Developer’s delay forces city to borrow $1.5 million

The Port Washington Common Council on Tuesday endorsed a plan to borrow more than $3 million for projects in 2019 and 2020, but half of that borrowing could have been avoided if work had begun on the Prairie’s Edge subdivision.

When the city sold roughly 35 acres of bluff property for the subdivision to Black Cap Halcyon last year, it received $200,000 of the $2.2 million price. 

The firm was expected to begin work on the subdivision last year, and the purchase agreement called for the city to receive $1 million when the building permit for phase one was issued and another $500,000 each when permits for the second and third phases were taken out.

But developer Tony Polston, who has said the first two phases would be done concurrently, has recently made changes to the project, and City Administrator Mark Grams said final engineering plans for the development were recently submitted for review.

Anticipating receipt of $1 million for the land last year, the city purchased such items as a new ambulance and tanker truck for the fire department, trucks for the street and parks and recreation departments, an emergency siren and park equipment, Grams said.

The city had also budgeted almost $370,000 for expenditures this year to be paid from Prairie’s Edge funds, he said, including $200,000 to replace the surface at Possibility Playground, a library check-out system, police equipment and other projects.

Even if the city receives funds from Prairie’s Edge this year, Grams said, the city still needs to borrow to avoid cash flow issues.

In addition to these projects, the city is borrowing about $1.2 million for road work to be done in 2019 and 2020, $700,000 for improvements to the east end of the breakwater and other purchases.

The city will have three years in which to spend the money it borrows, officials said.

Because interest rates for municipalities remain low, the city’s financial consultant Carol Wirth recommended a borrowing this year, Grams said.

Wirth recommended to the council that the city borrow the funds with short-term notes later this year, and possibly refinance them with bonds — a move intended to stabilize the city’s debt service levy.

The debt service would likely increase 26 cents per $1,000 in assessed value next year with the borrowing, but would increase even more in 2022, Wirth said. At that time, she added, the city can refinance some of its higher-interest notes to help keep the tax rate steady.

“The goal is to keep it similar to today,” Ald. Dan Benning said.

The Common Council also on Tuesday approved the sale of $1.8 million in revenue bonds for the water utility.

The money will be used to finance water main work being done in connection with street repairs this year and next.

The bonds will be sold to Bernardi Securities of Chicago at an interest rate of 2.94%, Wirth said.

Bernardi was the low bidder of four firms seeking the bond issue, she said.

The city retained its A1 bond rating for the issue, Wirth said. This is a step below the AAA3 rating it has received for general obligation bonds like those it is expected to seek for the road work and other projects, but that’s because revenue bonds aren’t backed by the tax levy, she said. Instead, they are paid back by the water utility’s revenue.

In other action, the Common Council agreed to apply for a $150,000 State Trust Fund loan from the Wisconsin Board of Commissioners of Public Lands to help pay the tax incremental financing incentive for Ansay Development’s Lake Harbor Loft condominiums on Washington Street.

The city last year approved a State Trust Fund loan of $330,000 to help Ansay pay for remediation and demolition on the former Victor’s property. 

The payments are a reimbursement and the state requires the bills be submitted during a four-month window, Grams said. The work wasn’t completed within that timeframe, he said, so the city has to apply for a new loan to cover the balance.

Ansay, which has since completed the remediation and demolition work and is reviewing the bills, has already received about $175,000 from the fund, Grams said.

  He noted that the firm is not likely to need the entire $330,000. The current estimate is that the bills will total $256,000, Grams said, adding Ansay won’t receive more than the total cost.

The city will likely have to apply for a second loan to help developer Stephen Perry Smith with his Lake Pointe condominium project next to the Ansay development, Grams said.