Northwestern Mutual Life Insurance Co. wants to buy the O’Donnell Park parking structure, located near the lakefront in downtown Milwaukee, for $12.7 million, according to a report from Milwaukee County Economic Development Director Teig Whaley-Smith to the Milwaukee County Board.
The O’Donnell Park parking structure is owned by Milwaukee County. It is located across the street from the Northwestern Mutual corporate headquarters campus, where the the company is preparing to build a new 32-story, $450 million office tower. The company plans to add 1,900 jobs in the new building, over a period of several years, and wants to buy the O’Donnell Park parking structure to provide additional parking spaces for its employees. The structure has 1,332 parking spaces.
Northwestern Mutual has offered to buy the parking structure for the appraised value of $14 million, minus $1.3 million for known repairs needed for the structure’s roof, according to Whaley-Smith’s.
The O’Donnell Park structure was built in 1993. The county still owes about $7.1 million on the facility, according to Whaley-Smith’s report. Interest costs and costs related to retiring the debt are estimated at $600,000. Therefore, the county would net about $5 million if it sold the structure to Northwestern Mutual, the report states.
Another benefit of selling the property is it would then be put on the property tax rolls, Whaley-Smith’s report says.
The parking structure provides a revenue source for the county, but there are also significant costs for debt service and to maintain the structure. In 2012 the structure generated more than $2 million in revenue. Minus expenses and debt service the structure provided a net gain of $988,067 to the county. However, that does not reflect needed capital repairs, Whaley-Smith’s report states.
“The financial benefits of continuing to own, manage and maintain the garage are more complex to calculate, since they require projecting the timing and extent of future revenues and expenses,” the report states. “The County Comptroller estimated those flows of funds over the next 40 years and calculates that the net present value of continued county ownership is roughly negative $1.6 million in today’s dollars, compared to a positive $5 million that the county could realize from selling the garage.”
Northwestern Mutual plans to make $6 million in improvements to the O’Donnell Park facility, Whaley-Smith’s report states.
“Northwestern Mutual is proposing to immediately address the structural, deferred maintenance and other issues identified by both the county’s and Northwestern Mutual’s engineering reports (on the structure), and install enhanced lighting for aesthetic and safety purposes,” the report states. “Long term, Northwestern Mutual is proposing to study other ways to improve the facility including activating green spaces, modernizing parking equipment, and adding zipcars and bike share options. These upgrades will be at no additional cost to the county but will greatly benefit all of the people who visit the lakefront.”
If it buys the structure, Northwestern Mutual would operate the parking garage and maintain the structure and plaza, according to the report.
In 2010 a concrete panel fell off the O’Donnell Park parking structure, killing a 15-year-old boy and injuring a woman and her son.
Today, the county faces a “significant liability of $1.3 million to fix existing issues with the property,” Whaley-Smith’s report states.
The structure is expected to have a “remaining useful life” through 2035. The cost to rebuild the structure is estimated at $58 million, the report states.
If the county moves to sell the O’Donnell Park parking structure to Northwestern Mutual it will face opposition from parks advocacy group Preserve Our Parks. That is the same group that has opposed the county’s plans to sell the Downtown Transit Center to developer Rick Barrett, who wants to build a 44-story luxury apartment tower there called The Couture. Preserve Our Parks opposes the sale of O’Donnell Park and the Downtown Transit Center because the group says much of those properties were originally in Lake Michigan and that under the state’s public trust doctrine the properties must remain in public ownership and cannot be used for private development.
“We see no reason (Northwestern Mutual) can’t reach an agreement with the county to lease spaces (at O’Donnell Park),” said John Lunz, president of Preserve Our Parks. “We’ve met with (Northwestern Mutual). They claim they are going to keep everything as it is. Who knows? It’s subject to change, of course.”
Northwestern Mutual has indicated that it has “other options” to add parking if it cannot purchase the O’Donnell Park site, Lunz said.
