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City, developers dispute TIF need for North Side housing

January 6, 2019

A dispute between the city and a developer over public financial support has derailed a proposed $10.5 million, 58-unit housing project that had been planned for a North Side shopping center.

The Bruns family, longtime owners of Northside TownCenter, formerly know as Sherman Plaza, proposed the four-story, 58-unit Warner View Luxury Apartments with 30 surface and 50 structured parking spaces in the shopping center’s parking lot along Sherman Avenue across the street from Warner Park.

The Bruns family applied for $995,000 in city tax incremental financing (TIF) support for the project, but a city staff analysis says the project can be built and be profitable without TIF support. The family met with Mayor Paul Soglin and other city officials with a revised request in late December but the answer remained no.

Without TIF support, “there is no deal,” Dave Bruns said. “At this point, the deal’s dead.”

The family still wants to do the project, and will see if the spring elections with Soglin on the ballot and Ald. Larry Palm, 12th District, not running again, produce a change in the city’s posture, Bruns said.

The project, which would be rare both as an investment in new luxury housing in the Northport Drive corridor and in placing an apartment building in the parking lot of an established retail center, merits city TIF support, Bruns said.

Bruns said his family has invested $3.2 million in the shopping center in recent years and that the concept of placing housing there emerged from a redevelopment analysis done with city participation in 2014.

The Bruns’ TIF application says an $11.1 million project would rely on an $8.17 million loan, $1.62 million in land value and $350,000 in cash, leaving a $995,000 gap. The project meets six of the city’s nine TIF goals, such as growing the tax base, creating and retaining family-supporting jobs, encouraging urban infill projects, and creating a range of housing types, Bruns said.

The revised proposal has a $10.5 million project relying on a $6.5 million bank loan, $1.62 million in land value, $1 million in cash, and a request for $1.5 million in TIF, Bruns said.

The request simply doesn’t need TIF support to succeed, said Matt Mikolajewski, city economic development director. “The city uses a standard approach for underwriting all residential projects,” he said. “We could not identify a financial gap for their project.”

The Bruns family contests the city’s analysis but is also making other arguments for city investment, contending that an apartment building would help support the TownCenter by providing on-site residents to patronize a new Willy Street Co-op grocery store, six restaurants and other businesses.

The city has never delivered TIF for a project on the North Side, Bruns said.

“This isn’t a standalone 58-unit apartment TIF request,” he said. “This is a request to support 17 acres, to protect the food market.”

If a financing gap for a project is “close or on the fence,” the city may consider such factors, Mikolajewski said. “In this case, however, the question of gap wasn’t close. We simply couldn’t justify TIF, even with these considerations.”

The lack of TIF investment isn’t due to a North Side bias, Mikolajewski said, noting that the city successfully pursued Wisconsin Economic Development Corp. funding for projects there and that the city itself provided funding for the FEED kitchens at 1219 N. Sherman Ave.

In 2009, the city created a TIF district on the North Side roughly bounded by Northport Drive, First Street and Sherman and Packers avenues.

The city spent about $400,000 for infrastructure improvements on Northport Drive, and the district’s project plan forecast about $6.25 million in new development and growth from projects, including about $3 million at Oscar Mayer, said Joe Gromacki, city TIF coordinator.

But the Great Recession caused property values to plummet and development never happened, Gromacki said.

“We didn’t receive any applications for projects that qualified for TIF support, and the district was effectively underwater because of the softening of property values from the Great Recession,” Mikolajewski said.

The city closed the TIF district in 2017.

The Northport Drive corridor has seen some investment in housing, but not comparable to that seen Downtown or along East Washington and University avenues or South Park Street.

“Our shopping center today is doing fine,” Bruns said. “But we have to strategically look at the future. We want to build up some high-quality housing and density.”

The Planning Division welcomes new housing in any part of the city, but parts of the North Side don’t lend themselves as readily to large developments because of the lack of density, relatively low vehicle trip counts, and fewer natural sites for multi-story, mixed-use projects, said Tim Parks, city planner.

The proposed housing at TownCenter could be a positive step in the evolution of Northside TownCenter, but any new housing there must be well designed so as not to simply drop an apartment building onto a retail parking lot, Parks said. The challenges include the placement of residential and commercial parking and how the site is made walkable for residents, he said.

Palm said that he wants to see the Bruns project move forward, but that the city must follow policies for providing TIF support.

“We haven’t said no to land use,” he said. “We have said no to being a financial partner. The project can support itself without city funding.”

Bruns said, “We’re not doing anything without the city wanting to support the North Side.”

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