Two Milwaukee aldermen are advancing a proposal for a $4.7 million loan from the city of Milwaukee to Mandel Group Inc. for the second phase of Mandel’s North End development.
The second phase of the North End is a $36.9 million project that would consist of two buildings with 155 apartments and 227 parking spaces. It would be located next to the 83-unit first phase of the North End project, which is located southwest of Water Street and Pleasant Street in downtown Milwaukee.
Mandel originally requested an $8 million loan from the city to help finance the project, because the capital markets for real estate development became extremely tight during the Great Recession. In January, the Department of City Development (DCD) recommended a $3.4 million city loan, based on a recommendation from Chicago-based consulting firm S.B. Friedman & Company.
City officials said they wanted to provide financing assistance to the project to help create construction jobs during the economic downturn and help grow the downtown area and expand the city’s tax base. City officials took a similar approach in providing a $9.3 million loan for the 30-story Moderne apartment and condominium building development, now under construction southwest of Old World Third Street and Juneau Avenue downtown.
DCD officials and Mandel executives have negotiated for about a year and a half, but have been unable to reach an agreement for a city loan for the second phase of the North End.
Mandel Group chief operating officer Robert Monnat said the firm has worked to reduce the amount of its loan request from the city for the project, but declined to provide specifics.
“We have worked very hard to get the amount requested down to a number substantially less than the $8 million,” he said.
Now Ald. Nik Kovac and Ald. Michael Murphy are advancing the $4.7 million loan proposal. The proposal has been assigned to the city’s Zoning, Neighborhoods and Development (ZND) Committee. The ZND Committee’s next meeting is Wednesday, April 27.
Monnat said Mandel Group was just informed about Kovac and Murphy’s proposal late last week and still have not had time to fully evaluate it.
Kovac and Murphy could not immediately be reached for comment.
“(The proposed loan) is not the Department of City Development’s proposal,” said DCD spokesman Jeff Fleming. “While we have not reached a conclusion in the discussions with the developer, we welcome the opportunity to discuss the proposal with the sponsoring aldermen.”
Other financing for the North End’s second phase will include $26.185 million in tax exempt bonds issued by the Wisconsin Housing and Economic Development Authority (WHEDA) through the federal Midwest Disaster Area program. Under the Kovac and Murphy proposal, Mandel Group would provide $5.66 million in equity for the project.
Also part of the proposed city loan, Mandel Group would agree to use emerging business enterprises (EBEs) for 25 percent of the construction costs for the project and 10 percent of the cost of services and supplies for the project and Mandel’s contractors would use unemployed or underemployed city of Milwaukee residents for at least 30 percent for the construction work on the project.
