Bad economy ends development dealAfter a closed session following the July 24 City Council meeting, Administrator Scot Simpson said the plans and deal from 2009 with Frisbie Properties to develop the 1.42-acre site at 319 N. Clark St. have been rescinded.
By: Debbie Griffin, River Falls Journal
After a closed session following the July 24 City Council meeting, Administrator Scot Simpson said the plans and deal from 2009 with Frisbie Properties to develop the 1.42-acre site at 319 N. Clark St. have been rescinded.
River Falls created tax-increment finance (TIF) district #7 in the area and offered incentives to develop it.
Local business owners Matt and Shari Frisbie proposed developing a 20,000-square-foot mixed-used commercial building on the site -- they would relocate their business, Frisbie Architects, to the building plus seek additional occupants.
Simpson said last week, “This is an amicable break between the parties.”
Shari said Monday that the Frisbies had no idea then that what is now called The Great Recession had only just begun.
“We had no idea it would be this long of a haul,” she said about the downturn, acknowledging how nearly every kind of business has had to make tough, painful decisions as the recession worsened.
She said the company did not anticipate how “tight” financing would become for it or its clients or its prospective tenants for the new office space.
As it became clear that Frisbie would not be able to fulfill the time-sensitive developer’s agreement, it began meeting with the city.
Shari said it is highly important to keep open the development options for the “great piece of property” that includes Kinnickinnic River frontage and a site adjacent to City Hall.
The 2009 deal involved transferring ownership of the property valued at $425,000 and committing to providing Frisbie with about $180,000 worth of incentives that would have included when the time came -- driveway and parking lot paving, underground electrical distribution, site excavation and storm-sewer facilities.
In return, Frisbie was to finish construction by the end of 2010, creating an improved property worth about $3 million with a new building, park-like spaces, landscaping, paths and other amenities.
Had the project been built, Frisbie would have begun making annual tax payments of at least $59,745 beginning December 2011 and continuing for 20 years.
In a deal separate from the developer’s agreement, Frisbie also bought from its private owner, the small apartment building adjacent to the site and near the Kinnickinnic at 300 N. River St.
Frisbie’s TIF payments over those 20 years would have repaid River Falls everything it spent on incentives and the property transfer -- they also would have created about a half-million dollars in additional tax revenue.
The local business came to the City Council in November of 2010, asking for a two-year extension and a reduction in the promissory-note interest from 6.5% to 4%.
The city approved the request for more time but not for lower interest. Simpson said the deal was essentially Frisbie buying more time to make the deal happen.
“We’re disappointed,” Simpson said last week. “We’d definitely prefer to have the project go forward, but the public is protected here and the risk was almost solely borne by the developer.”
Terms of the new deal include Frisbie transferring ownership of the property back to the city with no “encumbrances,” said Simpson.
Frisbie already paid nearly $40,000 in promissory-note interest after it amended the deal in late 2010.
It is also responsible for both sites’ property taxes for 2009, 2010 and 2011 -- about $36,000 according to county tax records -- plus about half the taxes for 2012.
The “agreement to rescind” also calls for Frisbie to pay another $40,000 toward its promissory note interest.
Besides interest and taxes, both Simpson and Shari mention Frisbie’s “significant investment” into the actual site and building-design plans, as well as preliminary engineering, soil-boring tests and other site-preparation expenses.
The city will also buy from Frisbie the small apartment building for $400,000. Simpson said future income from TIF district #7 will ultimately pay for the purchase, and both parties agreed it makes sense for one person or entity to own both properties.
It will continue to be an apartment building, and that would only change in the context of another development deal, said the administrator.
Simpson said the city will not receive the increased tax payment it anticipated, but it also hasn’t spent any money on the now-rescinded deal.
Shari said reaching the new agreement wasn’t quick, but Frisbie is grateful for an agreement and deems the city as “very fiscally responsible.”
Simpson said though no entity or individual is waiting to pounce on the riverside property, he has fielded a few calls of interest. The land will remain a TIF district, he said.
Whatever goes there, probably commercial office or residential -- will be at least 75 feet from the river, about the same distance as City Hall sits from the Kinnickinnic.
Frisbie felt confident about the deal four years ago, itself needing a bigger office to accommodate a growing staff.
“Nothing has been easy for the last few years by any means,” said Shari about the 15-year-old firm, “but we’re still here with seven employees.”
She said the firm has seen some encouraging economic signs “out there,” including recent jobs it completed such as the UW-Stout Memorial Student Center renovation and a skilled-nursing facility for military veterans in Chippewa Falls.
Shari describes Frisbie’s “core business” for the past eight years as services for assisted-care living and memory-care facilities.
Many people recognize other “Frisbie” buildings: River Center office building at 215 N. Second Street, the ambulance station, City Hall, Security Financial bank, the building that now houses Royal Credit Union, the senior living center south of the city called Comforts of Home.
Frisbie is helping the St. Croix Valley Habitat for Humanity with its green-built Eco Village project, and the firm worked on the recently completed Family Fresh renovation.
Shari says the “buy local” message is worth reiterating, whether it is groceries, gas, furniture, services.
“None of us gets the chance to be here unless we’re using the goods and services in our local community,” she said. “Whatever those services are, shop locally.”