Northwestern Mutual Life Insurance Company 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 report.
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.
Northwestern Mutual says it would continue to operate the facility as a public parking structure and keep all of the space on top of the structure open to the public. An analysis of the parking structure commissioned by the company in 2012 identified more than $6.5 million of near-term repairs needed in the facility. Were it to acquire O’Donnell Park, the company says it would initiate immediate improvements to the parking facility that would include structural repairs, deferred maintenance, improved cleanliness, and enhanced lighting to brighten the facility along with fresh painting and updated signage.
“We have had conceptual discussions with Milwaukee County for some time on this idea,” said Sandy Botcher, head of Northwestern Mutual’s downtown campus development project. “We’ve developed a proposal that relieves the county of some of its financial burden, upgrades the parking structure, and enhances the high-quality open space for the entire community to enjoy.”
However, Milwaukee County Board Supervisor Michael Mayo Sr. said the proposed sale price could be too low.
“I have a lot of respect for Northwestern Mutual and their role in the community,” Mayo said. “We should do everything possible to help Northwestern Mutual. They are a good employer and they are good for Milwaukee. But in the final analysis I wonder if this is better for Northwestern Mutual than it is for the people of Milwaukee County. This is prime real estate on Milwaukee County’s lakefront. We must be good stewards of the county’s property and the lakefront. I want to see a win-win for Northwestern Mutual and the people of Milwaukee County, but right now it’s not clear that given the sale price this is a win for Milwaukee County. Netting $5 million from the sale won’t begin to address the needs we have for our parks and other public amenities. In addition, how are we going to replace the $1 million in revenue that the parking structure generates for Milwaukee County each year? They need to go back to the drawing board and come up with a new proposal, one that benefits our constituents as much as it benefits Northwestern Mutual. I believe we must be diligent in reviewing this proposal and we must ensure that the people of Milwaukee County are well-served by the sale of this prime piece of real estate before we move forward.”
But Milwaukee County Supervisor Deanna Alexander expressed support for the proposed sale of the O’Donnell Park Parking Structure to Northwestern Mutual, saying the proposed deal is a “win-win-win for taxpayers, the county and Northwestern Mutual.”
“With what we know so far, this looks like an excellent proposal worthy of our consideration,” Alexander said. “The O’Donnell structure is an ideal location to meet the needs of Northwestern Mutual’s nearby 32-story office tower. We have a great opportunity to demonstrate common sense because the County Board will decide whether we allow Northwestern Mutual to take some troublesome long-term concerns off our hands while maintaining all of the aspects of public access and beautification that Milwaukeeans care about, or if we deny the proposal and lead them to build a competing structure that would put the county in a far worse position with growing liabilities and disappointing revenue. This is an opportunity to benefit one of the county’s key employers while at the same time benefiting taxpayers. Northwestern Mutual will get a parking garage one way or the other, and we should act quickly to see to it that this proposal is approved for the sake of the company and the taxpayers.”
Milwaukee County Executive Chris Abele also expressed support for the proposed sale of the parking structure.
“It’s not often enough we get to announce such positive news,” he said. “Not only will this sale allow us to continue to improve our beautiful parks, it’s also a great partnership with a company that has made a strong commitment to our community. I look forward to addressing any questions from the community and finalizing a deal that benefits the community.”
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 indictated that it has “other options” to add parking if it cannot purchase the O’Donnell Park site, Lunz said.
