Wednesday, August 22, 2018

Oshkosh arena developer pays city $260,800 to settle past-due bill, gets mortgage loan from builder

Photo by Miles Maguire
The Wisconsin Herd packed the Menominee Nation Arena on Fan Appreciation Night, March 23.

By Miles Maguire

The developer of the Menominee Nation Arena has paid a $260,800 past-due invoice from the city just days after the Oshkosh Examiner obtained a copy of the bill under the Wisconsin public records act.

The bill, dated April 11 with 30-day grace period, covered higher-than-expected construction costs for street, sidewalk and infrastructure improvements near the $17.7 million arena, the home of the Wisconsin Herd pro basketball team.

So far this year the Common Council has held two closed-door meetings to discuss its agreement with the arena developer, Fox Valley Pro Basketball Inc. The meetings were closed under a section of state law that provides for such sessions “to discuss bargaining options, strategy and parameters where competitive bargaining reasons require a closed session.”

Council members said they were unable to talk about the specifics of the discussions, but some expressed unease about the situation.

“It’s a little bit muddy right now,” said Deputy Mayor Lori Palmeri in an interview before the bill was paid. “I’m not entirely sure we know where they are in their obligations.”

But Greg Pierce, the president of Fox Valley Pro Basketball, said nothing is out of the ordinary. “We’re plugging right along,” he said. “We’ve got a big project with a lot of things moving. We continue to work through startup issues as a new business.”

One of the newest developments in the project is the emergence of the construction contractor as a major source of financing. In a mortgage recorded with the county on June 1, Fox Valley has agreed to pay $13.2 million to Bayland Buildings Inc., the Green Bay company that erected the arena.

A Bayland official said he could not immediately provide an account of how the mortgage agreement came about. But Chad Calmes, Bayland’s chief operating officer, dismissed the idea that there was any kind of problem between the developer and the builder. “We don’t have any material disputes,” Calmes said.

A second mortgage, for $1.3 million, was recorded July 25 in favor of a De Pere company named Two Willows LLC. Two Willows shares an address with Schoessow’s S.I. Metals and Supply, but city officials do not believe either company was directly involved in the construction of the arena. Efforts to reach the registered agent for Two Willows were not successful.

According to documents filed with the Securities and Exchange Commission, Pierce had originally hoped to raise $27 million by selling shares to investors in Fox Valley Pro Basketball. As of May 2017, he had raised $5 million from one investor. As of May of this year, he had raised $14.5 million from 63 investors and amended the offering to include both debt securities and stock.

Approximately $1.4 million of the amount raised will be paid for executive services and day-to-day management. Presumably this money will go primarily to Pierce, but the SEC filing names three other potential recipients, all of whom work in Pierce's financial advisory company.

City Manager Mark Rohloff said the closed door meetings about the arena were to consider the possible need to amend the development agreement with Fox Valley to accommodate new financing arrangements. Council members were also aware of the unpaid invoice.

But Pierce said he did not understand why the city would think the arena's financing was an issue. “I don’t know where that came from.”

He said he is satisfied with the current financing for the project, although he is still open to bringing in more investors. “The more we raise [from stockholders] the less we have to finance,” he said.

The delay in paying the city’s invoice, Pierce said, was based on a lack of documentation from the city. City officials told him initially to hold off paying it, he said.

The city received payment Tuesday, Rohloff said. A copy of the invoice was made available to the Oshkosh Examiner on Friday.

Now that the bill is paid, “we’re in compliance with all of our agreements: with our lender, with the city and with everyone else,” Pierce said. “We’re happy where we’re at.”

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