8 million, $6.8 million of which being contingent upon approval of Wisconsin Housing and Economic Development Authority (WHEDA) tax credits and an $850,000 affordable housing grant.
“The challenge we had, and every other developer had, is WHEDA has a two-year cycle with their qualified allocation plan. Last year’s cycle was a brand new scoring criteria and nobody knew exactly what the cutoffs would be,” Kwiecinski explained. “Now that we know where the cutoffs are and where we need to be scoring-wise, we’re able to better address the competitive position of the project and what ‘set-aside’ we should be going into. Now we know that going in, and we can make the adjustments necessary.”
Kwiecinski proposed a second application for the development, this time with a two-phased approach. The new development plan would consist of 40 units in phase one and another 24 units in phase two. Both phases would require separate WHEDA applications.
The new proposal would be applied for under the “Rural set aside” category rather than the “General” category under which the first application was made. While the General set-aside did not have any stipulations regarding the number of units to be built, the Rural has a cap of 40 units, hence the two-phase concept.
“We feel encouraged looking at this project in a phased manner, in terms of financing application cycles. We feel we have a good plan to retool the project and go after tax credits in a more competitive manner,” Kwiecinski added.
Rather than decide on the matter during their meeting last Tuesday morning, the RDA ultimately decided to table the matter for last night’s joint meeting.
Headed into the meeting, MAHA Executive Director Paul Russell appeared optimistic regarding the proposal.
“It’s not uncommon for WHEDA to reject a proposal on the first application,” he stated. “In fact, it is very common for WHEDA to reject the first proposal and approve it on the second time around. That is exactly how our upcoming project to renovate Park Place was approved. It was rejected at first, we came back and re-worked the proposal, then submitted again and it was approved.”
In opening the joint meeting, City Attorney Tom Hayden recommended approval of the proposal.
However, 2nd District Alderman Pete Lokemoen and 8th District Alderman Tim Meehean weren’t so sure.
“This is exactly what I was afraid of the first time around,” Meehean stated. “When we talked about this last year, I didn’t like the uncertainty of whether or not funding would be approved. But I shook the dice. Here we are again and now we have a negative cash flow if the second phase doesn’t go through. The assurances last time weren’t accurate or followed up on and now with this new proposal, we would have two projects to wait on. The uncertainly of this seems at a higher level now than it was before. That’s an issue for me.”
“When I look at this, I look at what’s in it for us,” Lokemoen added. “As a city what’s in it for us is housing for our residents. But from a TIF perspective, this is a zero.”
Both Meehean and Lokemoen suggested setting the property development up for public bid, or RFP (Request for Proposal) process as an alternative.
RDA member Ryan Schwartzman ultimately motioned on behalf of the RDA for granting Horizon Group’s request for a second proposal, which ultimately passed by unanimous RDA vote.
However, when Schwartzman motioned for the request to be approved by the Committee of the Whole, the council chambers fell quiet. Due to lack of a second to Schwartzman’s motion, the matter ultimately met it’s final resting place.
“The City of Merrill missed an opportunity to have a high quality affordable family housing project built at the Fox Point site,” MAHA Director Paul Russell stated following last night’s meeting. “This decision negatively impacts the Merrill Area Housing Authority’s ability to get the $700,000 grant from the Affordable Housing Program, and federal tax credit equity that will be awarded to other municipalities throughout Wisconsin in 2018. We will continue to pursue affordable family housing sites in the Merrill area, to meet a growing demand and long waiting lists for this platform of housing.”
According to City Attorney Tom Hayden, the fate of the former Fox Point Sportswear site now lies in the hands of the Common Council.