The Platteville Common Council approved a grant and a loan for a new building development, and gave an extension for an existing building loan July 28.
The council first approved a $260,000 loan and $100,000 grant to Grant Platteville, Inc., which is building a low-income housing project at 1245 N. Fourth St.
The former site of WSWW radio will have 34 rental units of one to four bedrooms, targeted to low- or moderate-income people and families based on Grant County median income levels.
Transmitter towers north of the site were taken down in January 2014. The developer agreement requires “substantial completion” by Dec. 1, 2016.
The vote was unanimous, more than the two-thirds requirement needed for a budget change. The city is creating a new capital projects fund, using $223,677 from the city’s Capital Improvements Fund balance and $41,323 from the street construction Capital Improvements Fund. The grant, which will come from Darrel Kallembach house sale proceeds, will be given when the property is given an occupancy permit.
The much longer discussion was over the fate of the Bayley Building loan, which the city gave through the Downtown Redevelopment Authority’s Underutilized Property Improvement Program in 2007. Five years and one recession later, the city in August 2012 — one month after rejecting a balloon payment extension request — extended the balloon payment deadline from 2012 to Aug. 1, five days after last Tuesday’s meeting.
Bayley Group LLC, the Bayley Building’s developer, owes the city almost $291,000 on the $320,000 loan made in 2007, according to city records.
On July 28, the council approved a two-year loan extension, to Aug. 22, 2017, with an additional 1 percent added to the loan interest rate. That passed 5–2, with at-large Alds. Mike Denn and Tom Nall opposed.
Amy Charles, principal of Bayley Group LLC, said the “circumstances that we obtained the property at changed quickly” after the 2008 recession, particularly in the financial services sector.
Charles said the building was worth $137,900 when Bayley Group purchased it in 2007, and it is now worth $598,400. It has one first-floor retail tenant, Change of Seasons, and eight rented apartments. Charles added that Bayley Group has never missed a payment on the city loan.
“I think the value to the community is larger than that, however,” said Charles, adding that a historic downtown building “perseveres.”
Charles said developing the basement was “not viable” because Bayley Group doesn’t have “positive cash flow.”
“We took on a project that was frankly a white elephant,” she said. “We paid twice the value of the property to acquire it so we could begin renovation and redevelopment of that property, and that has put us behind from an equity standpoint and made it impossible for us to get traditional financing up to this point.”
But, said Nall, “I look at this as a management problem. I see that you’re not able increase the rent that you’re getting paid because of certain situations. … I have an obligation to the taxpayers that things go well and we’re not back here two years later with the same situation.”
Platteville Main Street Program director Jack Luedtke said the commercial real estate climate was “now just turning the corner,” and that developers often aren’t interested in renovating buildings, and banks often aren’t interested in financing building renovations.
“It is a difficult situation for all the communities in Wisconsin, because developers do not want to deal with rehabilitating these buildings,” he said. “They cannot justify the additional cost because of the regulations for underutilized space, and we find that with every opportunity that we have to renovate underutilized space to make it a situation where somebody can move in, particularly if it’s a change of business. …
“You can’t get — and it’s not just Platteville — you cannot get substantial financing for rehabbing these buildings in the downtown area. They just are very difficult to cash-flow, and that’s part of the problem we’re having with rehabbing underutilized space.”
“If these are basically loans that traditional lending institutions will not touch … can the city afford to keep taking those kinds of risks?” said Denn.
District 3 Ald. Barb Daus described the building before Bayley Group work, and “walking by this particular building and looking at a stairway that had dead pigeons, and windows on the second floor that were broken and/or covered up with all kinds of cardboard and plywood. I wouldn’t have called it a white elephant; I would have called it an eyesore.”
“This building was definitely a building that most people would have probably said I don’t want to tackle this project,” said Common Council president Eileen Nickels. “I do think it’s the city’s role at times to work with a developer, just as we did with the development on North Fourth Street.”
Another opponent was Rich Christensen, a downtown resident who lives across the street from the Bayley Building. Christensen said he asked at the 2012 meeting where the extension was approved, “‘Where will this be in three years?’ Well, here we are.”
Christensen said the council was different in 2015 from 2012, “and I hope this Common Council will act differently.”
Luedtke said the city will be dealing with this issue in the future for developers of such buildings as the former Steve’s Pizza Palace at 15 E. Main St., which he called “the new white elephant.”
“The banks want to help, but their hands are tied to all their numbers,” he said.
