Last updated on July 2nd, 2019 at 10:55 am
Milwaukee developer Kalan Haywood is seeking $4 million from the city of Milwaukee to help finance the planned redevelopment of a former Sears building at the corner of Fond du Lac and North avenues into an 80-room hotel, which is slated to open in time for the 2020 Democratic National Convention.
Haywood, president of Haywood Group LLC, plans to redevelop part of the property into the Ikon Hotel. In addition to the 80 hotel rooms, the project also calls for a 24,600-square-foot conference center, a rooftop restaurant and first-floor incubator and office space. The hotel and conference center work represents a $30 million investment.
The space on the first floor, designed to encourage entrepreneurship and innovation, will be called ONE MKE Plaza. Haywood said he wants people from all corners of Milwaukee to see this as a hub for entrepreneurship, as well as new products, ideas and services.
Haywood plans to have the hotel opened in time for the DNC next year. This deadline is important because of the unique opportunity it offers for the community — “All the eyes of the world will be on Milwaukee,” he said.
A hotel operator has also been selected, though Haywood declined to name the firm, though he said they are headquartered in Illinois and already operate hotels in Milwaukee and Brookfield.
Haywood, whose office is downtown in the Germania building that he also redeveloped, said the Ikon Hotel project represents a chance to begin spreading the development activity being seen in downtown into nearby neighborhoods.
“One of our jobs (as developers) is, how do we take our craft, and use brick and mortar to push that vibrancy of downtown into other areas?” he said. “How do you make this the next best destination spot?”
To assist with redevelopment efforts, the city’s Common Council will consider a $4 million loan for the project to Haywood through tax incremental financing. Rocky Marcoux, commissioner of the Department of City Development, said $2 million would be related to property acquisition costs, allowing Haywood to pay back a loan he received early last year from the Milwaukee Economic Development Corp. to buy the property. The other $2 million will be related to redevelopment work, which will include interior demolition, asbestos abatement and other site work.
The interest rate on the loan would be 4.5 percent per year. No payments would be due and no interest would accrue on the loan for the first two years of the loan. Interest-only payments would be due for the next three years. After the first five years, principal and interest would be due on the loan over a term of 15 years, according to a summary of the proposed financing.
Haywood said the remaining financing, though it is not yet finalized, could rely on other funding sources such as historic tax credits, new market tax credits and incentives offered through the Opportunity Zone program. The key is to have a capital stack that allows the hotel portion to be finished by next summer, he said.
Details of the TIF spending were revealed Wednesday afternoon at a press conference in front of the site of the proposed redevelopment project, at 2100 W. North Ave. The building was the site of a Sears store until closing in the early 1980s. It was then eventually used as the Milwaukee Mall, a central location for smaller vendors, though it has sat vacant for some time, said Marcoux.
“This building was always considered to be a catalytic (redevelopment) project,” he said. “It’s just that we never had a developer or a project that could work until now.”
Plans are also in place to put forward a second round of TIF funding toward the project, once Haywood has plans for additional development phases firmer in place, said Marcoux. The exact amount of the city financing is not yet final, but the funding proposal is expected to be introduced prior to the Common Council’s August recess.
In addition, DCD is in talks with the Department of Public Works about potential ways to make Fond du Lac Avenue more pedestrian friendly between the Ikon Hotel and the Fondy Food Center farmer’s market across the street.
Options include constructing a pedestrian overpass, connecting the two sites and making it safer for pedestrians to walk from one to the other, said Marcoux.
Alderman Russell Stamper said the project is the latest major investment made being to the area. For instance, he pointed to the St. Ann Center for Intergenerational Care outdoor community arts and entertainment venue at its Bucyrus Campus, 2450 W. North Ave.
He added that the city is establishing a $500,000 investment fund aimed at spurring more economic development through entrepreneurship in the immediate area.
“So you’ll see a lot of new investment, a lot more small businesses coming into the area based on helping individuals becoming entrepreneurs,” he said.
The TIF proposal will be taken up by the Redevelopment Authority of the City of Milwaukee when it next meets in April.