Financial Fiasco Continued: Nearly three years after construction began on the Exhibition Center a plan to fund the project was presented and quickly rejected. An estimated $2.7 million could have been saved in finance cost and $522,000 in legal fees if bonding had been pursued earlier. Read on to learn more….
In October of 2017 Ben LaFrombois, Appleton's outside legal counsel for the exhibition center, submitted his plan for financing the Exhibition Center which called for Appleton to finance the project with loans from five local banks at an interest rate that would be 2.2 percent higher than the five-year U.S. treasury rate. The five-year U.S. treasury rate was 2.28 percent on the following Monday, placing the starting interest rate at 4.48 percent. The rate would reset every five years. Mayor Hanna said Appleton stands ready to use a "first-of-its-kind financing structure" (Ben LaFrombois’ plan) for the exhibition center. LaFrombois said he would receive 1.25 percent of the loans, plus legal fees, as compensation for arranging the loans. At $31 million, 1.25 percent equates to $387,500. When the loan plan was unveiled, LaFrombois said it wasn't feasible to finance $31 million through revenue bonds. The most the bond market would support, he said, was $25 million or $26 million. (APC 1-10-18).
The surrounding communities stalled the bank loan option touted by LaFrombois and Mayor Tim Hanna, forcing a closer look at the revenue bond option. Neenah Mayor Dean Kaufert said the 10 municipal partners in the project could have saved about $2.7 million in financing costs if Appleton had taken advantage of lower interest rates on revenue bonds in August 2016. Instead, Appleton pursued private-placement bank loans arranged by LaFrombois until serious objections were raised last fall because the loans had a variable interest rate. (APC 1/31/18). That dispute cost Appleton $522,000 in attorney fees (paid to LaFrombois/ Von Briesen & Roper) that it incurred as part of a failed effort to secure private-placement bank loans. (APC 7-11-18)
A representative of Robert W. Baird and Co. told the Appleton Finance Committee on January 8, 2018 that the Appleton Redevelopment Authority could issue revenue bonds to pay for the construction of the exhibition center. The interest rate on the bonds, was estimated at 4.07 percent, and would be fixed for the life of the bonds (APC 1-10-18).