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City of Kaukauna

Redevelopment Authority Meeting Minutes – September 29, 2016

A meeting of the Redevelopment Authority of the City of Kaukauna was called to order at 8:30 a.m. on Thursday, September 29, 2016, by Chairman Haak.

Members Present: Haak, Landreman, McGinnis, Natrop, Smith, VanderWyst.

Also Present: Planning Director Jakel, Applicants.

Absent and Excused: Feldt.

  1. Minutes. A motion to approve the minutes of the August 24, 2016, meeting was made by VanderWyst, seconded by Landreman. All members voted aye. Motion carried.
  1. Subordination Request – USA Academy of Martial Arts. Mr. Jakel explained that RACK’s previous action was to deny the subordination request and suggest that the applicants work with their primary lender in borrowing additional funds to pay out the RACK balance. Mike and Carol Van Heeswyk attended the meeting to clarify their request and explain the circumstances. They have been in business for ten years and are using the rental income from the upper level apartments to service the debt on the building. However, both have significant health issues that require time and resources away from the business. Energy costs on the building are significant and the rental income has not been enough the service the loan payments, utilities and building maintenance. The apartments are regularly improved and maintained to attract and retain renters. The applicants were looking to refinance the loan on the building as well as their primary residence and are requesting RACK subordinate their loan position to allow the bank to remain in a first position. The refinancing would allow the applicants to reorganize their debt, cut monthly payments and use the savings toward paying down debt. Ms. Van Heeswyk explained that the building is up for sale and while there has been some interest, the lack of parking has been an issue. RACK would be paid in full upon the sale of the building. Ms. Smith asked about the number of apartments and the rents collected. Mr. Van Heeswyk explained that there are four units – all currently rented – which generate $1,820 per month total. Those funds go towards debt service, utilities, and maintenance. Chairman Haak explained that it is not the intention of the Authority to not cooperate with the applicants, however, there was some question as to RACK’s security position. Mr. Jakel explained that there is no new money ahead of us and RACK would be keeping our current position – we would just be subordinating our position on the private residence. Mr. Natrop agreed and clarified that if the loan is refinanced, RACK’s position would automatically move up and the conventional lender is asking us to subordinate to our current position. Ms. Smith agreed and explained that the conventional lender may need to file a new mortgage even though no new money is involved. Chairman Haak explained that the Authority would need additional information on RACK’s security position. Mr. Jakel explained that the applicants would need to arrange contact between their bank and our offices to allow the release of the specific information.
  1. Subordination Request – Kaukauna Coffee and Tea. Mr. Jakel explained that the applicant intends to make approximately $100,000 in improvements to the building and would request $48,000 additional money from RACK. A formal loan application will be submitted early next year to allow the applicant time to buy down the existing debt. The application would include additional cost estimates. Chairman Haak explained that three estimates are required. Mr. Jakel explained that the applicant may have already gotten three estimates – we just need the proof. Mr. Haak asked if Davis-Bacon would come into play due to the nature of the project. Mr. Jakel explained that some statutes have changed and he would double-check. Mr. VanderWyst asked about the number of jobs created. Mr. Jakel explained that it would be two FTE. Mr. Landreman asked what improvements the additional funds would be used for. Mr. Jakel explained that the food service portion of the business would be expanded and the restrooms brought up to code. Ms. Smith asked if the menu would be expanded. Mr. Jakel explained that the applicant currently has limited staff and space and can’t really market the food portion of the business. This project will also allow for catering at the site. Mr. Jakel explained that the budget will be set first and then plans will be drawn up. Chairman Haak explained that a contingency fund would be required in that case as there is no commitment to honor the quotes.
  1. Executive Session – Collection of Quencher’s Food and Spirits Loan. A motion to adjourn to Executive Session at 9:05 a.m. pursuant to Wisconsin State Statute 19.85(1)(e) to discuss collection of a delinquent loan was made by Landreman, seconded by VanderWyst. All members voted aye. Motion carried.
  1. Open Session – Collection of Quencher’s Food and Spirits Loan. A motion to return to Open Session at 9:15 a.m. was made by Smith, seconded by Natrop. All members voted aye. Motion carried. A motion to direct McCarty Law to draft a forbearance agreement requiring Ms. Vandenberg to make payments of $300 per month until February 2017 and then resume monthly payments of $550 per month until the loan is paid in full and to diligently market and pursue the sale of the property through a realtor was made by Landreman, seconded by Smith. All members voted aye. Motion carried.
  2. General Matters. Mr. Jakel explained that he was contacted by Rose Simon Kazik regarding her delinquent loan for 117 West Third Street and the possibility of the loan being assumed by a new buyer. Mr. Jakel explained to Ms. Simon that any change in the loan terms would require RACK action. Mr. Jakel met with City Attorney Davidson on action to pursue the personal guarantees on the Plum Hill project.

There being no further business to be brought before the Authority, a motion to adjourn the meeting at 9:20 a.m. was made by VanderWyst, seconded by Landreman. All members voted aye. Motion carried.

Julianne Schroeder

Executive Secretary