The Middleton Finance and Personnel Committee on April 15 recommended that the Common Council consider allowing developer Verdean Homes to fund future High Road improvements for Pheasant Crossing Phase 1 through a mix of a $100,000 cash payment and a surety bond covering the remainder of the estimated $897,093.75 cost, with staged reductions in the surety as later phases proceed.

The recommendation — passed by voice vote after a substitute motion — asks the council to adopt language that would (as presented to the committee) allow the developer to pay 3.5% instead of 5% for a required funding percentage and to provide $100,000 in cash at agreement signing while the remainder is guaranteed by a surety bond, with scheduled reductions tied to future phase milestones or specified time triggers.

Why it matters: the developer told committee members that requiring the entire $897,093.75 in cash up front would force them to borrow and carry interest at current rates, increasing costs that could be passed on to homebuyers. Developer Matt Brink of Verdean Homes said, “At a 7% interest rate ... that's gonna be about $63,000 in interest carry” if the company must borrow the full amount now.

Committee discussion focused on three issues: precedent and administrative burden for city staff, protection of the city’s financial interest, and timing of payments. Several committee members warned the approach could set a precedent and increase recordkeeping demands; staff members cautioned the city would forgo interest income if large sums sit in escrow.

City staff clarified how the staged payments were intended to work. Sean Salski (staff member) described the schedule presented to the committee: “Hundred thousand at the, when the agreement is signed, another $100,000 365 days from when this agreement is signed, and then the balance ... 1 year after that,” unless final design triggers conversion of the surety to cash earlier.

Developer proposal and rationale: Verdean Homes proposed the surety-bond approach to avoid immediate borrowing costs and to reduce short-term upward pressure on sale prices. Brink said the surety method is commonly used and would reduce the developer’s interest carry while preserving the city’s protection through bonding and eventual conversion to cash as phases proceed.

Committee action and next steps: Committee members substituted a motion referencing staff’s corrected memo and the amended numbers provided by staff and voted in favor of recommending that the council consider the revised payment structure. The committee deferred final drafting of developer-agreement language to staff for council review and noted the council should consider whether to adopt a consistent future policy on phased payments and surety bonds for large developments.

Clarifying details recorded in the meeting included a minor correction to the parkland dedication amount in the draft developer agreement — from 7,095 square feet to 6,979 square feet — and confirmation that phase 1 was described in the packet as 47 lots (committee members discussed conflicting references to the phase counts in the packet and email exchanges). The committee voted to send the revised recommendation to council for final action.

Ending: The item will appear on the Common Council agenda with staff-drafted agreement language reflecting the committee’s recommendation; the council will make the final decision on the payment structure and any broader policy direction.