(First published in the May 17, 2018 issue of City Pages)
Unpaid initial construction bills sends the $27 million riverfront development into default, as Wausau prepares to seek another developer.
No progress since March: Much of the groundwork and foundations already have been laid for the Riverlife residential and commercial complex along the Wisconsin River.
The construction company Samuels Group filed two sets of liens Monday against the financers of the Riverlife development, triggering the city to seek other developers for the $27 million project along the Wisconsin River.
Court records show Samuels Group filed liens of $2,092,780 and $704,372 against both developer Quantum Ventures and its financier, Barker Financial, for unpaid work. The Riverlife project, a large apartment and mixed-use commercial complex along the city’s newly created riverfront, has long been pegged as a flagship of the city’s private-public revitalization in that area near downtown.
According to the liens filed in Marathon County Circuit Court, work on the first two structures started in September 2017, but no construction has happened since March 23. Samuels Group, based in Wausau, was contracted to build the projects but stopped while the developer searched for more funding.
Samuels Group finished about 10% of the project, including foundation work, says company president Sid Samuels. He says this is the first time the company has ever filed a construction lien since it went into business in 2005.
A construction lien, under Wisconsin state law, is a legal tool used by contractors and suppliers to ensure they’re paid for work on a piece of property. Quantum Ventures has struggled to secure financing for Riverlife, despite the project being nearly filled with tenants waiting for its completion, city officials say. Riverlife previously was pegged at a $20 million project, but increased in scope this spring because of high demand for commercial space.
The initial portion of the project involves $2.74 million of city funding. The city recently revised its incentive application to include vetting financers who will contribute at least 20% of a project’s costs. That vetting, which previously covered only the developers, asks applicants whether they’ve been involved in a lawsuit, bankruptcy, charged with a crime or paid civil penalties, or have outstanding tax liens. Applicants must provide an explanation if they answer yes.
The construction lien filings triggered a default of the developer’s agreement between Quantum Ventures and the city of Wausau, says Chris Schock, Wausau’s director of community development. Quantum president Mike Frantz and Barker Financial will owe the $372,000 pre-development loan the city made on the project.
The city could soon reissue a request for proposals for Riverlife. Another developer could propose a project in a different area of the Riverlife site, finish the unfinished projects, or both, Schock says.
However, there is a “cure period” between Samuels Group and Quantum, as well as one between the city and Quantum, in which the financers can make good on their obligations. It’s possible all parties could still come to terms and continue the project.
“We are hopeful either [Quantum Ventures] can obtain their financing, or someone else gets on board,” Samuels says. “A lot of families depend on the success of those projects.”