Bills piling up against Cudahy Iceport project

    Last updated on May 13th, 2019 at 02:28 pm

    Although construction has been halted for about two months, liens have been filed by four subcontractors and overdue bills are piling up, the developer of the Powerade Iceport in Cudahy says the project should resume soon and be completed later this year.
    Once the retail development begins on the northern portion of the property, construction will resume on the Iceport, said Jim Kasten, managing director for Sportsites LLC, the company developing the project.
    Sportsites is developing the facility south of Layton Avenue between Nicholson Avenue and Sweet Applewood Lane. The Iceport, if completed, will be a $27 million, 225,000 square-foot ice center, with four ice rinks and one roller hockey rink.
    The project is being delayed by a variety of factors, including unexpected environmental work and the timing of the adjoining retail development at the site, Kasten said.
    Meanwhile, the bills are piling up against the project.
    Four subcontractors recently filed construction liens against Sportsites LLC, saying they have not been paid a combined $732,120 for work they have provided for the Iceport project.
    The firms filing liens are:
    ¥ Rebar Express of Lemont, Ill., which is allegedly owed $59,083 for reinforcing steel work.
    ¥ Cardinal Fabricating Corp. of Milwaukee, which is allegedly owed $159,475 for furnishing, fabricating and installing steel.
    ¥ Doug Rohde, Inc. of Milwaukee, which is allegedly owed $270,743 for earthwork.
    ¥ Sonag Ready Mix LLC of Menomonee Falls, which is allegedly owed $242,819 for concrete.
    At least two other vendors are owed money from the Iceport project, according to sources.
    Kasten said he is not sure how many companies are owed money from the Iceport construction or how much total is owed. He said all of the firms will be paid for what they are owed.
    "We want to get them paid and get that situation rectified as quickly as possible," he said. "This was an unexpected situation."
    Eugene Spice, vice president of Doug Rohde, Inc. said this is the first time the company has filed a construction lien in its 34 years of existence. The company received three payments for the Iceport project totaling $90,000. The last payment was received on Dec. 17, he said.
    "We’ve had slow payers," he said. "But this is beyond slow. This is getting ridiculous … I just want to get my money. I don’t know what is going to happen."
    John Kaczynski, vice president of Cardinal Fabricating Corp., said his firm files construction occasionally.
    "It does happen occasionally," he said. "We get involved in projects once or twice a year (with financing problems). Most of them do (resume and get finished). That’s part of the construction business. Sometimes you just need to file a lien to get somebody to pay."
    Kaczynski said it is unusual to have a building project halted for more than a month. However, he said he would not worry about the project unless it is delayed for several more months.
    "I’m not overly concerned," he said. "I don’t think it’s a huge deal at this time. I think it’s going to be taken care of in a timely manner."
    "Nobody says we’re not going to get paid," Kaczyski said. "When we’re going to get paid is a different story. We just don’t know."
    The Iceport is being built on the southern half of a 30-acre property. Sportsites and The Endeavor Group, Milwaukee, are developing the northern half of the property with retail businesses that want to be next to the Iceport.
    The entire development is called LakePort Village.
    The development is within a tax incremental financing (TIF) district in Cudahy. The increased tax revenue from the retail development will be used to pay for construction of the Iceport.
    However, none of the retail development has occurred yet.
    Kasten declined to identify the firm that is providing financing for the project. He said the project is fully funded, but funding will not be provided to complete the Iceport construction until the retail development begins.
    "The commitment for financing was put in place last fall," Kasten said. "That is dependent on the work on the front half. We have to establish that work is being performed."
    Cudahy officials are anxious to see the project completed (see accompanying story).
    "We are told what is going on right now is that they are in the process of dotting the ‘i’s’ and crossing the ‘t’s’," said retiring Mayor Raymond Glowacki. "They needed a block of money as a bridge loan to get them started. That group is saying we’re not going to do anything more until we see where the (long-term financing) is."
    The increased tax revenue as a result of the retail development will be used to pay for the loan to Sportsites to build the Iceport, Kasten said.
    "This is a TIF project and not your typical TIF project," Kasten said. "The TIF is paying for the Iceport. This is actually a fully dependent project. For our project to move forward, we have to be able to substantiate that the increment is being created. All of that incremental (tax) revenue is what is the financial support for the Iceport."
    Some retail businesses have committed to the northern portion of the property. Construction of a Walgreens, the first retail project slated for the site, is expected to begin soon, Kasten said. A bank headquartered in Milwaukee plans to build a branch there, although he declined to identify the bank. Applebee’s plans to build a restaurant on the site.
    Hospitality Specialists, Inc. of Jacksonville, Ill. plans to build and manage a 119-room Spring Hill Suites Marriott hotel on the site.
    Spring Hill Suites is a new Marriott product. Rooms will cost about $80 to $99 a night and include pull-out couches, microwaves and refrigerators, said John Mann, president and chief executive officer of Hospitality Specialists.
    Construction of the hotel will begin shortly after the Iceport construction resumes, Mann said.
    "Our project is tied to the Iceport," Mann said. "As the Iceport moves forward, so will we."
    The LakePort Village retail development was delayed for several months to remove contaminated soil from the site, Kasten said. The property once was the home of the George J. Meyer Co. industrial plant. More recently, buildings on the site were used as storage facilities.
    Originally, Sportsites believed it would have to monitor but not remove the contaminated soil, Kasten said. Later, environmental consultant Earth Tech told Sportsites the company would have to remove the soil.
    A new plan had to be submitted to the Wisconsin Department of Natural Resources. The delay forced Sportsites to delay the site preparation process until recently, postponed the retail development and resulted in the delay in obtaining financing for the Iceport, Kasten said.
    Crews have been working in recent weeks to remove the contaminated soil, building foundations and an old storage building from the northern half of the property.
    That work is expected to be done in about three weeks, Kasten said. Construction then can begin on the Walgreens store and, shortly thereafter, construction should resume on the Iceport, he said.
    "We’re waiting for (development of) the front half of the property to catch up," Kasten said. "Now that the crews are on the front half of the property, our timing now looks very good."
    HOK Design+Build, part of Kansas City-based HOK Corp. is the architect and general contractor for the Iceport. Peter Ramstedt, senior project manager for HOK Design+Build, declined to comment for this report.
    Groundbreaking for the Iceport was held with much fanfare April 29, 2003.
    A year later, Glowacki says the Iceport developers should have waited to secure long-term financing before breaking ground and raising expectations for the project.
    "I view our problem here has been one of pre-maturity," he said. "I wanted to make the announcement when the big shovels got in there. I think maybe we jumped the gun. I’ll take the blame for that."
    Glowacki agrees with Kasten that the retail development near the Iceport must support the ice center’s construction. The city will not provide any additional funding, regardless of the facility’s fate, he said.
    Compared with other sports facilities, such as Miller Park, that are supported by taxpayers in hopes of generating economic development, Kasten argues the Iceport plan is a better arrangement for the community because the project depends on the economic development it will generate. In the future, more communities will follow a similar model to build sports facilities, he predicts.
    "When you think about sports facilities, the argument that’s always made is, ‘Build this structure for us, and it will be an economic boom,’" Kasten said. "For the most part, cities bought into that argument. We say if you’re going to make that argument, that the sports project will attract development, then prove it. This is the way these buildings should be built. This will not be the last project that’s built this way."
    Sportsites still hopes to resume construction in time to have the Iceport open this fall.
    "Our goal is to do what we can to try to get it done for the hockey season in 2005," Kasten said.
    Some area residents were surprised when Sportsites decided to build a large ice facility in blue-collar Cudahy, one of Milwaukee’s oldest and most established suburbs. Kasten said the Iceport site has an ideal location near the southern end of the Lake Parkway, near Mitchell International Airport and only a few miles east of Interstate 94.
    "It’s ideal to being accessible to all areas of the city," he said.
    If completed, Iceport will enter a marketplace with some ice facilities that are already struggling, such as the Pettit National Ice Center at State Fair Park.
    Kasten said the Iceport has a unique business plan that will give it a better chance to be profitable than other ice facilities.
    "Typical ice rinks, 95% of their revenue is derived from renting ice time," Kasten said. "Renting ice and only renting ice is the way they make money."
    Iceport will rely on ice and roller rink rental revenue for only about 45% of the facility’s revenue, Kasten said. The facility will receive additional revenue from sponsorships and amenities, including restaurants from Chicago-based chains Nancy’s Pizzeria and Al’s Italian Beef, a Starbucks coffee shop, a pro shop and a fitness center.
    The naming rights for the facility were purchased by Coca-Cola Bottling Co., which owns Powerade. Other Iceport sponsors include: Pick ‘n Save, Patrick Cudahy Inc., Unilever Ice Cream, Maritime Savings Bank, Bombardier, Woodway, Miller Brewing, Venus Ford, We Energies, General Mills, Time Warner Cable, the Milwaukee Journal Sentinel, Jackson Ultima Skates, Mission Hockey, FreeMotion Fitness, Athletica, Inc., Labatt’s and Midwest Airlines.
    Almost all of the sponsorship money will be paid to the Iceport once the facility is up and running, Kasten said.
    In addition, unlike many other ice facilities, the Iceport will have no debt service, Kasten said, because the TIF financing will pay for the building.
    Sportsites is expecting about 1.8 million to 2 million people to visit the Iceport each year, Kasten said.
    Kasten said he and others working on the Iceport project have heard comments from some in the community who predict the facility will be a white elephant.
    "I would ask the critics to take a look at the economics of this, the protection of the taxpayers and the business community that is supporting it," Kasten said. "It’s a huge economic benefit to the city. It is a catalyst for economic development. It can completely change a community from what it is to what it will be."
    Cudahy mayor says city is protected
    If Iceport project collapses, city will regain ownership of site
    By Steve Jagler of SBT
    Raymond Glowacki, who retired as Cudahy mayor this month, says he isn’t worried about the danger of the Powerade Iceport project folding up before it even starts.
    That’s because the city’s development agreement for the project won’t leave Cudahy taxpayers holding the bag.
    "Right now, whatever is happening out there, the monkey is on the Sportsites’ backs. The city has an excellent development agreement that protects the city," Glowacki said.
    In forming the development agreement, the city was represented by consultants Michael Best & Friedrich LLP (Milwaukee), Vandewalle & Associates (Madison) and Ehlers & Associates Inc. (Roseville, Minn.).
    "I told the lovely lady at Michael Best & Friedrich politely, ‘Ma’am, the mayor has got an awfully big hind end, and I want you to protect every inch of it," Glowacki said with a laugh.
    Glowacki is aware of the rumors that have been circulating since construction stopped at the Iceport site and liens have been filed against the project.
    "I know what they’re saying out there, that this is Glowacki’s lemon. I can understand people’s anxiety," Glowacki said. "All I know is, from our vantage point, the city purchased the land and transferred it to Iceports. At this point, the city will put out nothing."
    In fact, the city received a $1 million brownfield grant from the state, and that money is being used to clean up the former industrial site at the corner of Layton Avenue and Nicholson avenues – regardless of what ultimately is developed there.
    The development agreement created a tax incremental financing (TIF) district for the LakePort Village mixed-use project, which includes the Iceport complex. If the project collapses, the city will retain the first mortgage on the 35 acres, and the site will be developed for other uses, Glowacki said.
    Jack Vacarro, Cudahy’s economic development director, agrees that the development agreement protects the city’s interests.
    Vacarro expects the Iceport project to receive the private funding it needs to continue in the near future.
    "We don’t have anything theoretically to lose. If that thing goes kaput, it’s going to go kaput in the next couple of months," Vacarro said.
    Glowacki and Vacarro say the city can "pull the plug" on the project if the site lingers undeveloped.
    "I would imagine a year. That’s what I would say. I’d say that if you aren’t getting it done then, then it isn’t going to happen," Glowacki said.
    Glowacki and Vacarro are both optimistic that the Powerade project will proceed.
    "I think the Iceport will happen. I think it will take time, and there are a couple of hurdles to get over," Glowacki said.
    Glowacki said the state’s recently approved reforms in TIF financing are a godsend for fully developed, older municipalities such as Cudahy.
    "I guess you could call it Viagra for the older cities. This has given a city like Cudahy a second chance," Glowacki said.
    April 16, 2004, Small Business Times, Milwaukee, WI

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    Andrew is the editor of BizTimes Milwaukee. He joined BizTimes in 2003, serving as managing editor and real estate reporter for 11 years. A University of Wisconsin-Madison graduate, he is a lifelong resident of the state. He lives in Muskego with his wife, Seng, their son, Zach, and their dog, Hokey. He is an avid sports fan and is a member of the Muskego Athletic Association board of directors.

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