Brokers say Aldermen ‘Blew It’ by Rejecting PabstCity

Last updated on May 13th, 2019 at 02:35 pm

The Milwaukee Common Council’s July 26 vote against the PabstCity project made some businesspeople very happy and others terribly disappointed. The most stunned and disappointed may be members of the local commercial real estate community. "It’s too bad," said John Czarnecki, vice president of Brookfield-based Apex Commercial Inc. "This would have been a boon for the whole area. These guys blew it."
Czarnecki said he was shocked by statements made by some of the Milwaukee aldermen during the debate on the PabstCity project:
• "We’re not a first-class economic powerhouse," Ald. Michael McGee Jr. said of Milwaukee.
• "It’s not my job to educate my constituents," Ald. Robert Donovan said. "It’s my job to represent my constituents. My ‘no’ vote on this may be judged 10 years in the future as wrong. I may have erred today, but I feel most comfortable to err on the side of the little guy."
"It’s really moronic, moronic stuff," Czarnecki said. "We shouldn’t have expected this thing to ever go through. This is Milwaukee. They (aldermen) don’t want this to be a great town."
PabstCity was the proposed $317 million redevelopment of the vacant Pabst brewery site into an entertainment district with a movie theater complex, a House of Blues nightclub and other restaurants, stores, condos and office space.
Aldermen rejected the proposal that would have provided $39 million in tax incremental financing (TIF) and $2 million for job training for the development.
The project was proposed by Juneau Avenue Partners LLC, a consortium of: Wispark LLC, the Milwaukee-based commercial real estate subsidiary of Wisconsin Energy Corp.; The Ferchill Group of Cleveland, Ohio; and TerreMark Partners LLC of Canton, Ga.
With the council’s rejection, the developers are considering their options for the site.
The council’s vote against PabstCity is just the latest blow for downtown Milwaukee, according to Ned Purtell, partner with Milwaukee-based RFP Commercial Inc., who also criticized city officials for failing to bring GE Healthcare downtown. Instead, GE Healthcare decided to build a 500,000-square-foot office building for its IT division in Wauwatosa.
"(The PabstCity vote is) bad for downtown. It’s bad for the momentum of the city," Purtell said. "For the city to miss GE coming downtown because they didn’t get their act together … We’ll see what happens with Manpower."
Manpower Inc. is thinking about moving its corporate headquarters from Glendale to downtown or other locations in Milwaukee County.
"The city has a lot of momentum downtown right now with the residential development," Purtell said. "But if they keep missing these things, the things that are happening without their help won’t matter. If the city can’t come forward with a plan that works for one or two of these three (GE, PabstCity or Manpower), what does it say about our city?
"The city has got to be proactive. If they continue with the attitude they have about development, I don’t think the future looks good. PabstCity is something they clearly should be on board with."
However, several downtown business owners strongly opposed PabstCity, saying the city should not subsidize their competition. Some music venues were concerned about competition from the House of Blues.
Shank Hall owner Peter Jest was an outspoken opponent, and The Rave hired four lobbyists to fight the project. Several bar and restaurant owners, including "Johnny V" Vassallo and Hans Weissgerber III, also opposed the project. Vassallo said the PabstCity plan would create an artificially inflated capacity of restaurants for downtown Milwaukee, hurting existing establishments.
Some opponents of PabstCity said other developers were interested in doing a redevelopment project at the former Pabst brewery. However, some commercial real estate professionals are skeptical about that.
"These people that think other developers are going to come forward with the same credentials as Wispark and Ferchill are not in tune (with reality)," Purtell said.
Vassallo submitted a development concept for the Pabst brewery to city officials for a more residential-focused project, with about 1,000 housing units, 280,000 square feet of office space and 92,000 square feet of retail space. The PabstCity proposal had about 250 residential units.
However, Vassallo said his concept is not a development proposal but just an idea of what he thinks should be done at the site.
"Last time I checked, I don’t have $20 million in the bank," Vassallo said. "This isn’t anything more than concepts. For the last month, I was asking people what they wanted to see over there. All I did was ask Zimmerman (Design Group) to draw something up."
"I just love all of these non-developers’ expertise in how you develop in downtown Milwaukee," said Scott Welsh, president of Inland Companies. "It’s a very complicated site."
James Barry III, president of Colliers Barry, said it was "irresponsible" for PabstCity opponents to publicly suggest different uses for the property, such as a bio-medical development park suggested by Chris Kliesmet of Citizens for Responsible Government, when nobody is proposing such a development and no tenants have indicated they would be interested in it.
"No one is putting that (plan) together," Barry said.
Too many government bodies "don’t look at the use as proposed before them, they look at what they would like in a perfect world," Barry said.
Media coverage of the PabstCity vote could damage Milwaukee’s image as a place for real estate development projects, Barry said.
"Unfortunately, I think the effect (of the vote) is more symbolic than substantial," he said. "Unfortunately, I think the way it’s going to play out in the media is that anyone who wants to do a large scale multi-million dollar development in Milwaukee cannot count on the support of the Milwaukee Common Council. I don’t think that necessarily comports to reality."
Some members of the council are supportive of major development projects, Barry said.
"It’s not a good impression," Welsh said of the council’s PabstCity vote. "People in Milwaukee want change, but then they don’t want to address the issues and how it should get done. It feels like they were trying to fight the project from the beginning. I’m frustrated. Change is good for Milwaukee. I think the change would have been good for Milwaukee."
Part of the problem for the PabstCity project is that many people do not understand how a TIF works, Barry and Welsh said. For a TIF, money is borrowed by a municipality to assist a development. Increased taxes generated by the development are then used to pay back the TIF. The idea is to use the TIF to leverage a much larger real estate investment that otherwise would not occur.
"I think people thought that there was $41 million sitting in a vault below City Hall that was going to be hauled out and placed into the pockets of these developers," Barry said. "That’s certainly not the way TIF works."
Without a TIF, the Pabst brewery site will remain vacant and blighted, real estate professionals predict.
"I don’t see this property ever being built without a TIF," Welsh said.

Chicago sprawl reaches Village of Walworth
Urban sprawl from the ever-expanding Chicago region, the nation’s third-largest metro area, is spreading all the way to the Village of Walworth.
Walworth is a small village in Walworth County located about one mile southwest of Geneva Lake, two miles north of the Illinois state line, 60 miles southwest of Milwaukee and 80 miles northwest of Chicago.
In 2004, the Wisconsin Department of Revenue estimated Walworth’s population at 2,476. That could be about to change in a big way.
Geneva, Ill.-based developer Shodeen Inc. has proposed a 947-acre development that would double the geographic size of the village and could quadruple its population.
The property, long known as Big Foot Farms, is located southeast of the village between Ridge Road on the west and Walworth-Linn Road on the east. Shodeen wants to annex the property to Walworth.
Shodeen has proposed a massive development for the property with 2,000 to 3,000 homes, in a variety of styles. The development could also include a golf course, hotel and commercial buildings.
Other smaller housing developments are occurring in Walworth. The village recently approved a 25-home development on the north side of town. A 54-home development, which began two years ago, has sold all but 17 lots so far. Two other housing developments, offering a mix of single-family and multi-family housing choices, have been proposed.
"I honestly don’t know where most of these new people are coming from," said village clerk Donna Schut. "We think most of these people are coming from the Chicago area. But, that’s all speculation on our part."
To further accommodate residents from the Chicago area, Shodeen hopes to convince Metra to extend the commuter rail line that runs between downtown Chicago and Fox Lake, Ill., out to Walworth. Metra officials have talked about eventually extending that line to Spring Grove, Ill. and Richmond, Ill. (which is just south of Genoa City, Wis.).
However, extending the service into Wisconsin would likely require funding from Wisconsin, similar to the proposal to extend the Metra service that ends in Kenosha up to downtown Milwaukee.
More Milwaukee news
Brothers Bar & Grill, a chain of taverns owned by LaCrosse-based The Fortney Cos., plans to open a location at 1211-13 N. Water St., filling the space formerly occupied by O’Danny’s Pub & Pit and Oak Barrel, which closed last month. The Fortney Cos. recently purchased the connected, two-story buildings from Bob and Dave Leszczynski. Workers are renovating the buildings to prepare Brothers for its opening. The 3,608-square-foot former O’Danny’s building was built in 1906, and the 2,510-square-foot former Oak Barrel building was built in 1880. "We’re hopeful in the next few weeks you will see our open sign turn on," said Marc Fortney, president and chief executive officer of The Fortney Cos. The company opened the first Brothers in LaCrosse in 1990. The Milwaukee location will be the 15th Brothers Bar in eight states. Most of the Brothers locations are in college towns, including Eau Claire, Madison, Columbus, Ohio, Iowa City, Iowa, and Champaign, Ill. "We do a classic bar and grill," Fortney said. Each Brothers has several televisions for watching sports, pool tables, dart boards, air hockey tables, and a basic menu with burgers, fries and other typical tavern fare. Water Street remains an excellent location for a bar, Fortney said. "It’s a nice entertainment destination," he said. "We think Water Street is the No. 1 destination in Milwaukee." The building improvements will include a second story balcony that hangs over the sidewalk, similar to the balcony at Waterfront Deli, 761 N. Water St.
"It’s going to be a nice addition," Fortney said.
J.H. Findorff & Son Inc. is moving its Milwaukee office from 1122 N. Edison St., Milwaukee, to 1600 N. 6th St., Milwaukee. The 6th Street facility will be renovated to provide 23,500 square feet of office space for Findorff.

Dabble Investments LLC plans to build a 47,021-square-foot, multi-tenant light industrial building on a vacant five-acre property at 21365 Gateway Court in the Gateway Commerce Center. Anderson Pump & Process will be the anchor tenant in the building, occupying about 28,000 square feet.
Waukesha State Bank plans to build a new branch on a vacant lot along Highway 83, just north of County Highway NN. The bank has $606 million in assets and nine branches in Waukesha, Delafield, Pewaukee and Oconomowoc.
Domino’s Pizza plans to open a restaurant at 750 E. Washington Ave. Ann Arbor, Mich.-based Domino’s has more than 7,500 stores in more than 50 countries, but none in Oconomowoc.
Developer William Conley plans to build a three-story, 14,000-square-foot mixed use building at the site of a former Clark gas station at W61 N306 Washington Ave. The three-story building will have four condos on the top floor and office and retail space on the first and second floor.
S&L Holding LLC plans to build a 7,000-square-foot multi-tenant retail building in the 3500 block of Washington Avenue. S&L is negotiating leases with Starbucks, which would have a 1,800-square-foot coffee shop in the building and Cold Stone Creamery, which would have a 1,600-square-foot ice cream parlor in the building. It will be first City of Sheboygan locations for Starbucks and Cold Stone Creamery. Seattle-based Starbucks has 9,000 retail locations in the world, including a location in the Target store in Kohler. Scottsdale, Ariz.-based Cold Stone Creamery has 1,000 locations across the U.S.
West Bend
Louisville, Ky.-based Texas Roadhouse Inc. plans to build a restaurant at the northeast corner of Silverbrook Drive and Paradise Drive. The menu for the casual restaurant chain includes steak, ribs and chicken. The chain has more than 200 restaurants in 38 states, including locations in Appleton, Green Bay, Janesville, New Berlin and Kenosha. Another location is planned in Waukesha.

Andrew Weiland is the Managing Editor of Small Business Times. Send news about commercial real estate to or by calling him at (414) 277-8181 ext. 120. News can also be sent to Andrew Weiland, Small Business Times, 1123 N. Water St., Milwaukee, WI 53202.

August 5, 2005, Small Business Times, Milwaukee, WI

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