By Jennifer Eisenbart
Editor
If something goes wrong with the second phase of Fox River Crossing apartments, the City of Burlington won’t be first in line to recover money loaned to the project.
After approving a $25,000 incentive loan for Bear Developments last year to help the project secure Wisconsin Economic Develop Association financing, Janell Topczewski of the Racine County Economic Development Corporation came back in front of the city’s Community Development Authority Tuesday night to present the latest on the project – another company wanting to be ahead of the city to reclaim its money should the project default.
Topczewski stressed that the project isn’t likely to go belly-up, but agreed that this would be a modification of the loan terms – which already has the $25,000 loan on full principal deferment for 20 years.
When asked, Topczewski also conceded that Citi Bank – the group asking for the subordination by the city – presented this qualifier at closing.
“That’s why we brought it back before you now,” she said.
Alderman Bob Grandi, who serves on the CDA, called the situation “troubling.” If it is a bad loan, he said, the city will be third in line to recover the funds.
However, both Topczewski and Jon Hotvedt – at the meeting representing Bear Development – said that the $25,000 loan was an incentive loan designed to make the application to WEDA look more appealing and to indicate the city’s support.
“This was absolutely an incentive,” said Hotvedt, adding that the points gained on the WEDA application from the city’s loan was “extremely critical” to getting the more than $4 million in loans from WEDA.
Topczewski then stressed the subordination would only come into play in the event of a default. The city will still receive 2 percent interest on the loan each year.
City Attorney John Bjelajac added that he supported signing the agreement because the project was and is viewed as a good project, and the CDA agreed unanimously.
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