In the months leading up to the city of Ripon signing developer’s agreement with Boca Grande Capital LLC, numerous staff and advisors cautioned Ripon’s elected officials about moving forward too quickly.
Ripon’s top staff members even penned a memo warning the mayor and Common Council about potential pitfalls.
Four documents, secured by the Commonwealth via an open records request, demonstrate such worries about the $8.6 million proposal.
Time and again, between July and September 2009, top staff as well as advisors with years of economic development experience cautioned Ripon’s then-elected officials about what could happen if they approved the developer’s agreement — which they ultimately did in a closed-session vote on Oct. 1, 2009.
Each points to foggy projections, assurances not secured, an inability for the project to cash flow on its own, as well as several other pitfalls advisors then believed could lead to the 10-project plan failing — or, at least, hurting Ripon’s long-term health.
Many of those concerns have come true.
Most telling, however, may be one marked “HIGHLY CONFIDENTIAL!!!!!!” across the top.
It, as do the others, outlines a variety of potential problems that could occur if the city did not take certain steps prior to signing the agreement.
This particular memo is titled, “Concerns from staff team on Boca Grande’s proposal.”
Penned by then-City Administrator Steve Barg on July 24, 2009 — three months prior to the agreement being signed on Oct. 27, 2009 — it also represented the views of current City Administrator Lori Rich and City Attorney Lud Wurtz.
“... Staff wants to put forth the following issues and concerns as you consider the City’s role in the project,” Barg wrote.
The memo focuses on four points:
- Total amount and initial project scope: “$8.6 million is more than 2/3 of our remaining borrowing capacity. Such a reduction in borrowing capacity might impact our bond rating, which would result in higher interest costs for future borrowings. “We have recommended that the 9 projects beyond the ‘Ripon Inn & Spa’ be removed from the agreement and handled by a separate memorandum of understanding, as these likely will take a period of years to occur.
- Timing of the city’s financing: “... Years 2011-2029 require large city debt levy, generally about $200k/year. We may be able to find other sources of funding to fill the gap, but there is an opportunity cost in doing this, and the project should cash flow on its own. “We would like further justification for why all the funds are needed up front, especially for the ‘non-hotel’ projects.”
- Assurances and guarantees: “We appreciate the developer’s personal guarantee ... but the City’s investment is substantial, and it doesn’t address what will happen if projected increases in assessed values don’t materialize. Beyond this, we have only been offered second mortgages, which don’t represent significant value.”
- Financial and proprietary information. “If we are investing $8.6 million, or even close, and becoming ‘partners,’ we should see information like a business plan, marketing study or similar document, in part to determine if there is a true need for this level of financing. We have requested this in the past, but it hasn’t been received, although we understand this information is going to be made available to us soon. We also want a letter for commitment from the primary lender.”
When approached for comment on this document, Rich declined.
“Due to the pending litigation, I have to decline comment, based on the advice of our outside legal counsel,” she said.
Read the full story in the April 24, 2014 edition of the Ripon Commonwealth Press.