‘It was a mess and a nightmare’
Amcast developer seeks additional funds for snow, weed removal

By Laurie Arendt

Feb. 14, 2019

CEDARBURG — It may not look like it to the average eye, but there’s been a lot of work going on behind the scenes at the Amcast site, also known as tax incremental financing district No. 4 in the city of Cedarburg. That work is both physically on site, and in modifying the existing developer’s agreement.

Developer DJ Burns was before both the Community Development Authority and the Common Council Monday night with an update and to consider some changes to the existing agreement.

Burns took control of the property last fall and explained that there has been significant work on the project to date. He began with the existing office building.

“This building is in terrible disrepair,” he noted. “It hasn’t been occupied in 14 years. There was 3-inch grass growing in the building, mold … we’re doing a complete gut. It was a mess and a nightmare.”

The Quonset hut, also located on the southern parcel with the office building, is ready for deconstruction, once the weather permits. He said that a significant amount of work on the existing buildings has been asbestos removal, including the roof of the building on the north parcel. “There’s actually no roof remaining,” he explained. “You can’t see a lot of visible demolition going on, but there’s going to be a major moment when we take down that front wall. When it goes down, you’re basically going to see the entire four-acre site behind it.” He said that a small building that is part of the north parcel complex will remain. The building is acting as a cap over the contaminants below it.

Burns was also before the city to discuss three issues that would require modifications to the existing developer’s agreement.

The first was in regards to the title company’s role in allocating funds to Burns. The structure was put in place to provide an additional level of oversight for the project in addition to City Administrator Christy Mertes.

City Attorney Mike Herbrand said that this has put the title company in an escrow allocation role.

“Title agents are not used to being escrow agents,” he said. “They don’t know how to handle this, and it’s really a second or third level of oversight on this project.”

 CDA member Eric Stelter questioned how such a change could alter the city’s liability regarding the project.

“You’re acting as a vehicle to provide funds; you don’t own it, you don’t possess it,” explained Burns of the Amcast site.

The CDA also first took up the second issue regarding the property: who should be responsible for the cost of snow and weed removal during the remediation process. Burns contended that the city should also be financially responsible for this, particularly the snow removal, and he provided quotes from two local providers as examples of the cost.

“For 14 years the city has been plowing the sidewalk,” he noted. “I am now looking at thousands of dollars for plowing snow that I wasn’t anticipating.”

He also added that, over the years, city contractors had been using the Amcast parking lot as a staging area for their heavy equipment, which damaged the parking lot, and said that no reimbursement had been made for that.

Burns had approached the city about reimbursement for snow and grounds maintenance and that was when it was discovered that there was not a line item in the agreement that addressed this.

“When Arrabelle was proposed, they didn’t come to us and say, ‘Hey, can you do snow removal?’” said Stelter of one of the other two TID projects currently underway in Cedarburg.

“Arrabelle didn’t have $3 million of remediation on its site,” countered Burns. “They asked for $2 million to help provide a return on the investment for their investors.”

At the Common Council meeting, Council member Kristin Burkart questioned why this funding was not included.

“Was this just discovered, was this just overlooked?” she asked. “Was this just an ‘oops, my bad?’” she asked.

That essentially appeared to be the issue. Had it been discussed or clarified initially, and had the city agreed to provide the services, it would have just rolled into the original developer’s agreement. Burns said it was his original understanding when the developer’s agreement was completed that this would be the city’s responsibility.

“While Mr. Burns takes this position … we never had a public or private conversation about snow removal,” said Herbrand. “We have agreed to disagree on this point.”

But the CDA and the Common Council both considered an additional $50,000 in funding over a three-year period for snow removal; Burns agreed to cover the cost of grounds maintenance, which he estimated at about $8,000 for the year.

“We’re not talking Augusta National here, we’re talking the bare-bones basics,” said Herbrand about the necessary grounds maintenance. “It’s weed removal, vegetation issues.” “Do we have to abide by city code?” asked Stelter. “What if we just threw up a fence around the whole property? Seems like it would be a lot cheaper.”

The discussion also covered the fact that once a portion of the project was completed, it would be removed from the city-funded snow removal. For example, once Burns completes remediation and reconstruction of the existing office building, he plans to move his own consulting business into the building. At that point, it would no longer qualify for the subsidized snow removal. Any parcel sold would also be removed.

The CDA took no action on this particular proposal, though CDA member Jack Arnett introduced the idea of providing additional city funding of $50,000 ($10,000 for this year and $20,000 for each of the remaining two years of the three-year remediation plan), and instead pushed it to the Common Council for further discussion.

After significant discussion, including a suggestion by Council President Pat Thome to possibly do a 50-50 cost split, the Common Council voted 6-2 to approve an additional $50,000 in funding for snow removal and the removal of the title company as a de facto escrow agent for the project. Council members Burkart and Rick Verhaalen voted in opposition.

The $50,000 in funding will be available on an as-needed basis and Burns will request reimbursement for snow-removal services. It is also a capped amount; should the cost of services exceed the amount, Burns will be responsible for the additional costs.

Finally, staff also requested direction from the CDA on what to do in regard to a required life insurance policy on Burns, also known as a key-man policy. The city intended to pursue a policy of this size as it was equal to the cost of the project. It was Burns who alerted the city that this had not been purchased yet.

“It’s in the agreement, but it’s not inexpensive,” said Herbrand. “The premium is $730/month.”

The purpose of such a policy would be to provide funding should Burns die during the project. The quote the city received was for a 10-year term policy, though Mertes said she was told it could be cancelled at any time. The CDA directed staff to continue investigating policy options, including whether it was possible to obtain a policy with a smaller payout or shorter term, as the city did not need it for that long. Should such a policy be in place and Burns would die, the money would be used more as a bridge to help the city find a new developer to take over the project rather than to just pay it off in the state it was left, they noted.

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