Properties Added to Park East Borders

Change to help city pay off $20 million of project
By TOM DAYKIN
tdaykin@journalsentinel.com
Posted: March 17, 2005
A plan to help cover cost overruns on the Park East redevelopment project was approved Thursday by the Milwaukee Redevelopment Authority.


The authority changed the borders of the redevelopment area along downtown's northern edge by adding some properties. Their redevelopment will generate additional property tax revenue, helping pay off $20 million in city funds spent on the Park East project.

Those additional properties include a former industrial building at 1319 N. King Drive that developers Boris Gokhman and James Wiechmann plan to convert into condominiums. Also added was Convent Hill Apartments, 1325 N. Jefferson St., where city officials are seeking a federal grant to make improvements.

The city funds were used to help tear down the former Park East Freeway, and replace it with improved streets and a new bridge.

In 1999, city, county and state officials agreed on a $25 million plan to tear down the lightly used freeway.

Under the original plan, $21.25 million of federal money was used to raze the Park East, expand W. McKinley Ave. into a boulevard and build a new bridge across the Milwaukee River from McKinley Ave. to E. Knapp St. That was matched by $1.2 million in state money and $2.55 million in city money, with the city agreeing to cover any additional spending above $25 million.

That plan, though, was based on tearing down the freeway from N. 4th St. east, and officials later decided to raze it from N. 6th St. east. That change, together with higher-than-expected costs for the bridge, land acquisition and environmental work, boosted the costs to $38.1 million. City officials asked the state to share the $13.1 million of additional costs but were rebuffed.

In addition, the city is spending $6.2 million on other new streets, a riverwalk and other public improvements in the Park East area. That tab, along with $650,000 in city administrative costs, raises the project's total costs to $45 million. That includes just under $20 million in city money that will be repaid through property tax revenue generated by new development in the Park East area.

That $20 million could be repaid by 2013, said Michael Wisniewski, a senior economic development specialist with the Department of City Development. That scenario envisions the 64-acre Park East area being fully developed with housing, offices and retail over a period of several years, Wisniewski said. That would create $880 million in new property tax base, generating $87 million in annual property tax revenue, he said.

Under the most conservative scenario, the $20 million would be repaid by 2016, Wisniewski said. That scenario takes into account just two projects, both under way. They are Mandel Group Inc.'s creation of 500 condominiums and apartments at the former Pfister & Vogel tannery, at N. Water and E. Pleasant streets, and Big Bend Development LLC's construction of 130 condos south of E. Ogden Ave., between N. Milwaukee St. and N. Broadway.

Those two projects alone will create $168 million in property tax base, and will generate $27 million in annual property tax revenue, Wisniewski said.