The Five Rivers saga: more twists and turns than the Fox River it will be built on

Well, it looks like Five Rivers is moving forward. I wish I could say I was surprised, but most of us who have been around awhile have, over the years, developed somewhat of a cynical attitude about things. We expected this to go forward, especially since the Common Council was being led around by the nose by Community Development Director Jackson Kinney and because we didn't hear tough questions being asked by many council members (with the exception of Bryan Bain and Paul Esslinger; and I'm sure Dennis McHugh would have played an active role, too, had he been there at the time).

In this morning's Oshkosh Northwestern we see just how much authority the council has actually given Mr. Kinney and others in city administration, wittingly or unwittingly. According to an article by Alex Hummel the council will probably not be asked to approve any formal Five Rivers development agreement. That's because the term sheet it approved last year "contained a provision that authorizes city staff to ink the formal agreement and move on. That is, if nothing within the term sheet language substantially changes, requiring council reconsideration."

• Here are some questions council members need to get answered immediately, if not sooner, before this goes any further.
• What is the exact wording of that provision referenced in the article and where is it spelled out in the term sheet? I have copies of what are supposedly both term sheets, though they look more like outlines of something than anything else and don't contain much, if any, legal specificity.
• The term sheet was modified in March of this year. Did the modifications include that same provision and if so, where can it be found?
• Who decides if the term sheet has "substantially" changed or not? Jackson Kinney? Warren Kraft? Richard Wollangk? All of the above? And wouldn't you think that a contractor underwriting some or all of the very project they're going to work on is akin to a "substantial change?"
• There's been a lot of talk about "pay as you go" TIFs and those which are "direct pay." It's been well-documented that the "pay as you go" better protects taxpayers' interests. If this doesn't come back before the council, who decides which pay option developer Tom Doig and his friends get? Jackson Kinney? Richard Wollangk?
• Exactly how much of this project is C.D. Smith financing and why would a contractor finance a project like this? You'd think they'd want to MAKE money, not just break even. If they're underwriting it, where and how do they make a profit and how much of the grant money do they get?
• If C.D. Smith is getting some or all of the grant money available for this project, what is to prevent them from stopping the project partway through - basically taking the money and running? We've certainly seen other companies take our money and run, or have we forgotten Wisconsin Automated a few years ago? Different circumstances true, but the Common Council at the time operated on information given to them by Jackson Kinney and we all see where that ended up. I do not believe Mr. Kinney is as careful as he should be OR he simply doesn't have the taxpayers' best interests in mind.
• How did C.D. Smith automatically become the contractor on this project? It is being built in a TIF district with a lot of TIF money being funneled into it. Where is the competitive bidding on the job or is this yet another project where the public will be told bids can be waived? If so, I would like someone in the Attorney General's office or State Legislature to explain to us under what conditions bids ARE necessary.
  

Neither Jackson Kinney or any of the others mentioned above are elected officials (though I think we can agree they each can be somewhat of a politician) and they do not answer directly to the electorate. Therefore, for this council to have abdicated its authority and given it to the "hired help" is shameful. And if Jackson Kinney or someone else in City Hall has used semantics and legal loopholes to pull the wool over the council's eyes, it is as, if not more, unconscionable and reprehensible. Jackson Kinney has pushed for this project from day one. Talk about the fox guarding the hen house.

One last question: Did our city council members know they were essentially agreeing to give away their electorate-given authority by approving a term sheet? If so, why would they do that and if not, why did they not know?

The public has been shut out of this process from the beginning and now the council, while good enough to keep granting extensions to Mr. Kinney and this developer, and which will have to approve the necessary bonding, has been shut out of the final approval process. Council members need to find a way to have this brought back in front of them so they can do the job they were elected to do and scrutinize the financing details and vote them up or down. But whether they do or not, the onus of responsibility with respect to this project falls squarely on their shoulders.

- Cheryl Hentz

The following comments are owned by whomever posted them. This site is not responsible for what they say.

The Five Rivers saga: more twists and turns than the Fox River it will be built on
Authored by: DP on Saturday, June 03 2006 @ 12:42 PM MDT
Good point...who gets to determine what "substantial" is? It is ironic that once again we could be confronted with an "opinion". I haven't seen the documents, but you would hope that the staff has it written with more clarity than that.I do know that according to a recent e-mail from the developer...they think the city has approved their plan (it says it right in the e-mail).I do hope that once the ink has dried, and the ground is broken, everyone could get behind this development. Regardless of your opinion on viability, it does have the potential to be a wonderful project for our city.

The Five Rivers saga: more twists and turns than the Fox River it will be built on
Authored by: admin on Monday, June 05 2006 @ 11:56 PM MDT
City Councilor Meredith Scheuermann asked the questions in the above post of community development director Jackson Kinney. Earlier this evening she sent his responses to both Tony Palmeri and I. They are posted below, along with a statement from Mr. Kinney prior to answering the questions. We thank both Mr. Kinney and Mrs. Scheuermann, however, I find the answers disturbing at best.

Kinney statement: "First, in the Council's approval of the Term Sheet, the Resolution authorized the proper officials to enter into an agreement with the developer based on the parameters in the Term Sheet document. Also, various Security/Guarantee measures will be built into the Development Agreement to help protect the City/RDA's interests."

Hentz: Who decides if the term sheet has "substantially" changed or not? Jackson Kinney? Warren Kraft? Richard Wollangk? All of the above? And wouldn't you think that a contractor underwriting some or all of the very project they're going to work on is a substantial change?

Kinney: City/RDA staff will determine if there is a substantial change to the parameters in the Term Sheet. This would be a reasonable interpretation of City/RDA staff responsibilities. It needs to be recognized that the Development Agreement document will be a public document and the Council and general public will see that document and there should be able to be a rather straightforward recognition of whether a substantial change has occurred from the basic parameters set forth in the Term Sheet document.

Hentz: There's been a lot of talk about "pay as you go" TIFs and those which are "direct pay." It's been well-documented that the "pay as you go" better protects taxpayers' interests. If this doesn't come back before the council, who decides which pay option developer Tom Doig and his friends get? Jackson Kinney? Richard Wollangk?

Kinney: The Term Sheet does give Five Rivers the option of selecting either the "Direct Pay DAG" or the "Pay-As-You-Go DAG." While the "Pay-As-You-Go DAG" may be the preferred DAG approach from a City/RDA perspective, we also recognize it is more the exception than the rule when it comes to the provision of assistance in support of projects. We wanted, however, to at least include the option for a "Pay-As-You-Go" DAG, so if the developer could see an advantage to taking assistance on that basis we would be in a position to work with them in that regard. The developer has, however, indicated they wish to receive a Direct Pay DAG.
The Term Sheet spells out the format for either DAG funding approach.
The Term Sheet document, page 5 item C, "has given Five Rivers the option to choose either."

Hentz: Exactly how much of this project is C.D. Smith financing and why would a contractor finance a project like this? You'd think they'd want to MAKE money, not just break even. If they're underwriting it, where and how do they make a profit and how much of the grant money do they get?

Kinney: According to CD Smith's commitment letter of May 31st, they state: "Funds will be advanced and provided for all phases of construction, including all hard and soft costs, as more specifically provided in a construction contract between Smith and Five Rivers and development agreement between Five Rivers and the City of Oshkosh (the "City"). The financing will be in an amount sufficient to complete the Project less any amounts awarded to Smith pursuant to developer's assistance grants through the creation of a tax incremental finance district by the City of Oshkosh (the "City")."

As noted in the City's Press Release of last week: "Upon initial review, the commitment appears to meet the financial requirement of the amended term sheet dated March, 2006. However, the city and its consultants will continue to review the commitment letter and will meet with the parties to ensure common understanding of this commitment."

Hentz: If C.D. Smith is getting some or all of the grant money available for this project, what is to prevent them from stopping the project partway through - basically taking the money and running? We've certainly seen other companies take our money and run, or have we forgotten Wisconsin Automated a few years ago? Different circumstances true, but the Common Council at the time operated on information given to them by Jackson Kinney and we all see where that ended up. I do not believe Mr. Kinney is as careful as he should be OR he simply doesn't have the taxpayers' best interests in mind.

Kinney: As pointed out previously, various Security/Guarantee measures will be built into the Development Agreement to protect the City/RDA's interests.

Hentz: How did C.D. Smith automatically become the contractor on this project? It is being built in a TIF district with a lot of TIF money being funneled into it. Where is the competitive bidding on the job or is this yet another project where the public will be told bids can be waived? If so, I would like someone in the Attorney General's office or State Legislature to explain to us under what conditions bids ARE necessary.

Kinney Response: It's not up to the City/RDA to select the contractor on the construction of the hotel/resort complex, that's an obvious developer responsibility, and those are not "public improvements" subject to public bidding.
- end Kinney responses

I have only now gotten this and will study it in greater depth tomorrow, at which time I will likely have some more specific thoughts. I also had sent Mrs. Scheuermann some additional questions that I will be posting here. Until then, feel free to give us your thoughts on these responses or the project altogether.
- Cheryl

The Five Rivers saga: more twists and turns than the Fox River it will be built on
Authored by: alibi2day on Tuesday, June 06 2006 @ 01:51 PM MDT
Did our city council members know they were essentially agreeing to give away their electorate-given authority by approving a term sheet? If so, why would they do that and if not, why did they not know?ME THINKS THIS ONE IS CONTINUING TO SMELL --either the Council didn't do their homework or the city planning staff has pulled another one over on the Council and the taxpayers.Who on the Council will have the nerve to question this issue????WHO SHould We TRUST as the representative for the Taxpayers?

The Five Rivers saga: more twists and turns than the Fox River it will be built on
Authored by: DP on Tuesday, June 06 2006 @ 08:32 PM MDT
I was under the impression that the project was approved by the council provided the financing committments were met. I'm not sure why so many people (including council members) are confused about this. What did they THINK they were voting for?

The Five Rivers saga: more twists and turns than the Fox River it will be built on
Authored by: DRR on Wednesday, June 07 2006 @ 09:19 AM MDT
After reading The Northwestern today, it sounds like this is anything but a done deal. Is the council in the dark as much as it seems? It sure looks like it!