Unity urged in pushing Park East development

By TOM DAYKIN
tdaykin@journalsentinel.com
Posted: June 20, 2004
Moments after the Milwaukee Common Council rejected a proposal to require union-level wages for construction workers in the Park East redevelopment area, carpenters union official Eric Strom approached a top local developer and sought to mend fences.

"It was a good fight," Strom told developer Barry Mandel, shaking his hand.

"I don't want to fight," replied Mandel, who opposed the union proposal. "I want you guys to work with me."

With last week's approval of the Park East plan, which provides land-use guidelines and design standards, a lot of work - and opportunities - lie ahead. Debate over the wage proposal sidetracked the redevelopment plan, stalling approval for several months.

City officials expect more than $250 million in housing, offices and shops to eventually appear in the 64-acre development area, which includes 16 acres made available by the demolition of the former Park East Freeway. Some major projects already are surfacing within the area, which lies on the northern edge of downtown Milwaukee.

"I think there are a number of people who had plans but had put them on hold" until the Common Council took action, said James T. Barry III, president of James T. Barry Co. commercial real estate brokerage.

After Tuesday's council vote, Mandel said he will proceed with his $100 million plan to replace the massive Pfister & Vogel tannery building, at N. Water and E. Pleasant streets, with 500 condominiums and apartments.

Mandel, who bought the former tannery in 2001 for $3.4 million, plans to begin demolition and environmental cleanup work this year. Mandel said the union wage proposal would have added $8 million to $14 million to his project's cost. He declined to comment on whether he would have dropped the project had the council approved the wage proposal.

Along with property tax revenue for the city, Mandel's project probably will generate hundreds of construction jobs, including work for 75 to 100 carpenters, said Strom, a business agent with the Milwaukee & Southern Wisconsin District Council of Carpenters.

Mandel's plans for the Pfister & Vogel site, which overlooks the Milwaukee River, is the biggest proposal in the Park East area.

So far, no proposals have emerged publicly for the 16 acres owned by Milwaukee County.

That vacant strip, which runs north of Juneau Ave. from N. 8th St. to N. Jefferson St., became available when the freeway stub was demolished last year. New streets, along with a new bridge to replace the freeway, are nearly finished.

Call for unity
City and county officials need to work actively on promoting development within the Park East area - especially on the vacant lots that resemble a strip mine right now, Barry said.

"It's critical that everyone unite behind this," said Barry, who owns two potential development sites in the area.

Meanwhile, other plans are in the works for privately owned properties in or near the Park East area.

Randy Scoville, who operates Big Bend Development, is considering an unspecified project at the site of the Milwaukee Center for Independence, 1339 N. Milwaukee St. The center, a non-profit agency that helps disabled people, occupies the northern half of the block bordered by N. Milwaukee St., N. Broadway, E. Knapp St. and E. Ogden Ave. The agency is moving later this year to a new building in the 2000 block of W. Wells St. and is selling its existing site. Scoville declined to comment on his plans, but the city's Park East redevelopment plan envisions mostly residential uses in the area that includes the center facility.

Waukesha-based Key Bridge Group Inc. plans a 76-unit building on an empty lot at the southeast corner of N. Jackson St. and E. Ogden Ave. That eight-story, $25 million project would be one block east of the Park East redevelopment area's eastern border.

An unidentified developer has agreed to buy a 23,900-square-foot warehouse at 1144 N. Edison St. from Platz Floral Group, which moved earlier this month to Milwaukee's northwest side, according to brokerage firm Dickman Co.

Specific plans for the building, and the developer's identity, were not provided. The two-story building is just south of the redevelopment area's Juneau Ave. border, and is in the heart of the Water St. entertainment district.

De Pere-based Garot Hospitality Inc. is continuing to review plans to build a Country Inn & Suites hotel, with 85 to 110 rooms, on a 15,100- square-foot lot, at 1141 N. Old World 3rd St., within the redevelopment area's western portion. Garot Hospitality bought the property in 2001 for $600,000 but delayed its plans when the hotel business declined during the recession, said co-owner Susan Garot. With the Common Council's action, and an improving economy, Garot Hospitality is again actively contemplating the $5 million development.

Developers Boris Gokhman and James Wiechmann plan to eventually develop condos on the upper floors of a 93,700-square-foot industrial building at 1319 N. King Drive, just north of the Park East redevelopment area's northern border. Gokhman and Wiechmann bought the building for $2.15 million in 2002, just before the freeway demolition began. Gokhman said last week that the conversion project probably will begin "in a couple of years," with his firm, New Land Enterprises, now focused on other downtown and east side condo project.

Revenue use
The property tax revenue generated by new buildings within the redevelopment area will pay for streets, a new bridge across the Milwaukee River and other public improvements.

Those costs have soared beyond what city officials had originally anticipated.

In 1999, Gov. Tommy G. Thompson, County Executive F. Thomas Ament and Mayor John O. Norquist - who have all since left office - agreed to spend $25 million to demolish the underused freeway stub and replace it with new streets to encourage new development.

The federal government provided $21.25 million, with the state paying up to $1.2 million. The city agreed to pay $2.55 million - and cover any cost overruns above $25 million.

The latest tab for the project is $30.2 million, and that number could rise further, according to the Department of City Development. So, the city has to pay at least $5.2 million more on top of its original commitment of $2.55 million.

In addition, the city expects to create riverwalks and additional street improvements in the Park East area, said Michael Wisniewski, of the Department of City Development.

As a result, the city's total tab for the Park East project will be $15 million to $20 million, Wisniewski said. A detailed spending proposal will be forwarded this fall to the Common Council for its approval, he said.

Project's scope grew
Costs rose as the scope of the project expanded, Wisniewski said.

The elevated freeway stub originally was to be removed between N. Jefferson St. and N. 4th St. However, it was knocked down two blocks farther west, at N. 6th St., to make more land available for development. As a result, the demolition cost and the cost of extending W. McKinley Ave. to replace part of the freeway increased substantially, Wisniewski said.

Also, costs were higher than expected for a new bridge that connects W. McKinley Ave. to E. Knapp St., Wisniewski said. That bridge is expected to open by mid-August.

Opponents of removing the Park East Freeway have raised doubts about the expected pace of development within the area.

They also say the freeway removal was spurred in part by Harley-Davidson Inc.'s original plans to build a motorcycle museum at the former Schlitz brew house, just north of the Park East area. Harley in 2002 dropped plans to build the museum there because of cost overruns. The museum is now planned for a site at S. 6th and W. Canal streets, in the Menomonee Valley.

Project backers say at least some of the investments planned for the Park East area wouldn't be occurring if the freeway hadn't been razed.

"The freeway was a definite physical and psychological barrier to development," Wisniewski said.