Marshfield aldermen reject restaurant funding request
BY MIKE WARREN
MARSHFIELD — If a local developer’s group moves ahead with plans to put a new steakhouse in downtown Marshfield, the city will not participate in its funding.
During the closed-session portion of the Dec. 13 meeting of the Common Council, Marshfield aldermen voted 6-3 against continuing further discussions regarding assistance for the proposed downtown development. Alderman Pete Hendler – who was present for the public portion of the council meeting – did not attend the closed session, and therefore did not vote on the motion. The decision was made public Dec. 16, when the minutes of the full meeting were released as part of the agenda packet for the Common Council’s Dec. 20 meeting.
The closed-session denial came after Dave Krause of the Marshfield Restaurant Development Group, LLC (MRDG) asked for $160,000 in public financing, during the public portion of the meeting.
“We have clients, we have people that we do entertain,” Krause said. “We end up traveling out of town. I drive to Wausau more frequently to take people to dinner than we can do here in Marshfield, because we don’t have those opportunities really in Marshfield,” Krause told the council. “And that’s not uncommon,” Krause added. “It’s not unusual to be sitting in a restaurant in Stevens Point or in Wausau or Weston and run into somebody you know from town here.”
In identifying some needs “that have come up over and over again in the community,” Krause told the council of MRDG’s goal to locate a fine-dining restaurant in the former High Street Salon building at 210 S. Central Ave. downtown.
“MRDG will act only as the landlord,” Krause said. “We will own the building. We will redevelop the building, and then we will lease it to an operator. So, we will have nothing to do with the management of the restaurant. We’re going to leave that to the experts.”
In this case, the “experts” are the current owners and operators of Wish Steakhouse based in Weston, which Joel Kasten established in 2008.
“The tenant (Wish) will actually buy us (MRDG) out at the end of an eight-year term,” Krause added. “MRDG will basically go away after this restaurant is successful.”
As part of the development deal Krause was seeking, the city would have labeled the project as a site-specific TIF, or Tax-Increment Financing, District.
“Wish will buy out MRDG at the end of this whole thing at what our investment is minus whatever city dollars are put into this,” Krause said. “Obviously those are paid back through property taxes. At the end of eight years, we’ve got X number of dollars invested in the project. That’s what he (Kasten) buys the building for,” Krause added. “So, he gets into the building at lower than cost.”
City Administrator Steve Barg told aldermen the payback to the city would actually be closer to twelve years, because of added costs to create the TIF district.
During an interview with Hub City Times the following day, Barg said the public investment would have come in the form of a development grant, which would have guarantees built into it up front to make sure the city gets its money back, through increments in property taxes until the full amount is paid back. “In this case, we would literally be providing the money up front, for improvements to the building and so forth, with the expectation that over the next 10-12 years, we would recoup our investment,” Barg said. “You’re literally guaranteeing a dollar amount of tax payments,” he added.
Barg also indicated the city’s $160,000 contribution would have been used by the developers “fairly early on to do the renovation work,” and not as some sort of bailout should the restaurant fail. “We don’t look over their shoulder every minute to see what they’re doing with it,” Barg said. “It’s all about the protections. The city doesn’t just say, ‘Here’s $200,000. Have a nice day.’ There’s a lot of protections built in so that if you don’t provide what’s on paper, you don’t fulfill your obligations, we’re going to be able to recoup it another way,” he added. “That’s what the contracts, the development agreements, are all about.”
The development would increase the current value of the former High Street Salon property by $552,000, according to what Krause told the Common Council. It is on that amount that the city would recoup its investment, without having to share those increments in property tax value with the other taxing entities, which are Wood County, the School District of Marshfield and the Mid-State Technical College District.
“I came to Marshfield in ’84, and there were several really decent restaurants in Marshfield at that time,” Aldermen Ed Wagner said, following Krause’s presentation to the council. “Not one of them is here today. Restaurants are notoriously high risk,” Wagner added in open session, before voting in closed session against further discussions pertaining to public financing. Aldermen Adam Fischer, Mike O’Reilly, Rebecca Spiros, Natasha Tompkins and Brian Varsho joined Wagner in voting against entertaining public funding for MRDG. Aldermen Mike Feirer, Nick Poeschel and Tom Witzel voted in favor of continuing the dialogue.