|By Dean Mosiman, The Wisconsin State
JournalMcClatchy-Tribune Regional News
Nov. 13, 2011--Developer Robert Dunn has secured private financing and expects to sign a construction contract next week, his last obligations to accessing $16 million in city assistance for the $98 million redevelopment of the historic Edgewater hotel.
"This is a monumental step," Dunn, president of the Hammes Co., said Saturday. "In this economy, financing a project of any size is extremely difficult."
The financing was delayed by a recently decided lawsuit challenging the city's land use approval, he said.
But Dunn, who hopes to start construction early next year, still faces hurdles.
The developer and city staff must now complete a final tax incremental financing (TIF) agreement and the City Council must approve a resolution with a 15-vote super majority to borrow $16 million that's in the 2011 capital budget. If the TIF funds aren't borrowed this year, they would have to be reauthorized for 2012.
Mayor Paul Soglin has said he would sign TIF documents if completed by the end of the year. "The city will respond to whatever (Dunn) requests within the scope of the agreement," Soglin said Saturday, adding that he isn't sure if all the work can be done by Dec. 31.
Dunn, however, said Soglin's comments at a recent press conference that the city had met its obligations and was awaiting Hammes to do the same mean there should now be no roadblocks.
Assistant City Attorney Anne Zellhoefer said finishing the TIF agreement will depend on negotiations but that the timing of a borrowing resolution "will likely be the first quarter of 2012."
Soglin, who said he has no obligation to support $16 million in TIF next year, proposed the redevelopment get $3.3 million -- which would kill the project. But 10 of 20 council members co-sponsored an amendment to the mayor's budget to deliver the $16 million next year.
The council will consider the 2012 capital budget Tuesday.
The "prudent thing to do" would be to maintain the funds in the next budget, Dunn said. "I've done everything I said I would do," he said, adding he has invested time, energy and millions of dollars in the project. "It's our expectation the city will fulfill its obligation as well."
Hammes wants to restore the original 1946 hotel, cut the size of a 1970s addition and build a public terrace atop it, create a staircase to the lake, erect a nine-story tower and add underground parking.
The project uses about $35 million in equity from the developer, about $35 million in borrowing from National Exchange Bank and Trust and River Valley Bank, about $8 million from the sale of condos, and the $16 million in TIF.
The $16 million would help build the public terrace and staircase, move the hotel back 15 feet from Wisconsin Avenue and cover some costs related to moving underground parking to adjacent property owned by National Guardian Life Insurance Co.
Ald. Mark Clear, 19th District, a sponsor of the amendment for $16 million next year, said the project was approved by the council and shouldn't be undermined by delays. If the city doesn't deliver the funds, it could open itself to litigation, Clear said.
Though the project received land use approvals in May 2010, securing private financing was a challenge due to the economy and more importantly litigation challenging the city's approvals filed by Mansion Hill neighborhood residents Fred Mohs and Eugene Devitt, Dunn said.
On Oct. 27, a three-judge panel of the state's 4th District Court of Appeals unanimously sided with a lower court decision, which affirmed the council's vote to overturn the city Landmarks Commission's decision to deny the project.
Mohs on Saturday said he has not decided whether to appeal to the state Supreme Court.
Dunn said a further appeal would be denied and that he and lenders are confident enough in the unanimous appellate court decision to move forward.
(c)2011 The Wisconsin State Journal (Madison, Wis.)
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