Board receives review of CDA financial statements
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Board receives review of CDA financial statements
By Kim McDarison
Members of the Whitewater Community Development Authority Board of Directors Thursday unanimously approved financial statements showing revenues and expenditures year to date, defined as a four-month period, between January and April 30.
The board approved documents provided in the meeting packet as a matter of housekeeping and without further discussion.
In a followup interview Whitewater Director of Finance Rachelle Blitch, responding to questions posed by WhitewaterWise, offered an understanding of the CDA’s financial statements as presented in the packet.
Fund 900
Blitch said the CDA has two primary funds, the first of which is the Economic Development Fund, also described as Fund 900, used by the committee as an operating vehicle. A second fund, the CDA Projects Fund, contains several sub-funds, she said, describing each as a “fund within a fund,” containing information about the CDAs board-controlled resources.
According to the financial statements provided Thursday, the Economic Development Fund is anticipated to have $203,000 placed within it and made available for CDA operating expenditures this year. The monies will come through transfers from five of the city’s Tax Incremental Financing Districts, or TIDs, and the city’s general fund. To date, the CDA has received $82,500 through the transfer process.
The financial statements show that each of three TIDs, nos. 11, 12 and 14, are anticipated to make a contribution of $25,000, and TID No. 10 is anticipated to contribute $22,500. A transfer of $50,000 also was earmarked, and has, to date, been received into the fund from TID No. 4. Another $32,500 was earmarked and received into the fund from the city’s general fund. The received funds represent 40% of the CDA’s anticipated 2024 operating budget.
While the CDA’s operating fund is anticipated to receive another $120,000 through transfers, Blitch said that some of the city’s TIDs may not this year produce the required resources to allow for funds to be transferred. In that case, she said, the transfers will be deferred until next year.
Offering additional information about TID transfers, Blitch said that the city has five active TIDs, Nos. 10, 11, 12, 13, and 14, plus TID No. 4, which was scheduled to close in 2022, but new state legislation allowed the city to use some of the TID’s resources for the purpose of affordable housing. The city has identified some $1.9 million which it has earmarked for that purpose. For that reason, she said, the TID remains open.
The $1.9 million in resources are not controlled by the CDA, she said, and while a percentage of TID resources have been earmarked for placement within the CDA’s Fund 900, other monies from the TIDs are used to support economic development within the tax incremental financing districts that produce the resources.
The above document, as provided within the CDA’s Thursday meeting packet, shows the committee’s operational budget to date, including transfers made into the CDA’s Fund 900, for a period ending April 30. Of its anticipated 2024 $203,000 operating budget, the CDA has thus far received $82,500, or 40% of the intended total.
A map, shown above, shows the five Tax Incremental Finance Districts, or TIDs, within the city. A sixth TID, TID No. 4, not pictured, was scheduled to close in 2022, but remains active within the city’s books to allow a use made available by the State Legislature put some of the TID’s increment toward affordable housing within the city. Some $1.9 million has been identified by the city and earmarked for that use.
Within the financial statements, within the four-month period ending April 30, the CDA’s expenses included salaries, in the amount of $26,000; payments made to “county/regional economic development,” in the amount of $11,019, and consultant fee payments made in the amount of $9,834, among others, for a total of $59,104. After deducting expenses from revenues, the statements show that the fund, as of the end of April, carried a balance of $23,495.
Included among the CDA’s April expenditures was $3,834 paid to Tracy Cross and Associates for a rental market study, and $2,800 for March 2024 “CDA work,” performed by Kristen Fish Peterson, who has continued since last year in a consulting role for the CDA.
In a recent telephone interview, City Manager John Weidl said that while Fish-Peterson was hired initially for a limited time, the city found itself without an economic development director for longer than it had anticipated, so the consultant stayed on. With the recent hiring of Economic Development Director Taylor Zeinert, Fish-Peterson is anticipated to finish her work with the city in June.
The documents, above, as provided within Thursday’s CDA packet, shows monies expended by the CDA in April, shown, at top, in the first column, and in 2024, through April 30, shown as year to date. The document above shows itemized payments made through a checking account in April.
Fund 910
A second fund, the CDA Programs Fund, or Fund 910, at the end of the four-month period ending April 30, shows revenues of $34,664.
Blitch noted that the majority of those dollars come through interest earned on loans the CDA has extended to various entities, and on monies kept in sub-funds achieved through various city and governmental transfers, grants and loans. This year, she added, revenues are earned through interest on loans and interest on cash balances in the CDA’s bank accounts.
The CDA was established, city records show, in the early 1980s, and the entity began acquiring dollars through various available resources, she said.
Loans made by the CDA found within Thursday’s financial statements, and listed within the document shown above, include $50,000 to the Bowers House, with a first payment due in April. The interest revenue made from the April payment is $1,407, and constitutes the only Facade Loan Revenue denoted as included within the sub-fund and making a payment within the four-month period. Blitch noted that the $50,000 amount denoted in the line item is a working title. The actual amount of the loan is $75,000, the details of which are further outlined in an accompanying spreadsheet.
As stated by Blitch, a more detailed spreadsheet, above, shows that the Bowers House loan was approved in the amount of $75,000. The sheet shares some additional details associated with loans that are on the CDA’s books in 2024.
A spreadsheet, offering a fuller understanding of loans extended by the CDA over the same four-month period, indicates that the Bowers House loan was originally $75,000, with the establishment making payments that include the aforementioned interest and monies toward principal of $2,069.
A second program, dubbed the “Action Loan,” shows interest earned over the four-month period from three loans extended by the CDA to each of the following: The Learning Depot, in an amount of $41,294, with interest earned from the loan in the amount of $419 year to date; SafePro, which received a loan of $104,360, through which the CDA has earned in interest $1,299 year to date, and a loan of $54,000, made to the Sweet Spot, with interest of $419 earned year to date.
The aforementioned spreadsheet shows that the Action Loan program has extended six loans, including $158,320 to the Pauquette Center, with a balance of $106,739 remaining. The organization makes principal payments of $1,289, with no interest payment logged within the four-month period. The account is designated as “current.”
The Learning Depot’s loan is also logged as “current,” with a balance of $17,404 remaining. The company makes principal payments of $615.
SafePro Tech, as it is listed on the spreadsheet, was originally extended a loan of $104,360. The company makes principal payments of $1,153, and shows a remaining loan balance of $94,625. A spreadsheet note, Blitch said, indicates that a first payment was due in December of 2022, and a demand letter was issued in December of 2023. The company paid past due amounts, and authorized monthly withdrawals for future payments.
Another loan was extended to Fine Food Arts, in the amount of $30,000, with no principal or interest payments logged on Thursday’s spreadsheet. A loan made to the Sweet Spot also is logged, with a remaining balance of $42,390.
An entity, listed as “UDAG Slipstream Loc,” received a loan of $12,500, and shows no monies paid. A note on the spreadsheet indicates that the entity is “in default.”
The spreadsheet additionally shows a line item titled: “UDAG loan loss revenue,” with an entry of negative $12,500.
In total, the Action Fund loan program has, as indicated within the spreadsheet, loaned some $663,770 in funds, and has collected in payments some $226,504. The spreadsheet shows that the program has “written off” some $153,606.
During Thursday’s meeting, three other loans, made to MeeperBOT in 2023, were discussed, with a board member asking for an explanation about why the loans were written off, to be placed on an upcoming agenda.
Blitch said the loans were not included on the spreadsheet because they were written off before the four-month period the spreadsheet outlines. The spreadsheet, she said, includes loans that are still on the CDA’s books in 2024.
City records show, she said, that the company received monies through the CDA’s Action Fund program in the amounts of $97,907 and $82,310, both of which were written off in March of last year. Additionally, the company received $102,000 through the CDA’s Capital Catalyst initiative, with that loan written off in April of last year.
She anticipated that further discussion about the loans, and the outcomes, will be among topics discussed during the CDA’s next meeting.
Looking at the financial statements for the four-month period ending April 30, several other sub-funds, including “Facade,” “Housing,” “Seed Fund,” and “Action Fund,” are likewise listed, as shown above, with the funds collectively bringing $4,495 in interest earnings in April, and $31,118 year to date. The financial statement includes income earned through “miscellaneous income,” and “crop leases.”
The aforementioned broader spreadsheet additionally includes six loans listed under a heading of “capital catalyst,” with each of the loans showing no activity under principal and interest payments over the four-month period.
They include two loans extended to “Slipstream,” in the amounts of $102,500 and $42,000, with payments to date listed as $6,275. A note on the spreadsheet indicates that the company last paid an “interest only” payment in 2016.
A $27,500 loan was extended to “Royal Invent,” with a notation on the spreadsheet indicating “no payments have been received.”
Likewise, $97,500 was loaned to “Royal Scanalyitics,” with payments to date of $8,125 received. A note on the spreadsheet indicates that the only payment received by the CDA was in 2019.
Additionally, “Royal Inventalator” received a loan of $77,500, and has made payments to date of $1,386. A note within the spreadsheet indicates that the last payment received from the entity was in 2020.
“Recruit Chute,” another entity found on the spreadsheet, received a loan of $51,050. No payments have been received to date, according to the spreadsheet.
Loans made under the Capital Catalyst heading total to $601,264, with balances owed totaling to $398,050, payments due collectively totaling to $117,561, with another $102,000 listed as “written off.”
Under a heading of “CDBG Housing,” 15 loans are listed. In total, the program has extended funds in the amount of $247,943, with no principal or interest payments recorded.
Blitch said that each loan extended by the CDA came with individual terms, which are not included within information released within the financial update on Thursday.
Expenditures attributed to Fund 910 within the four-month period include nominal charges for maintenance costs on properties the CDA recently purchased, including such items as gas, electric and water bills, and legal and professional services, for a combined total of $1,254, leaving the fund showing an ending balance, over the four-month period, of $33,410.
History, holdings, and net worth
Offering some history, Blitch said that monies accrued and controlled by the CDA, in some cases, date back to 1982, and were obtained through governmental transfers and federal programs.
In a two-part story published in January of 2023 on WhitewaterWise’s sister site, Fort Atkinson Online, following the hiring of Redevelopment Resources, and its principal, Fish-Peterson, who was charged with helping to create some guidelines for the city’s CDA, and develop a job description for a CDA director, some of the CDA’s existing financial structure was shared.
The two parts of the earlier story about the CDA are here: https://fortatkinsononline.com/whitewater-part-1-council-receives-presentation-begins-discussion-outlining-what-is-a-cda/, and here: https://fortatkinsononline.com/whitewater-part-2-cda-receives-presentation-begins-discussion-outlining-what-is-a-cda/.
Within the earlier stories, Fish-Peterson identified several funding sources used by the CDA, including a U.S. Department of Housing and Urban Development (HUD) Community Development Block Grants (CDBG) program.
According to the HUD website, the block grants were provided on a formula bases to states, cities and counties to develop viable urban communities by providing decent housing and a suitable living environment, and by expanding economic opportunities, principally for low- and moderate-income persons.
She also identified facade grants, which, according to the city’s website, have been made available through a program begun in 1991, and have “helped a number of downtown businesses over the years.”
Additionally, Fish-Peterson noted the city’s Capital Catalyst Fund, which, according to information provided in 2020 to area news outlets by former Economic Development Director Cathy Anderson, was funded with a Wisconsin Economic Development Corporation (WEDC) grant of $250,000.
Fish-Peterson further cited funding identified as a HUD Urban Development Action Grant (UDAG), which provides funding to assist revitalization efforts in distressed cities and urban counties that require increased public and private investment, and holdings within the city’s business park in land and real estate, as among resources used to develop the CDA’s portfolio.
Addressing the CDA last year, Fish-Peterson said: “Currently you have a variety of programs and I’ve been studying all of your programs, your sources of funding, the levels of funding that you have in each program. You have your housing program that is largely funded by Community Development Block Grant — that’s federal funding — you have a facade fund, a capital catalyst fund, which is investment dollars into startups in the form of equity, you have a loan fund, a revolving loan fund, a UDAG fund, and then you have the business development park that the CDA operates, and you have land and real estate listed as assets on your CDA balance sheet.”
More recently, Blitch noted that resources accumulating in the CDA’s program accounts have been earning interest income over the years. Looking more closely at sub-funds found within Fund 910, she said they are still sometimes labeled with the names of the federal programs from where money might have originated because the labels are familiar to members of the CDA and some city staff, but the resources in the funds are no longer attached to federalized programming and can be used by the CDA in whatever way the body might authorize.
She also stressed that the CDA’s “housing fund,” as identified in the documents, and also known by city staff as the CDBG fund, is not associated with the $1.9 million derived from TID No. 4, and earmarked, as a matter of state law, specifically for affordable housing. The CDA’s fund does have $14,000 that can be loaned by the board to residents with qualifying projects. The loans are made available through a third-party administrator, she said.
Among documents made available to CDA members Thursday, a balance sheet, shown above, shows 37 accounts within Fund 910, composed of checking accounts, and “CDBG,” “Action,” “Capital Catalyst,” “Facade,” and “UDAG” loans, ranging between $540,897, labeled as a land purchase, and $4,235, labeled as “housing,” for a combined total of assets in the amount of approximately $9.6 million. Interest earned in April on the combined total was $6,177, and interest earned year to date is $16,233.
Listed against Fund 910 as liabilities are accumulated depreciation on buildings, in the amount of approximately $1.6 million; monies due to the city’s general fund in the amount of $17,176, and deferred revenue in the amount of $851,866, for a total of $2.4 million.
The balance sheet notes a “total fund equity” of $7.1 million.
Within each sub-fund, the document, shown above, shared Thursday offers “current bank balance(s)” as follow: Fund 900, CDA operating, $41,597; Fund 910, Action Business Development, ‘UDAG,’ $868,995; Fund 910, Facade Checking, $28,799; Fund 910, ‘CDBG’ Housing, $14,687, and Fund 910, Capital Catalyst Checking, $120,000.
Additionally, Blitch said, the up to $160,000 earmarked by the CDA for use as prize money in the Whitewater WindUp competition will come from the CDA’s “Action Fund.”
The full 11-page financial document as shared within the CDA meeting packet is here: http://whitewaterwise.com/wp-content/uploads/2024/05/ITEM-Attachment-001-958256120e73477b8df059e83f50d8c1-1.pdf.
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