Aster to pay $300,000 TIF balance
By Bert Lehman
The city of Clintonville and Aster Retirement Community have entered into an agreement that will pay the city a little over $300,000 that it felt it was owed, as well as payments in the future, in lieu of taxes.
The issue was initially discussed at a Feb. 10, 2015 council meeting when Clintonville City Administrator Chuck Kell told the council that the former Angelus property was bought by a tax-exempt organization.
Prior to the sale, Angelus was part of a Tax Incremental Financing (TIF) District, which uses a property’s tax revenues to pay for bonds that the city uses to attract new development. At that time about $300,000 remained due on the bond.
A copy of the 2002 agreement between the city of Clintonville and the original developer, Angelus XXI Retirement Community LLC, included a clause that said, “The developer shall not assign this agreement nor sell the development to any entity which by virtue of such ownership would render the development exempt from the property taxes unless and until such assignee or purchaser enters into a written agreement with the city pursuant to which such entity agrees to make annual payments to city in an annual amount equal to the general property taxes that would have been paid in that year by the development had it been included in the tax rolls.”
To help rectify the situation the previous city council had asked then Clintonville City Attorney April Dunlavy to work with Aster to develop an agreement to pay the funds due on the TIF district.
In July 2015 Kell informed the council that he and Dunlavy met with the attorneys representing Aster. He said Aster had a different understanding of how tax payments over the years for the property were applied to the TIF investment.
“They feel they’ve accomplished and repaid the city money that was invested. But if you look at it in reality based on what the debt issue was and the interest, basically all that’s been paid is the interest to this point. The debt is still due,” Kell told the council in July 2015.
The next month Dunlavy told the council that Aster felt it had fulfilled its obligation.
In September 2015 the council approved allowing Dunlavy to research legal recourse against Angelus/Aster to recoup the more than $300,000. Also at that meeting, the council debated whether it should authorize Dunlavy to seek outside legal help from someone with expertise on the subject. The council eventually decided against Dunlavy seeking outside help.
With little movement on the topic over the next several months, the city discussed the possibility of using funds from other TIF districts to pay the remaining balance of the TIF district Aster is in.
When Keith Steckbauer was appointed city attorney in April, the council tasked him with trying to reach an agreement with Aster. That agreement finally came to fruition Tuesday, Sept. 13.
“I want to thank Keith for his leadership on this,” Kell told the council. “This was an issue that we had trouble gaining any ground on for quite awhile. I think we’ve accomplished a lot here with this agreement that has been approved by the other parties. It will basically make us whole on the TIF debt that we had with TID 5 involving the Angelus project. It will go a long, long ways towards providing payment every year in the future after that TIF debt is paid. That will be equal to what the taxes would have been on the project for the city had it not been taken off the tax rolls. I think in both cases this is a win-win for the city financially.”
Steckbauer informed the council that the agreement with Aster contained two parts.
First, it included $314,000 that Aster will pay the city over a period of three years, Steckbauer said.
He added that the city will receive a lump sum payment by the end of the year that will cover the last two years’ worth of payments that the city did not receive.
“Once that mortgage portion is paid off, then it will go to a regular payment in lieu of taxes,” Steckbauer said.
This is consistent with the original developer agreement, Steckbauer said.
“Once the bond was paid off, or if it ever became a nonprofit, that it would then be structured so that it would be a payment to the city in lieu of what we would have received in taxes,” Steckbauer said.
Steckbauer said the agreement will be recorded as a municipal service and as a mortgage so there will be a record of it.
“We elected not to change the underlying developer agreement because there are provisions in there that we want in there,” Steckbauer said. “This should resolve this issue in a way that meets our needs, their needs, and also the residents and the complex.”
The council unanimously approved the agreement.
In a follow-up interview by the Clintonville Tribune-Gazette, Steckbauer said he wasn’t sure why an agreement was able to be reached with Aster now, when it couldn’t be reached in the past.
“Maybe there was fatigue on the other side or they understood what their obligations were in the underlying contract,” Steckbauer said. “I simply pointed out what their obligations were in the underlying contract.”