City seeks assurances from Commonwealth for workforce housing project

A project to bring 40 additional apartment units to the city is facing a rocky road as some city council members at Monday’s Medford City Council committee of the whole meeting called for additional assurances before giving their OK to a financing deal which would allow construction to begin this fall.

About three years ago, the city started the process to bring an apartment complex on city-owned land on Progressive Ave. just north of the Northcentral Technical College Campus. The city partnered with Commonwealth Development Corporation to develop the parcel to become Cedar Ridge apartments.

The project calls for the construction of a mixture of two and three bedroom apartments in three buildings with a dedicated clubhouse space surrounded by green space. The city had given the parcel to the company to develop the project utilizing tax credits through a program with the Wisconsin Housing and Economic Development Authority (WHEDA). Unlike other income-eligible apartments that have been constructed in the past, once completed the property will be on the city’s tax rolls.

The project has always been dependent on getting the WHEDA tax credits. However, the project was not among those selected for the program on the first round and was two away from qualifying under the competitive point scale. The project was able to move forward when over the course of last summer two or more other projects in the state dropped out.

In October the city was notified that Commonwealth was awarded funding but there was a severe funding gap due in part to sharp inflationary increases for construction materials and labor from the time of the initial proposal which was compounded by increases in federal interest rates. After reaching out to other state and federal funding sources and making a few design changes including the elimination of $500,000 worth of garage structures. The $10 million project is still $350,000 short.

After meetings with city coordinator Joe Harris and Mayor Mike Wellner and Commonwealth representatives, a proposal was brought to the council for the city to finance the remaining portion with a 0% interest loan for 15 years.

According to Harris, the city would tap into funds specifically designated during the closure of Tax Incremental District 6, 8 and 12 for the purpose of bringing additional low income housing to the city. The city would loan this money to Tax Incremental District No. 14, which includes the proposed development, and TID 14 would in turn loan it to Commonwealth. However, TID 14 would repay the city’s housing fund as part of annual debt service rather than waiting the full 15 years. This significantly reduces the risk to city taxpayers if the project developers would default on the loan.

According to Harris, all the financing must be in place before the contractors can begin work on it. Construction is slated to begin in September 2023 and be completed by September 2024. This would also ensure that it would be on the city tax rolls beginning with the December 2024 property tax bills.

“There is no question about the need, we just all thought it would be built by now,” said council member Mike Bub.

Bub said he was “very uncomfortable” with the financing proposal saying he did not feel the company was living up to their commitments.

Wellner defended the project and the company involved saying there have been delays not caused by the company and that the company has made a good faith effort in closing the financing hole to make this work with contacting other entities. He said if the financing is not approved and entirely in place by the end of July the project is off the board. He noted the city property has sat undeveloped for years and would likely remain so generating no tax income.

He also noted that even with additional apartments having been built in the area, there is still a large demand for this type of housing, especially among people working in industries in the city.

“What happens if they get halfway through and uh oh there is another shortfall?” asked council member Christine Weix.

Harris said they could structure the financing agreement so that the city’s funds would be the last money to be spent.

“I am concerned they will not finish the project,” Weix said.

Council member Ken Coyer said he would like the city to have a way to hold their feet to the fire on the project.

“Can we leverage other assets with the company in case they default?” Bub asked.

Harris noted that Medford is not the only place this has happened. He said the same sort of issues occurred in Ladysmith but in that community the city gave the company the money, in Medford they are loaning it and will be paid back. He also reminded council members that while it seems like a long time, there was a 9-month delay in the middle as they awaited even getting the project approved. Harris also noted as of December 2022, the project was $1.5 million short and that Commonwealth has worked to close that gap.

Wellner also noted that the company has sunk a lot of resources into the project already, but said they could ask for a guarantee to protect the city’s interests.

In the end, council members voted unanimously to recommend the financing proposal to advance it to next Wednesday’s city council meeting. The company representative who has been working with the city on the project will appear via Zoom at the meeting to address council members’ questions.

Tuition reimbursement

The city of Medford will help one of its employees complete her bachelor’s degree with a tuition reimbursement program. The city has had the program as part of its employee handbook for a while, but in recent years has been a rarely used employee benefit.

Coyer said when he was police chief they had an officer utilize this to get additional training. Under the policy, the city will pay 50% of the tuition, fees and books of coursework that is deemed not mandatory for the employee’s current position up to a set number of credits. The city covers 100% of the costs for mandatory classes. The reimbursements for the credits are conditional on the employee completing the class with a C or better and that they must be pre-approved by the city.

Brooke Klingbeil is taking online classes through UWGreen Bay in an organizational leadership program with an emphasis in human resources and management. She has 10 years working in the city’s wastewater treatment utility and is currently the lab manager. She is on pace to graduate in fall of 2024 taking six credits per semester.

Klingbeil said her goal in taking the courses and completing her degree was to add value to herself and to the city.

Council members praised Klingbeil for her commitment to continuing her education. Council member Laura Holmes said she knew that it was not an easy thing to do.

Bub supported the request saying that it was important to support employees who have been hard working and dedicated. “I think it is good for the city,” he said.

The policy allows up to 25 credits. However, Klingbeil said the maximum she would need is 24 credits. If she were to leave city employment within five years of the reimbursement she would have to repay the city prorated for every year below five.

The issue council members had was if they should approve reimbursement for credits in the program already taken along with the courses currently being taken and going forward. The city employee handbook says they needed to be preapproved. The cost to the city to approve all 24 credits would be about $4,400. However there were concerns this could set a precedent to have employees seeking reimbursements for courses taken years ago.

City Clerk Ashley Lemke said they would be setting a precedent and that going forward they would need to treat other employees exactly the same or open themselves up to complaints about favoritism.

In the end, committee members voted to recommend reimbursing 50% of the tuition and books for 15 credits for successful completion of the courses she is currently enrolled in as well as the ones she plans to take in the coming semesters. This is with the conditions of staying in city employment for at least five more years or have to pay it back.

In other business, council members:

  Recommended approval of a liquor license renewal for The Sports Page and a tobacco license for Freedom Vapors.

  Recommended approval of two-year private well permits for property owners of 19 private wells in the city limits.

  Recommended approval of refuse collection/ recycling hauler’s license for GFL Environmental and Waste Management for July 1 through June 30, 2024.