City council tables ArtStart boiler proposal

The Rhinelander city council on Monday was split on making a decision with regard to replacing a boiler at a building it owns with the federal government and is used by the non-profit organization ArtStart, 68 South Stevens Street.

The lengthy discussion started with ArtStart programs and operations director Ashley McLaughlin addressing the council. 

She said when ArtStart was started, it lobbied the city to purchase the “old federal building” that is still home to the organization today. 

“That became possible through a quitclaim deed with the federal government and now the city … of Rhinelander owns the ArtStart building,” she said. “Second, a lease was put in place for ArtStart to occupy that building between the city of Rhinelander and the organization of ArtStart.”

McLaughlin explained the federal government is involved with the building and what happens to it because of its historical importance. 

“So every two years, ArtStart and the city of Rhinelander need to put together a document report for the federal government to review of any changes and updates that are being done or planned for the building,” she said. “So this is a very complicated relationship that we have.”

The lease agreement, McLaughlin said, says ArtStart is responsible for the building’s maintenance and repairs. 

She said the non-profit has invested roughly $340,000 into the building to date. 

“The boiler system is original to the building,” McLaughlin said. “It is an old coal boiler system that was retrofitted last in 1965. This year, well, for the entire time ArtStart has occupied the building, the boiler has always needed maintenance and repairs.”

Every two to three years, she noted, ArtStart has been replacing the circulation pumps.

The company that does that told the organization it wouldn’t be able to guarantee it could get parts to continue to repair the boiler system and were lucky to be able to get the necessary parts this year. 

McLaughlin said when the circulation pumps and the ignition switch failed this winter, the building’s temperature fell to the mid-40s. 

“And that was despite all the emergency repairs that we were doing to the boiler system,” she said. “It took us probably about two weeks to get it up and running to where it would heat the building back up, but it heats the building now to over 80 degrees. So we have to continue to shut off the boiler so that we can regulate the heat back down to a manageable temperature and then we have to pray it reignites again, because it has a problem with the ignition switch that’s being constantly repaired.”

McLaughlin reiterated ArtStart was told a replacement to the boiler was needed. 

She said bids have been put out for a new boiler system and Johnson Controls and Focus on Energy have been consulted with since. The latter, McLaughlin said, has helped the non-profit with funding through a $50,000 grant and is willing to offer a five-year, zero-percent loan to pay for the boiler replacement.

“So what I am asking for today with all of that backstory, is I am asking you to consider co-signing the financing plan since I can’t do that because I don’t own the building,” she said. “So we cannot put that together on our own. I’m asking you to consider taking a look at our lease. Since we’ve been there and we’ve been good stewards, and since this is such a complicated relationship, and to get some other tenant could potentially be complicated from what I’m understanding from the National Park Service, I’m asking you to take a look and maybe review the lease again for major repairs like this and consider maybe a cost-sharing or some other way that we can work together on major repairs like this because ArtStart is a small non-profit.”

McLaughlin said she understands the city’s budget is limited, too, but “a partnership (means) working together to solve challenges.”

The issue, if it lingers, could force ArtStart to no longer occupy the building, she said. 

McLaughlin said the grant would cover the boiler replacement for the first year and loan payments wouldn’t start until the following year. 

She said splitting the loan with the city would cost roughly $15,000 a year for both organizations. 

The total for the boiler replacement is $185,000, McLaughlin said. 

“We’re at a point, too, ArtStart is just coming to you openly and honestly, we’re at a point where the building … needs a lift,” she added. “Right? We all know that it’s an old building and it’s going to take significant dollars to do a facelift on it. And we’re finding that we might be outgrowing the space as well. So I’m asking you to support the idea of a potential expansion of the building.”

If an expansion is pursued, McLaughlin said, that would require the city and ArtStart to contact the federal government for that as well.

“We’re in a partnership right now and I’m just asking you to think about all these things, discuss it and maybe come and aid us in fixing this boiler,” she said. 

Alderperson Steven Jopek asked if ArtStart would be able to continue its operations if it wasn’t able to occupy its current building right now.

McLaughlin said the non-profit is at “a crossroads right now.”

“A lot of our programming is no longer happening inside the building,” she said. “We still do a significant portion inside, but we’re finding that we are looking more toward the impact of art and health. So partnering more with health organizations and helping with programs that are related to health and building new partnerships. So we’re kind of in this area where we’re re-exploring what ArtStart is.”

McLaughlin indicated the ArtStart board of directors is deeply discussing what its future may look like currently.

Alderperson Gerald Anderson asked about any time constraints.

ArtStart board member Craig Zarley said the $50,000 grant funding needs to be used by the end of 2025. The loan offer, he said, would be lost if the city decides not to co-sign. 

Focus on Energy, Zarley mentioned, has said the boiler replacement would pay for itself by saving energy costs over the five-year period. 

Mayor Kris Hanus asked if Focus on Energy had any issues with the building being owned by a government agency. 

Zarley indicated there were no issues, but the company simply needs the owner to sign due to the building being collateral for the loan. 

Alderperson Thomas Barnett asked what it would take for the city to sell ArtStart the building. 

City administrator Patrick Reagan said from correspondence with the federal government, a fair market value would need to be determined for the building first.

Second, that value is what the building would need to be sold at, with the city paying the federal government that amount of money, too, he said. 

“So regardless, whatever you want to sell it for, you’re going to have to pay the federal government for this,” Reagan said.

Barnett suggested more time to think about different options, but it seemed as if the sooner the boiler was replaced the better.

Hanus said there could be some hurdles yet to be encountered still. 

He wondered if since the building is not only owned by the city, but the federal government as well, could it be used as collateral. Second, Hanus said, the contract will need to be renegotiated to take the maintenance and repairs burden off of ArtStart, which could take time.

He also asked city attorney Steven Sorenson if, since the city owns the building, would it need to find bids itself in accordance to its procurement policy. 

Sorenson indicated that it would depend on how the lease agreement between ArtStart and the city is renegotiated. 

“The other thing to keep in mind here too, is it looks like they do have an option to start this project, it’s just how do they continue to fund it once they get past the first year,” Hanus said. 

He said he feels the solution won’t be reached in one or two meetings, but it’s more of a “six-month process, to be honest, and it’s more of what direction does the city want to go.”

Alderperson and council president Carrie Mikalauski noted, because of the grant covering the first year of the project’s payment, proceeding with replacing the boiler wouldn’t affect the city’s budget until next year.

“So obviously, there’s a lot of concerns and, like you were explaining, there’s some significant obstacles, especially with the budget being tight — it was tight this year, it will be tight next year,” Jopek said.

He also posed a series of questions to the council to think about. 

“The conclusions that I’m kind of drawing here, and I get that it’s complicated and that there’s a lot of obstacles, but if ArtStart stays in the building, they use a historical landmark that they’ve been using that we had this agreement with, and they can continue to contribute to on-going cultural programs — I’m a social studies teacher — that I find vital to Rhinelander,” Jopek said. “We split the cost with ArtStart, which hits the budget later, which is a big deal and I’m not going to downplay that, but it also ensures that ArtStart is going to stay there and function, in which case they’ve already done the groundwork in the first year. And, in the event that ArtStart stays, avoids future conflicts of trying to find another lessee or trying to sell the building as is. Which keeps the future of the building confirmed and we don’t run the risk of trying to find someone to lease the building, and it doesn’t just sit there … unsold or sits there unoccupied, whereas currently we have an organization that has contributed a lot to our society, to Rhinelander, while also offering to do the footwork for future improvements to continue to use the building.”

He wondered what the bigger problems and consequences would be for the city if ArtStart wasn’t in the Stevens Street building.

Reagan indicated he thought the federal government should be consulted for more information in the case ArtStart vacates the building.

McLaughlin intervened and explained some of the correspondence she’s already had with the National Park Service.

 “This is a big deal for both of us and is very hairy and messy,” she said. 

McLaughlin said according to the federal government, if the building were to sit vacant and the city found a new tenant, a new agreement would need to be put in place with the federal government as well. 

She added the building is part of a “historical surplus property program.” That, McLaughlin said, causes challenges if the building was to be sold. 

“So it seems very challenging,” she said. “It seems like we might be forever married to this relationship or as long as the city wants to do that. And so any other organization that would want to lease the building would have to go and be approved by the federal government … this was quite the thing when they did it, honestly. I don’t know how they got through all this red tape.”

Alderperson David Holt said the $15,000 a year from the city seems like it would be the most affordable option when considering the other options, “whether that be legal fees or loss of occupancy.”

“And it would end up costing the city and we would also lose the resource of ArtStart being there,” he said. 

“Couple other things just to keep in mind out of the 900 things going around is, one … we can barely maintain our own buildings right now, as well as this building,” Hanus said. “And two, we have similar leases like this with the chamber building etcetera. So I mean the city of Rhinelander is already … receiving a dollar rent and paying insurance on this property. So, I mean, we’re already somewhat helping them and the chamber to sustain their operations. So, I mean, just something to keep in mind. I don’t know if $15,000 is a deal-breaker or not, but we’re already putting some skin in the game and we have since this partnership has started.”

Anderson said it seems to be time to renegotiate its lease the city has with ArtStart.

He said he would hope “something” could get done in less than five months and “figure out some reasonable financial arrangement.”

Hanus reminded the council the only action it could take at the April 14 meeting would be to move forward with helping ArtStart fix the boiler or not. He indicated other issues involving the building and ArtStart could be discussed further at future meetings. 

Reagan said the first thing he would do would be to contact the federal government and see if the building could be given back. He said he’s “not a fan of a municipality holding onto land for the sake of holding onto land.”

“If you don’t have a plan for it, let’s get it back to someone else who can use it, who can utilize it better than we can,” Reagan said. 

He added part of his job is “to tell the truth” and noted ArtStart had to cut a position this year due to rising operating costs and those costs aren’t going to go down. 

“So I would just caution you to think about that ... ” Reagan said. 

Mikalauski mentioned she’s been working with ArtStart regarding its effort of art programs with a health focus. She indicated she feels the direction ArtStart is heading in its programming is positive and “unmatched” for what it provides to the community.

“I think that it is vital that this organization stays within the city and I think that if we were to sell this building, either way the boiler has to get fixed,” she said. “So I think the fact of their willing to partner in that and we share the cost makes it a whole lot easier to swallow than us having to replace a boiler or them having to replace a boiler. So I think the fact that the grant gives us some time to find … other funding sources to pay for this going forward, I think behooves us to look into those things.”

Mikalauski said the council “should really” consider helping ArtStart with the boiler “tonight.”

While there was a little more discussion which started with regard to the lease, Hanus said the boiler is what the council needed to consider. 

Sorenson said, answering a question from Jopek, there could be terms inserted into the contract to tie a higher monthly lease payment into paying for the boiler.

Holt asked the council if it wanted to move forward with getting the boiler fixed with ArtStart or if more discussion should be held, particularly with regard to re-negotiating a lease agreement.

Hanus asked Sorenson if, because of the contract mandating ArtStart’s responsibilities of maintenance and repairs, if the council even had the option to move forward with helping fix the boiler. 

Sorenson said the council could by way of donating money to the non-profit for that organization to “fulfill their obligation to maintain the property.”

Hanus then asked Sorenson if the city could issue “more or less a (short-term) loan at no interest” while other issues regarding the lease agreement are worked out. 

Sorenson said that could be done.

“So the concept is we would be loaning the money with the anticipation that there would be some system of paying it back at some point, to be figured out in the future,” Hanus said. 

Anderson made a motion to table the discussion until the council’s next meeting and have it worded on that agenda to allow council members to discuss the full range of the situation. 

The vote to do so split 4-4 with Hanus being the deciding vote to table.

Trevor Greene may be reached via email at [email protected].