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Federal grant falls through for Kewaunee’s controversial marina deal

Empower Wisconsin | Nov. 18, 2020

By M.D. Kittle

MADISON — The city of Kewaunee’s request for $3 million in federal funding has been rejected, seemingly sinking a controversial plan to purchase a private marina.

But city officials remain “highly motivated” to complete the acquisition, grant or no grant, a source close to the situation tells Empower Wisconsin.

As Empower Wisconsin first reported, some citizens of this Lake Michigan city of nearly 3,000 have raised concerns about the local government’s pursuit of privately owned Salmon Harbor Marina. Meanwhile, they say Kewaunee’s taxpayer-owned marina has mostly remained idle and in a state of disrepair since flooding knocked it out of commission.

Without the Common Council’s knowledge, Mayor Jason Jelinek unilaterally signed a purchase agreement with the private marina owners for $1.8 million, contingent on council approval and securing the federal funding. The city would use the $3 million U.S. Economic Development Administration grant to purchase the marina and for upgrades, but the grant would include a sizeable match from the city — as much as $600,000. City documents note “the matching funds would need to be out of the General Fund or from a loan.”

Now that the sought-after EDA assistance has fallen through, will city officials move to borrow the funds? Sources say that appears to be the next plan of action.

City Administrator Fred Schnook once again did not return Empower Wisconsin’s request for comment. Schnook and the mayor have not returned multiple requests for comment.

In the EDA letter obtained by Empower Wisconsin, the agency said its Chicago Regional Office Investment Review Committee considered the city’s application for assistance in support of the “Acquisition of Salmon Harbor Marina for Community Recovery, Development of Critical Infrastructure, and Workforce Development.” The funding application was made in part to “Respond to Economic Injury as a Result of Coronavirus,” according to the letter.

“We regret to inform you that EDA will not be able to fund your application based on an extensive review of the project and portfolio evaluation factors outlined in the Notice of Funding Opportunity,” the agency informed the city.

The primary reasons for the rejection: Limited private sector job creation and investment anticipated. EDA also notes the appraisal of the property was submitted more than a year ago “and may not reflect the current value of the property, increasing the relative risk of the proposed project.”

Alderman Jeff Vollenweider said all eyes have been on the proposed acquisition. He said he hopes the city can turn its attention back to the needs of the city-owned marina.

“I’m hoping we can refocus our energy on a proposal for mitigating the water problems, and that our customers will come back,” said the council member, who has and remains opposed to the Salmon Harbor purchase. “We had a pretty full marina and campground. We want to restore confidence.”

Last year, torrential spring rains flooded the Kewaunee Marina parking lot and campground, as well as the boat launch, located on the other side of Wisconsin Highway 42. While flooding kept visitors away, residents tell Empower Wisconsin the problem was exacerbated when city officials failed to fix much of the submerged property. They opted not to open the campground and gave long-time campers just 12 days to remove their property.

The city and its taxpayers lost a lot of business — and tax revenue — as the  council and city administrator focused on the possible federal windfall.

It appears the pursuit of Salmon Harbor isn’t over, though. Vollenweider said he thinks there’s interest among some council members to borrow money for the purchase. Other sources say that’s exactly what the city is considering.

Some residents are growing increasingly concerned that the city, which has been criticized for its failure to keep the public informed, will push through a borrowing or alternate funding plan with little notice.

“I just hope we get public input, if this were to move forward,” Vollenweider said.

Meanwhile, sources say the floodwaters have receded, exposing a broken boat launch and a debris covered parking lot.

Alderwoman Janita Zimmerman, who voted against the purchase agreement, said city officials are talking about the direction they want to go with the city-owned marina and how they want to clean up the area.

“They are concerned about doing more damage with the cleanup,” Zimmerman said.

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