The Iowa-based company that manages the Baraboo college student dormitories failed to pay any taxes to the city of Baraboo during 2018, defaulting on its lease agreement.
Bluffstone LLC of Davenport, Iowa, owes the city $47,400 in personal property taxes plus interest and penalties as of Jan. 1, said Baraboo Finance Director Cynthia Haggard. It built The Villas at Baraboo on the University of Wisconsin-Platteville Baraboo Sauk County campus after entering into an agreement with local government and university officials in February 2014.
Every month, “the snowball gets bigger” as more interest and penalties are incurred, Haggard told the Baraboo/Sauk County UW Campus Commission at a meeting Thursday. Haggard said the issue has been turned over to the county.
Sauk County Assistant Corporation Counsel Debra O’Rourke said she has contacted Bluffstone co-owner Pat Sherman, who told her the company is working with a lender to refinance and pay off its debt, though O’Rourke noted a lack of concrete details.
Sherman did not return a phone call Monday.
Committee members directed O’Rourke to request a Bluffstone representative attend the commission’s next meeting, which will be 8 a.m. on Feb. 21. They suggested she send the company a notice of default at the same time, which O’Rourke listed among the commission’s three options:
- Give Bluffstone more time;
- Pay off the debt Bluffstone owes and then attempt to collect it with 12 percent interest; or
- Send Bluffstone a written default notice, which would give the company a 30-day “cure period” to attempt to pay its debt.
“It may start a fire under them,” O’Rourke said of sending a notice. “I mean it should, because technically if they don’t cure the default or show that they can’t cure it within that time period but are making those efforts, you would have the right to terminate the lease and take over.”
But managing student housing didn’t appeal to Chairman Phil Wedekind.
“We sure don’t want to take it over, that’s for sure,” he said.
If the company demonstrates an effort to pay its debt during a cure period — even if it ultimately can’t — O’Rourke said the commission “probably couldn’t” end the contract.
Ed Janairo, Baraboo campus dean, said he would ask administrators at the UW-Platteville campus, which has had dorms longer than Baraboo, to attend the February meeting to offer assistance.
Bluffstone has been in financial trouble before in its construction of the Baraboo dorms and others in Marshfield around the same time, though Baraboo City Administrator Ed Geick said the situation was caused by a subcontractor that defrauded Bluffstone. In 2015, three other subcontractors sued Bluffstone for not paying $750,000 in collective services. The company settled and paid two of the firms a total of $293,000.
Editor's note: This story was updated Jan. 22, 2019, to correct Debra O’Rourke's title and to clarify Bluffstone's role in previous financial issues.