A former landfill at Layton and Pennsylvania avenues apparently will not be transformed into a retail development anytime soon.
The Cudahy Common Council on April 21 abolished a Memorandum of Understanding between the city, the Community Development Authority and Cobalt Partners, and terminated all negotiations with Cobalt regarding the property. An MOU is a guideline for development.
CDA Chairwoman Sara Eberhardy said Cobalt Partners put the city "in a very awkward position" after it threatened litigation against the CDA, claiming that members were "not operating in good faith."
Too much TIF money
Eberhardy said Cobalt Partners wanted about $10 million in tax-incremental financing funds through the creation of an environmental tax-incremental financing district. The site was contaminated, and city officials could have created an eTIF district to facilitate development of the parcel.
Tax-incremental financing, or TIF, is a mechanism that allows municipalities to borrow money to fund infrastructure improvements for an area that otherwise would be difficult to develop or redevelop. The increased property-tax revenue from the improved land is then diverted from the tax roll to pay off the loan.
The total cost of the retail development would have been between $17 million and $23 million, and CDA members felt a $10 million contribution was too much to put toward the project, Eberhardy said.
Cobalt Partners was "not happy" with the CDA's denial and threatened litigation, which resulted in a discussion breakdown, Eberhardy said.
"They rang the litigation bell," she said. "Once that occurs, you can't unring it."
Development discussions are now at a standstill.
"It's unfortunate," Eberhardy said.
Developer still optimistic
Scott Yauck, principal of Cobalt Partners, denied allegations that representatives of his firm threatened the CDA with litigation.
"Our goal is to work with the city," he said.
When the MOU was entered into last year, a developer's agreement was supposed to be reached within 60 days.
Yauck said he remains "optimistic" and hopes to finalize an agreement with city officials as soon as possible.
Cobalt Partners' proposal to construct a five-building retail complex, encompassing 235,000 square feet, was approved by the Plan Commission last summer.
The CDA has since met with Cobalt Partners representatives in closed session.
Earlier this year, a proposed development agreement was presented to the CDA, but was rejected. The MOU was terminated because "no viable development agreement could be based upon it," according to a memo Eberhardy distributed to the Common Council.
Chantel Balzell can be reached at (262) 446-6602.
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