Esperanza Unida bankruptcy delays city redevelopment efforts

Perez hopes building can produce revenue again

Last updated on May 15th, 2019 at 04:56 pm

Esperanza Unida’s chapter 11 bankruptcy filing will delay the city of Milwaukee’s efforts to find a new use for the organization’s building on National Avenue.

“The bankruptcy proceeding puts a hurdle in front of us in our plans to acquire the site,” said Jeff Fleming, Department of City Development spokesman. “For the time being we will no longer be  advertising the site for development and await the bankruptcy proceeding to conclude.”

The city issued a request for proposals in March in anticipation of acquiring the properties at 1313 and 1329-1331 W. National Ave. through foreclosure. Fleming said the city did receive some interest in the property, but declined to say if any or how many proposals were submitted, adding the process is now on hold.

Esperanza Unida, an organization that focuses on workforce and economic development, filed for chapter 11 last week. The organization said it has $1 million to $10 million in liabilities. Those debts included more than $400,000 in unpaid taxes owed to the IRS, nearly $150,000 owed to the state worker’s compensation fund and nearly $150,000 owed to the city of Milwaukee, including $72,000 in unpaid property taxes.

Esperanza Undia executive director Manny Perez, a former Department of Workforce Development secretary, said he is hoping to have the building generate revenue again in the future to help the organization pay down its debts.

“The idea is to re-position the building for its mission, which is to accelerate economic development and create jobs, pay creditors, at least in a standard manner and accelerate entrepreneurship on the Milwaukee south side which is the mission of that building,” Perez said.

He said he previously had found a buyer for the properties, but that deal fell through at the end of 2016. Perez said he then approached city officials to ask if they would acquire the site through a foreclosure under state brownfield statutes. He said the city agreed, but required him to find a buyer and declined to cover any attorney or realtor fees.

Perez said he couldn’t find a buyer again and opted to find potential occupants for the facility instead. He said he’s been able to secure three rental contracts for various portions of the building and hopes to find one more.

But he added the presence of the city’s foreclosure and RFP actions have made prospective tenants nervous about moving forward with building repairs and occupancy.

Perez said his goal for the building is to “get it rehabilitated as soon as possible and get it producing revenue,” but those efforts are also complicated by the $1.5 million to $2 million in liens still on the building, he said.

Those liens were transferred over from Esperanza Unida’s former building at 611 W. National Ave. The city seized that property in 2014, after the then non-profit failed to pay property taxes. Esperanza Unida, which is currently run from offices at 2825 N. Mayfair Road in Wauwatosa, converted to a for-profit entity two years ago, Perez said.

“If somebody wants to buy (the building in the 1300 block of National Avenue) for $2 million, I’ll sell it,” he said. “If nobody is there for $2 million, we have to create a system where we restructure the debt and we make partial payments and the first thing that must occur is increased revenue. I’m only doing what any good business person would do in the absence of a buyer.”

Fleming said there has already been a lot of public discussion about the building and the city has an interest in seeing it return to providing tax revenue “but more importantly to become an asset neighborhood.”

Perez also said he has a longer term strategic plan for the organization, but declined to provide specifics.

“I’d rather report on what has been accomplished, not what hopefully will be accomplished,” he said.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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