City threatens lawsuit over late land payments

The developer of the proposed Prairie’s Edge subdivision — the largest to be built in Port Washington — is about $45,000 in arrears in mortgage payments to the city for the south bluff land on which the subdivision is to be built, City Administrator Mark Grams said.

The Common Council on Tuesday met in closed session to discuss the possibility of taking Black Cap Halcyon to court to recover the back payments and ensure it will receive future mortgage payments from the firm, Grams said.

Aldermen took no action following the session, but Grams said they authorized him to continue talks with Tony Polston, the firm’s principal.

The council did not rule out the possibility of filing a lawsuit to ensure it gets its money, Grams said.

“We’re looking at all our options,” he said.

Grams said the city has been talking to Polston since the council in October rejected a request from Black Cap Halcyon to create a tax incremental financing district and provide TIF incentives for the subdivision, something the firm initially said it would not seek.

“It’s time to get things moving,” Grams said “He (Polston) hasn’t been sitting still. He’s still working on (financing) alternatives.”

But, Grams said, the prospect of litigation may help in negotiating a settlement — perhaps even a plan that could result in the city getting its money earlier than specified in the purchase agreement.

Grams said the Milwaukee-based Black Cap Halcyon has fallen about five months behind in its $8,400 monthly mortgage payments to the city.

According to the city’s agreement with Black Cap Halcyon, the firm is to pay $2.26 million for the 35-acre bluff property — the appraised value of the land.

The agreement states the firm was to pay $22,600 in earnest money and $226,000 when the sale closed, then make principal and interest payments to the city of $8,400 a month. An additional $1 million payment was to be made when building permits were issued for the first phase of the project and $516,000 each when the permits for the second and third phases were issued.

At the time, officials were told the first phase was to begin in March 2018, the second phase in July 2019 and the third phase in July 2020. While plans for the project have been approved, construction has not begun.

If work on the project doesn’t begin by July 1, 2023, the city can buy back the property, Grams said. 

Officials are looking at ways to ensure the city gets its money and perhaps alter the payment schedule, Grams said.

“Obviously they’re having problems,” he said. “Let’s see if we can help them out or mitigate things.”

Black Cap Halcyon’s biggest problem was timing, Grams said, noting that just after the firm bought the land construction costs skyrocketed as a result of natural disasters, tariffs and large competing projects.

The city wants to see Prairie’s Edge succeed, Grams said, noting that of the three proposals for developments on the bluff land, Prairie’s Edge not only offered the city the most money for the property but also the mixed-use development officials sought.

Prairie’s Edge would be the city’s largest subdivision with 34 single-family houses, 16 pocket neighborhood single-family homes, 20 townhouses and 156 apartments, as well as 40,000 square feet of commercial space.

“This is where we’re going to get the most value and the most money for the land,” Grams said. “To me it’s worth it to work with him. Give him a little more time. Ultimately, you’ll get the most bang for your buck.”

If that doesn’t occur, he said, the city can go back to the drawing board.

One of the other firms vying for the bluff property offered the city $1 for the land, wanted a significant amount of TIF financing and planned to build apartments and condos on the property. The other developer offered the city a similar price for the land as Black Cap Halcyon, but wanted significant city funding for the project, which would have been primarily apartments.

Grams said that while he wants to see construction begin next year, that remains up in the air.

“A lot of it is going to depend on the economy,” he said. “But now’s the time to get things going so things could begin next year.”