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$800K loan LLC 'parent company' not involved since late 1997

$800K loan LLC 'parent company' not involved since late 1997

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Historic Arcade Apartment complex

The Historic Arcade Apartment complex, shown in 1996, once housed a J.C. Penney department store and the original Arcade Building, most recently known as the Main-Lake Building. The City of Racine announced earlier this year that it would not recoup an $800,000 loan made in the 1990s to the then-owner of the building. Since then, though, the city has negotiated a settlement to recoup $400,000.

RACINE — When news broke last week that the City of Racine would write off an $800,000 loan it made to a local real estate LLC in the 1990s, Joe Alexander started getting phone calls.

He found that odd, since the company he now runs hadn’t been involved in the LLC in almost two decades.

“Our involvement completely ended in late 1997,” he said. “We were hearing from all kinds of people.”

Alexander, 37, is president of The Alexander Company, a Madison-based real estate developer. In the 1990s, when the loan to Main-Lake LLC was made, Joe’s father Randy Alexander was running the company and Joe said the company owned a 1 percent stake in the LLC and served as the managing partner and developer.

That 1 percent stake was assumed by the LLC in 1997. Alexander says the city’s assertion that the Alexander Company was the “parent company” for the LLC., which dissolved in 2014, confused him.

“Parent company is the wrong term,” he said. “I’m surprised that they used that.”

He instead said “managing partner” would be a better term to characterize the company’s involvement in the LLC., which officially ended in January 1998 when the company was removed as the registered agent for the LLC, Department of Financial Institutions records show. Alexander does understand the city mentioning his company as involved if the city only considered documents from the early 1990s.

“Not only do we not know how the property was run or accounted for, we had no involvement in it,” he said. “It was no longer our business.”

The city has not expressed interest in looking into The Alexander Company to try to recoup the debt with certainty. Assistant City Attorney Nicole Larsen said last week that the company “could be” the target of additional inquiry.

Wednesday, City Attorney Scott Letteney didn’t say whether his office was specifically looking at The Alexander Company, but did say he’s considering “all circumstances regarding this debt.”

“We’re looking at every possible angle right now,” Letteney said.

The motivation for the further investigation, which Larsen requested at a June 16 special meeting of the Loan Board of Review, is to correctly inform the city’s elected officials on the matter.

“We just want to make sure we properly advise the common council,” Letteney said.

The project the loan helped fund, the creation of affordable housing at 419-425 Main St., is one The Alexander Company hangs its hat on. Today, that property houses the offices of the Downtown Racine Corp. and the Arcade Apartments.

“We’re proud of the project,” Alexander said. “The project won a couple of awards from Racine.”

And even though it positively affected the city, according to Alexander, his company’s role still ended before the loan came due.

“It did great things for the community,” he said. “It was well received. After that, we did not have any further involvement.”

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