Redevelopment Authority Meeting Minutes – February 13, 2018

A meeting of the Redevelopment Authority of the City of Kaukauna was called to order at 9:00 a.m. on Tuesday, February 13, 2018, by Chairman Haak.

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

Also Present: Planning Director Jakel, Mayor Rosin, Planning/Engineering Technician Holmes, Applicant – Todd Grubofski, Mathew Breselow, Josh Krueger, and Andy Wallace representing Wells Fargo and Jesse Hall representing Keller, Media.

Absent and Excused: Feldt, Landreman.

1. Minutes. A motion to approve the minutes of the December 19, 2017, meeting was made by McGinnis, seconded by VanderWyst. All members voted aye. Motion carried.
2. Loan Request – Nobility Reigns, LLC. Mr. Jakel explained that the Common Council and Plan Commission had previously approved a special exception request for the community based residential facility (CBRF) to locate within a residential zoning district. State statutes prohibit municipalities from barring CBRF’s however safeguards can be placed to ensure compatibility with surrounding properties. Previous concerns regarding design and infrastructure have been addressed and staff has no objections to the project. When the project went to bid and the appraisal was completed, a $75,000 gap in financing was found. Mathew Breselow of Wells Fargo explained that they are financing 97% loan to value on the project and that Mr. Grubofski has added 16% of private funding. Ms. Smith asked for clarification on the loan security. Mr. Breselow explained that Wells Fargo is taking a first position on the Kaukauna property and a second on the Oshkosh property, leaving RACK to take a second position on the Appleton property and equipment. Mr. Haak asked about the total project cost. Mr. Breselow explained that it is approximately $1.1 million total including a 10% contingency fund held by Wells Fargo. Mr. Jakel asked about the cost of work that already been completed. Mr. Krueger explained that Mr. Grubofski had approximately $200,000 into the project before Wells Fargo was involved with items including soil borings, engineering, and retaining walls. Mr. Haak asked how income is generated. Mr. Grubofski explained that he receives referrals from care management organizations (CMO); he then assesses the individual and their specific needs and if he can help, he is paid through the CMO. His entry level staff is paid $11.00 per hour, which is higher than the standard. Typical client rates are $150 to $200 per day based on the needs of the individual. Mr. Vander Wyst asked about the length of a typical stay. Mr. Grubofski explained that clients can be indefinite or transitional. They offer a life skills program which teaches financial management, cooking, time management and medical management to assist residents in being successful in the community. They will hire five full-time and five part-time employees to assist up to eight residents depending on their needs. Staff is available 24/7 and are all-awake. Mr. Grubofski explained that it is not an institution or a nursing home but a 6,300 square foot home for individuals who require assistance. Mr. Haak asked about cash flow during construction. Mr. Breselow explained that the Wells Fargo loan is interest-only for the first 12 months during construction and the ramp-up phase and that Mr. Grubofski’s two existing facilities generate enough revenue to cash flow all three sites. Mr. McGinnis asked about the gender of the clients. Mr. Grubofski explained that it could be male or female or a combination based on the client needs. Ms. Smith asked about a lump sum payment to RACK in the event of excess contingency funds. Mr. Breselow explained that is at the discretion of Mr. Grubofski and underwriting, however, they are flexible. Mr. Haak expressed concern that funds be allocated appropriately to avoid triggering Davis-Bacon. Mr. Jakel explained that funds would be designated for furnishings and equipment only. Mr. Jakel asked about the interest rate on the Wells Fargo loan. Mr. Breselow explained that it is at 6.35% fixed for 26 years. Mr. Natrop asked about the project timeline. Mr. Hall explained that they anticipate a four-month period to completion. Ms. Smith asked if there had been any consideration given to scaling back the castle concept to reduce costs. Mr. Breselow explained that the business plan evokes the feel of a castle. Mr. Krueger explained that scaling back the project could decrease the value as well. Mr. Wallace explained that some SBA fees are included in the appraisal which bumped up the cost, however, the appraisal very accurately estimated the value of the building.
3. Executive Session – Nobility Reigns LLC. A motion to adjourn to Executive Session at 9:50 a.m. pursuant to Wisconsin State Statute 19.85(1)(e) to discuss the loan request by Nobility Reigns LLC was made by Natrop, seconded by Smith. All members voted aye. Motion carried.
4. Open Session – Nobility Reigns LLC. A motion to return to Open Session at 10:15 a.m. was made by McGinnis, seconded by VanderWyst. All members voted aye. Motion carried. Mr. Haak explained that the Authority found the project interesting and is grateful for the service to the residents and the value to the community. A motion to approve the loan request of $75,000 at 2.5% for eight years contingent on the applicant paying all RACK-associated closing costs, any funds remaining in the contingency fund being used to pay-down the RACK loan, and Planning staff being given the opportunity to review any expenditures from the Wells Fargo contingency fund was made by Natrop, seconded McGinnis. Upon roll call (five aye – Haak, McGinnis, Natrop, Smith, VanderWyst, zero nay) – motion carried.

There being no further business to be brought before the Authority, a motion to adjourn the meeting at 10:20 a.m. was made by Smith, seconded by VanderWyst. All members voted aye. Motion carried.

Julianne Schroeder

Executive Secretary