Construction for the 30-story building residential proposed for downtown Milwaukee has been delayed for almost 2 years.
The Moderne, a long-delayed 30-story residential building proposed for a vacant lot at the southwest corner of West Juneau Avenue and Old World Third Street in the downtown Milwaukee Park East corridor would receive a $10 million loan from the city of Milwaukee under a proposal that will be reviewed by the city’s Redevelopment Authority at its meeting on Thursday. Construction for the project could begin in November, the developer said.
The $60 million project has been delayed for nearly 2 years while the developer for the project, The Moderne LLC, has struggled to obtain financing. That has been a problem for almost every large real estate development since the financial industry meltdown a year ago.
"Given the state of the credit markets when we have been introduced to high quality projects that have the potential to grow the tax base we have been willing to take a look at providing financing," said Department of City Development deputy commissioner Martha Brown.
A loan from the city could provide the missing piece to the financial puzzle for the project.
“We are working with the city,” said Rick Barrett, managing partner for The Moderne LLC. “We’re all trying to get a great project off the ground.”
In February, Barrett said that the project had obtained a $1.5 million equity investment from four investors from Hong Kong. At the time he said the project had obtained $5 million in equity financing and needed to attract another $15 million. In addition, a $40 million construction loan will be needed, Barrett said in February.
Barrett said he has a potential primary finding source, which he declined to name, for the construction loan. If the loan from the city and the loan from the primary funding source come together in the next 60 days, as expected, construction could begin in mid-November, Barrett said.
The loan from the city would make the deal more attractive to the primary funding source, Barrett said.
During the projects’ lengthy delay, Barrett worked to get the details for the construction project ironed out. As a result of that work the project is now “shovel ready,” he said and only needs financing approval. The general contractor for the project is J.H. Findorff & Son Inc.
“We are ready to build this building,” Barrett said. “I’m optimistic we are going to break ground in November. I feel really good about it.”
The collapse of downtown Milwaukee’s now overbuilt condo market has also slowed downtown development in recent months. Barrett has increased the number of apartment units and decreasing the number of condominium units in the building. The plans for The Moderne now call for 203 apartments, 14 condominiums and 7,500 square feet of retail space.
Construction of The Moderne could provide a boost for the Park East corridor, which remains mostly vacant. Across Juneau Avenue from The Moderne site, Dallas-based Gatehouse Capital cancelled its proposed $158 million Milwaukee Hotel Palomar and Residences development early this year. The developer asked the city for $18 million in assistance for the project, but that request was denied. In addition, the project struggled to sell its 66 condos.
One development that is proceeding in the area is the 160-room Aloft hotel, which is being built by Milwaukee River Hotel LLC at the northeast corner of Juneau Avenue and Old World Third Street. The hotel is expected to be complete in December.
The proposal for the loan to The Moderne LLC that will be reviewed Thursday by the Redevelopment Authority also includes $1.7 million in tax incremental financing (TIF) for a public park at Water and Ogden streets, which is about 5 blocks northeast of the Moderne site, but both sites are in the Park East corridor.