EM authorizes $400,000 promissory note and $895,000 revenue bond for TID incentive payments
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By LeAnn R. Ralph
ELK MOUND — The Elk Mound Village Board has approved the sale of a $400,000 general obligation promissory note and the sale of an $895,000 tax increment revenue bond anticipation note to pay incentives for the Settlers Ridge development.
Sean Lentz of Ehlers Inc., the village’s financial consultant, told the village board at the December 20 meeting he had been working with the law firm of Quarles & Brady and had hoped to have a meeting with the village board a week earlier.
Quarles & Brady is doing their due diligence on the $895,000 tax increment revenue bond and had asked where they could find certification from the state of Wisconsin that Elk Mound’s Tax Increment Finance District No. 2 had been approved, he said.
The Elk Mound Village Board approved TID-2 a while back to help facilitate the Settlers Ridge Development located on the east side of Elk Mound.
Work has already started on two eight-plex apartment units and one 12-plex apartment unit as part of Phase I in the Settlers Ridge development.
The 28 apartments are the first of up to 84 units that have been proposed for Phase I.
Settlers Ridge LLC owns 117 acres all together in Elk Mound and has similar developments in Menomonie, Eau Claire and Chippewa Falls.
According to state law, after TID-2 was approved, the village is able to charge expenses to the TID. The paperwork for TID-2 has been sent to the state for certification, Lentz said.
Certification
Quarles & Brady insisted that Ehlers obtain the certification from the state for the law firm to be comfortable putting the resolution together to issue the revenue bonds, which are predicated on the TID, Lentz said.
Lentz contacted the state Department of Revenue and was told that according to a new DOR policy, certification for TIDs approved before October 1, 2021, will not be sent out until January of 2022 at the earliest, Lentz said.
Since the certification was not available from the state, Lentz said he was unable to receive a legal opinion from Quarles & Brady on the $895,000 revenue bond.
Lentz said he checked with Jim Rooney of Settlers Ridge LLC and Rooney’s attorney about whether Elk Mound could pay the first $400,000 to them in January rather than in December.
Rooney said their financial commitments required a payment in December, Lentz said.
The back-up plan, then, since certification of the TID is not available until January, is for the village board to approve a $400,000 taxable obligation promissory note, he said.
If the village board approves the $400,000 promissory note, Ehlers would close on the promissory note with Bremer Bank next week, and then Elk Mound would have the funding to pay the development incentive payment to Jim Rooney before the end of the year, Lentz said.
Quarles & Brady are comfortable with the village board approving the $895,000 revenue bond anticipation note that Lentz would close on in January after receiving certification of TID-2, and the village could use the $895,000 revenue bond anticipation note to pay off the $400,000 promissory note, he explained.
The other purpose of the $895,000, after paying off the $400,000 promissory note, is to pay future incentive payments that are part of the TID-2 development agreement with Rooney and his group, Lentz said.
Elk Mound would not receive any funding on the $895,000 until January, but then the village would draw the money to pay off the $400,000, he said.
“I think we’ve got it ironed out at this point. The down side is it will require not a single note issue, as we had originally hoped, but a two-pronged approach,” Lentz said.
The remainder of the $895,000 will be used to make future draws to meet the provisions of the development agreement for TID-2, he said.
How confident?
Steven Abraham, village president, asked how confident Lentz was that certification of TID-2 would be received from the state in January so Elk Mound would not be falling behind in its obligations.
The $400,000 and $895,000 have the same interest rate of 3.72 percent, Lentz noted.
Lentz said he was confident the certification would be received in January.
The people he had talked to at the Department of Revenue were understanding but were not willing to change their policy about releasing the certification until January, he said.
They understand that Elk Mound is not a large municipality with a large general fund that could be used to fill in gaps on incentive payments, Lentz said.
Lentz said he had made it known that everyone involved would appreciate receiving the TID-2 certification as soon as possible.
Abraham said he would be willing to contact Rob Summerfield, state representative for Assembly District 67, and Kathy Bernier, state senator for Senate District 23, to put political pressure on the DOR if necessary.
Lentz said his plan was to wait through the first week of January and then send an e-mail asking for the certification.
The Elk Mound Village Board, on separate motions, unanimously approved the issuance and sale of the $400,000 promissory note, Series 2021B, and the issuance and sale of an $895,000 taxable tax increment revenue bond anticipation note for TID-2, Series 2022A.
