Community benefit agreements (CBAs) could hamper or even prevent the redevelopment of the 60 acres cleared by the removal of the Park East Freeway, developers and land owners in the freeway corridor say.
"We need to be very cautious when we consider placing demands on projects like the Park East redevelopment," said John Periard, spokesman for the Commercial Association of Realtors Wisconsin. "We shouldn’t jeopardize the project because we’ve placed demands that are so unreasonable, that developers throw up their hands in frustration."
Jim Barry III, president of James T. Barry Co., believes the intentions of the Milwaukee Innercity Congregations Allied for Hope (MICHAH) coalition leaders are good, but he may be close to reaching the point of frustration described by Periard.
"I think they may be laudable goals," Barry said. "I just don’t like the apparatus of trying to impose this on other developers and therefore add to the already formidable obstacles to development in the downtown."
Barry threatened to move his business, which is headquartered on North Edison Street near the former freeway, out of the Park East corridor and perhaps out of the city if CBAs are imposed.
"If we allow a third party group to dictate the way (the land) is going to be developed, you are going to sit here with fallow land for a long time," Barry said.
"If someone wants to relocate, they have a lot of options,’ Barry added. "But if something akin to what is in their proposal would occur, I would have to seriously consider moving my business out of this area and perhaps out of the city of Milwaukee – and we have been here for 80 years."
Barry stressed that, while development in the corridor will benefit from a tax incremental finance (TIF) district, developers aren’t looking for subsidies on the project but, rather, are looking for a development opportunity that makes economic sense. CBAs, he said, would make buildings more difficult to lease and land harder to sell.
"I feel it would have a devastating effect on the potential development of the Park East corridor," Barry said.
While the idea of being required to pay into a parks fund is a concern to Barry, he said he was particularly upset about restrictions on hiring.
"To say that a community group is going to handle all the hiring for any new commercial development, in my view, contradicts the whole notion of a free market system," Barry said.
Even without CBAs, bringing companies downtown is difficult, Barry said.
"The suburbs have lower taxes and free parking," Barry said. "But because of the attitude the city took during the ’90s, downtown became more attractive. A key reason for that is the ability of developers to get transactions done free of excessive regulation and excessive additional fees. Their proposal is that they want to go back to this old highly regulatory method and place fees on people. That does not make sense," Barry said. "Development under this system will not occur. Developers are economic actors, and they will go where it makes economic sense to develop."
If developers are allowed to meet the needs of the market, many of MICAH’s goals would be achieved, Barry said.
Milwaukee County economic development director Bill Hatcher agreed, adding that allowing the Park East corridor to be developed to its highest value use would increase county revenues, making funds available for programs MICAH supports.
The county would not only benefit from increased property taxes on land in the Park East corridor but also from higher sales prices, because the county is the largest landowner in the corridor.
"The more restrictions you put on the deed or on a company development agreement, the more depressed the value is," Hatcher said. "You are in fact restricting the developer or restricting his creativity. The county hasn’t made any decisions on what it is going to do, relative to the land we own on the Park East site. That will be a matter dealt with by the county board to determine if any or what restrictions might go on the deed or related development agreement."
Like Barry, Hatcher believes much of what MICAH wants to achieve through CBAs could be better achieved by allowing development to take place within the current guidelines outlined in the city’s redevelopment plan.
"You can’t assume from the start that no progress will be made towards any of those goals under a free market situation," Hatcher said. "Any straightforward free market is going to have positive outcomes – perhaps not always as direct as they would like to see. It is going to create jobs. In the past, it has provided housing opportunities. You really can’t start with the idea that if you don’t put these requirements on the deed that none of these things are going to happen."
April 4, 2003 Small Business Times, Milwaukee