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HomeMy WebLinkAbout35. 16-275 MAY 24, 2016 16-275 RESOLUTION (CARRIED 7-0 LOST LAID OVER WITHDRAWN ) PURPOSE: ACCEPT WEDC GRANT & APPLY CDBG FUNDS TO THE BALANCE OF PROJECT COSTS FOR PROPERTY LOCATED AT 1118 SOUTH MAIN STREET (FORMER BUCKSTAFF PROPERTY) INITIATED BY: CITY ADMINISTRATION WHEREAS, Oshkosh Industries, Inc., and Oshkosh Furniture, LLC, doing business as the Buckstaff Company, stopped operating the furniture factory located at 1118 South Main Street in the City of Oshkosh in March 2011; and WHEREAS, in March 2013, the City of Oshkosh filed a Complaint related to nuisance conditions on the property located at 1118 South Main Street(the former Buckstaff property); and WHEREAS, the Common Council has declared the property located at 1118 South Main Street to be blighted; and WHEREAS, the Common Council by Resolution 15-537 adopted on December 8, 2015, approved a settlement agreement with the parties to the nuisance litigation including FirstMerit Bank and Oshkosh Industries, Inc., and Oshkosh Furniture, LLC, (represented by Martin Cowie), which identified in part funding for a portion of the project demolition costs from two (2) separate $150,000.00, grants to be applied for from the Wisconsin Economic Development Corporation (WEDC); and WHEREAS, WEDC has notified the City of the awarding of one (1)$150,000.00, grant and City staff has identified available funding through Community Development Block Grants to fund the remainder of the anticipated city project costs associated with the demolition of the structures on the property located at 1118 South Main Street(the former Buckstaff Property). NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of Oshkosh that the appropriate city officials are hereby authorized and directed to accept the WEDC grant in the amount of$150,000.00, to be applied to the portion of the project costs identified as city grant funded in the settlement agreement and to execute and deliver any documents required and perform such other acts as may be required in connection with the acceptance of the grant funding. BE IT FURTHER RESOLVED that the appropriate city officials are further authorized and directed to apply Community Development Block Grant(CDBG)funding to the balance of the city/grant funded project costs identified in the settlement agreement pertaining to the demolition of structures on the property for the purpose of blight elimination and to execute and deliver any documents and to perform any actions necessary or required for such purpose. CITY HALL 215 Church Avenue P O. Box 1130 Oshkosh, Wisconsin 54902 -1130 City of Oshkosh —0— OIHKCJIH TO: Honorable Mayor and Members of the Common Council FROM: Lynn A. Lorenson, City Attorney DATE: May 19, 2015 RE: Resolution to Accept WEDC Grant & Apply CDBG Funds to the Balance of Project Costs for Property Located at 1118 South Main Street (Former Buckstaff Property) BACKGROUND In February 2011, Citizens Bank (now FirstMerit Bank, hereinafter, "the Bank ") commenced foreclosure on Oshkosh Industries, Inc., and Oshkosh Furniture, LLC, (known as Buckstaff Furniture) property located at 1118 South Main Street in the City of Oshkosh. In March 2011, Buckstaff Furniture, (hereinafter "Buckstaff ") stopped doing business at the site and vacated the property. In September 2011, the Oshkosh Fire Department conducted an inspection of the site and issued orders to correct various nuisance conditions on the property. At the time of these orders, a representative of the Bank was overseeing the properties. In January of 2012, representatives of the Bank met with city staff regarding conditions at the site and the Bank undertook some measures to attempt to address some of the safety concerns raised. In January of 2013, representatives of the Bank met with city staff and representatives from the Wisconsin Department of Natural Resources (hereinafter, "WDNR ") and the United States Environmental Protection Agency (hereinafter, "EPA ") regarding conditions at the site. The Bank completed the foreclosure on two of the three parcels of property and those parcels have since been sold to third parties. In March 2013, the City filed a Summons and Complaint against the Bank related to the nuisance conditions on the main factory parcel. The Bank filed a third party Complaint adding Oshkosh Industries, Inc., and Oshkosh Furniture, LLC, to the lawsuit. In April 2013, the City approved an application for a Wisconsin Plant Recovery Initiative Assessment Monies (WAM) grant for a Phase I environmental assessment of the site. WDNR hired a contractor and completed the Phase I investigation of the site. WDNR working with the EPA removed various containerized materials and hazardous waste at Buckstaff. In May 2014, the City met with representatives of the Bank and Martin Cowie, the principal for Oshkosh Furniture, LLC, and Oshkosh Industries, Inc., for mediation. From May 2014, through December 2015, the parties continued to work toward resolution of this matter. At its December 8, 2015, meeting the City Council approved a settlement with FirstMerit Bank and Martin Cowie. The settlement relied upon cost estimates received from contractors and provided that Mr. Cowie would contract for and manage the demolition process with neither the City nor the Bank acquiring any contractual liability to demolition or asbestos contractors; the City would dismiss the lawsuit and all parties would release any claims against one another; the Bank, Cowie and Oshkosh Industries and Oshkosh Furniture would execute deeds and all other documents required to convey ownership of the property to the City upon demolition of the structures; the City would be responsible for the costs of removal of the slabs and foundations on the site, a cost estimated to be approximately $100,000.00, and for grading, seeding and any other necessary site preparation costs; the Bank would be released from liability for any past, existing or future environmental issues and the City will indemnify the Bank against any environmental liabilities; the City would assume responsibility for any claims that WDNR /EPA may have against the Bank with respect to the property, staff has reconfirmed a willingness on the part of these agencies to forgive these costs; and the City would accept responsibility for all unpaid real estate taxes which would be forgiven by other taxing jurisdictions. Finally, the settlement was contingent upon the City and the RDA receiving WEDC grants to be applied to the project. At the time of settlement, staff estimated a minimum cash contribution from the City of $58,853.00. This number included $52,553.00, toward removing the buildings to ground level, plus an estimated $5,000.00, to cap utilities on the site, and an estimated $1,300.00, in closing costs. A critical component of this calculation was the receipt and maximization of a WEDC grant that would contribute to the demolition of the buildings to ground level. Although the City /RDA applied for two (2) $150,000.00, grants totaling $300,000.00, for the Buckstaff site, the maximum value of that grant was estimated at $255,080.00, based upon existing WEDC grant rules which may have operated to limit the funding actually received. WEDC has announced that the City was awarded a single $150,000.00, grant for removal of the Buckstaff buildings. It is anticipated that under current WEDC rules the City would be able to maximize this $150,000.00, grant upon the site. The settlement agreement was contingent upon the award of two (2) $150,000.00, grants for the removal of the buildings on the property. Although the award from WEDC was less than originally sought, adequate funds have been identified from another grant source, Community Development block grant funding, to adequately fill this gap in funding. During the period between the settlement and the announcement of the WEDC grant award, city staff has identified additional CDBG funding that can be used 2 toward blight elimination on this site. The CDBG funds were received in repayment of prior CDBG loans and so were unbudgeted and undesignated funds that can be applied to this project without diverting CDBG funds from other identified projects. Blight elimination is a qualified expense under the CDBG program and the property has previously been declared blighted. Because the source of funding has changed from that contemplated in the settlement agreement, staff is bringing forward a resolution to the Council to approve acceptance of the $150,000.00, grant from WEDC and to authorize the use of the previously undesignated CDBG funds for the remainder of the project costs to be covered by the City under the terms of the settlement agreement. FISCAL IMPACT Approval of this resolution will authorize acceptance of the WEDC grant funding and the use of CDBG funds for the remainder of the project costs related to the demolition of the Buckstaff structures. The City will be able to take advantage of grant funding to fund all of its anticipated costs in the settlement agreement. RECOMMENDATION Staff recommends approval of the resolution authorizing acceptance of the WEDC grant funding and authorizing the use of CDBG funds for the remainder of the project costs related to the demolition of the Buckstaff structures. 4Res ectf ully Submitted, Approved Ir A. Lorenson Mark A. Rohloff City Attorney City Manager J May 18, 2016 Mark Rohloff City Manager City of Oshkosh 215 Church Avenue Oshkosh, WI 54901 Dear Mr. Rohloff: I am very pleased to inform you that the City of Oshkosh has been awarded a Site Assessment Grant of up to One Hundred Fifty Thousand Dollars ($150,000) to reimburse expenditures for eligible environmental site work that will take place on the blighted and underutilized property located at 1118 South Main Street. The Wisconsin Economic Development Corporation (WEDC) is looking forward to participating in an important environmental investigation and cleanup project that will help the City of Oshkosh remove blighted conditions so the 7.7 acre site can be placed in a higher use. The effort of the City of Oshkosh to take ownership of the property so that redevelopment can ultimately occur there is very commendable. The Site Assessment Grant has been approved to reimburse expenditures for eligible environmental site work incurred on or after May 18, 2016. This letter is contingent on a contract being executed by June 21, 2016. Al Rabin of the Credit and Risk Division will be contacting you very soon to develop a contract with final terms and conditions. He will also discuss reimbursement procedures. Please contact Al at (608)210 -6818 if you have any questions regarding the Site Assessment Grant award. Congratulations and thank you for your appreciated work to address soil and groundwater contamination so redevelopment can take place on the vacant site. The completion of the environmental site work should help to lead to the %hI generation of increased property revenue for the City of Oshkosh. Sincerely, 0 -i U"'%Z'Q �3 �" >tc peer k0` Tricia R. Braun Deputy Secretary / COO