NEW RICHMOND -- The final chapter in the life of the historic Beebe Building saw the city involved in the controversial relocation of 46 homeless individuals during the summer of 2018. Now New Richmond is looking at a sole proposal for the block's future.
New Richmond purchased the property in December 2018 for $300,000, then began its quest to realize a return on its investment by issuing a request for qualifications in January 2019.
City officials estimated that better than one hundred firms viewed the RFQ with five ultimately responding. Interviews conducted by staff and Forward New Richmond Committee over the course of the spring narrowed the field to three firms.
In May and June, the city solicited public participation in the vetting process via a newsletter and on social media.
In mid-August, the city announced the names of the final three firms competing for the Beebe Building redevelopment project: Gerrard Corp., American Property Development Group and Peterson Group.
By way of introducing the firms to residents, the city published a brief introduction to each of the firms and a short summary of their development ideas for the Beebe Building on the city website and Facebook page accompanied by podcasts during which the prospective firms briefly introduced themselves and answered questions posed by City Administrator Mike Darrow.
In September, city attorney Nick Vivian confirmed the city was cooperating with a Wisconsin Department of Administration inquiry into the city’s handling of the displacement of homeless individuals back in August 2018.
City Financial Director Rae Ann Ailts confirmed two of the three competing developers, American Property Development Group and Peterson Group, withdrew their proposals in September.
Residents got their first opportunity to meet in person with the only remaining developer, Paul Gerrard of Gerrard Corp., during an open house Oct. 17.
“The City Council or the Forward New Richmond Group, has not made a decision on anything yet. We’re still working at that. They’re looking for public input. If you have some public input that you’d like to state tonight, please do, please ask questions. If you’re not super comfortable with that, you can email any of us at the City of New Richmond. We’ll make sure that the City Council hears those comments. They really want to hear if you think this is a great opportunity for the City or if you think, here are some of the hardships you might encounter by doing this type of a development. Either way, we want to make sure that we hear so that the Council is fully informed before they make this really big decision about our downtown,” said Community Development Director Beth Thompson.
About a dozen residents took advantage of the opportunity to listen and ask questions.
According to Thompson, both Forward New Richmond and the City Council are expected to discuss the project at meetings in Oct. and Nov. The council has a work session scheduled for Monday, Oct. 28, and regular monthly meeting on Monday, Nov. 11. Due to the financing constraints of the Gerrad proposal, it is expected that the Council must make a decision no later than Nov. 11 .
The Gerrard proposes to develop and manage a senior housing apartment complex. The facility would consist of 40-some housing units for ages 55 or up, with amenities, community space as well as onsite parking. This plan would require the demolition of the Beebe Building.
“We chose New Richmond because it fits perfectly into our philosophy and our way of doing business. It also really helps that we have the largest inventory of other apartment housing in St. Croix and Pierce counties. Some of those apartment communities are extremely difficult to manage and we’ve been managing them for 10 years,” Gerrard said.
Gerrard described a number of apartment communities ranging from student housing to senior living developed by his company, including four facilities in River Falls and six in Hudson. He described The Depot, a 50 unit senior project being built next to River Falls City Hall, as identical to what he is proposing to build on the Beebe site, but cautioned the audience that what he was showing is preliminary.
“It can change based upon your design standards, getting through your Plan Commission, getting through your council, if we’re awarded the project,” said Garrard.
Gerrard described the Beebe project as a corner element featuring a first floor community room complete with a full kitchen and business center, covered condition parking in the building with external parking for guests, 40 total rental units consisting of a mix of eight one-bedroom and six two-bedroom apartments per floor with in-floor hot water radiant heat and all appliances, window coverings and ceiling fans, and rents that would include wifi, cable, heat and water/sewer.
Gerrard went on to describe his tenants.
“There’s been this talk about this is a low-income property. No, it is not. Number 1, you have to have the necessary means to pay your rent. We’re not getting subsidies from Uncle Sam. It’s not based on 30% of your income. In other words, if you had $1,000 your rent’s $300. No, that’s not us. We are middle-income driven. We have individuals that live in our Hudson property that have over a million dollars of assets and they qualify to live here. Most of our demographic that’s going to live in this building have Social Security, pension and if they’re lucky, they might have an annuity. We’re taking car of middle-income older individuals,” Gerrard said.
Proposed rents for one-bedroom apartments will range from $525-$925 per month, two-bedroom apartments from $975-$1,250. Rents will be subject to construction pricing and interest rates and will absorb a 1-2% annual increase to match inflation.
Gerrard’s proposal also sets aside six to eight units for disabled American veterans at the $525 rent.
Gerrard’s presentation bogged down when it came to explaining how the project would be financed and how renters would be vetted.
According to Gerrard, sale of federal tax credits will provide the project with millions in equity. To benefit from that opportunity, the developer enters into an agreement with the IRS and state of Wisconsin.
According to Gerrard, the development will be subject to an annual IRS audit and will require a cash marketing reserve in the neighborhood of $250,000.
“This project is competing with another 80 properties in the state. There’s only going to be enough to award 25. Somebody is going to end up on the short end of the stick. What developers like me do, is to start creating these bands within the development. I’ll have so many units at 30, so many units at 50 and so many units at 60. I get more points when I do that rather than just a straight 60% project,” Gerrard said.
A successful agreement with the IRS and State of Wisconsin ensures that the building will remain in that program for 30 years and available to those categories of renters over that period of time. After 30 years the developer can opt out of the program.
In the developer agreement, Gerrard Corp. asks for a portion of tax-increment financing revenue in a “pay-as-you-go” with the city totaling $600,000.
Tax credit applications are due to the state Dec. 6. Gerrard expects that only 25 of the expected 75 applications will be funded. Awards will be announced April 15, 2020. Gerrard warned this project is not guaranteed to be funded.
The feeling in the room following Mr. Gerrard’s presentation seemed to be a mix of folks being overwhelmed by all of the information, confusion as a result of questions surrounding how rents will be determined and how the project will actually be financed, anxiety driven by the short timeframe in which the city must make a decision, and duress driven by the December tax credit application deadline.
There was also a sense of frustration and disappointment that after months of interviews and preparation, only a single proposal remained to be presented while the city continues to sit on a valuable investment without a return going on nine months now.
Gerrard’s slide presentation is available to view at Gerrard_Presentation.pdf