Special Council Meetings and Closed Sessions

Special Council Meetings and Closed Sessions  January 11, 2016

Lately I’ve been hearing some grumblings from residents about the number of closed sessions and special meetings being held by the City Council, especially in conjunction with the Library Block project. I understand their frustration. Quite frankly, both the City Council and staff would prefer to handle City business at our regularly scheduled meetings. So what was different about the library block? I can identify a few things:

1. Multiple players in the project, including the City, Developer, WHEDA, Forward Community Investments, the buyer of the tax credits, and the financing bank. Most negotiations are bi-lateral between the City and developer. This was a multi-lateral negotiation in which the City was one of many players.
2. The complexity of the new market tax credit financing (NMTC) tool for a public-private venture.  NMTC are typically only used for private investments.
3. The change-over in City leadership. My arrival as City Manager resulted in at least two additional closed sessions as part of the negotiation process. As a new manager, I felt it was important to do an independent financial review of the library block project’s impact on the City’s downtown tax increment district and the developer’s pro-forma to determine if the public investments were justified and manageable.
4. Working across state lines. This should be easy but unfortunately is not. Since the Library Block developer is from Minnesota, he was not able to anticipate some Wisconsin nuances with respect to the project financing.

Closed sessions will always be necessary when the City is in a negotiation process. It is not possible to negotiate an agreement in a public forum because your opponent would have complete knowledge of your negotiating position. For example, if the City is looking to purchase a piece of property and it is publicly discussed that the City’s bottom line is $500, why would the seller sell it for anything less? Since it is not possible to handle negotiations publicly, your elected representatives – the Common Council – serves as the voice of the residents.

So what about the special sessions? While closed sessions are not open to public, special sessions are just like council meetings but they are held at a different time and often called with one or two day notice. I think the need for special sessions for this project goes back to the multi-lateral nature of the project. For example we just held a special session related to temporarily leasing a portion of City Hall to the Health Partners Community clinic during the construction process. The developer’s deal with the clinic was not reached until Christmas Day. As part of that deal, the developer needed to have a City-approved lease before the clinic will release the deed for the property. The deed for the property is required for the January 7 closing. The project is already over deadline with respect to closing on the New Market Tax Credits, which are only good for a specified period. As a result, had we followed the City’s normal meeting procedure, we would have put the financing for the entire project at risk. So the Common Council elected to hold a special meeting to approve the lease. Had this been a normal bi-lateral agreement between the City and developer, this type of action would have not likely been needed.

Is this the new normal? I don’t think so. There will likely be some closed session associated with negotiating a developer agreement for the Pioneer Ford site but I do not anticipate the complexity associated with the Library Block.