Northwestern Mutual turns the page

When the Milwaukee County Board rejected, by a narrow 9-8 vote last month, a proposal to sell the O’Donnell Park parking structure and park to Northwestern Mutual Life Insurance Company, the company was faced with two options.

Option A. Go back to the bargaining table with county officials and make some concessions to try to work out a deal to buy the property, or:
Option B. Build a structure elsewhere to satisfy the company’s long term parking needs.

It didn’t take long for the company to move ahead with plan B. Just a few hours after the County Board voted in opposition to a deal that had been in the works for about a year, Northwestern Mutual announced that it planned to build a mixed-use development to the west of its headquarters campus that would include 1,000 parking spaces, residences and retail space.

And a spokesman for Northwestern Mutual made it clear that this was not a negotiating ploy. The company has turned the page and moved on from its plans to buy the O’Donnell Park property.

“We will not reopen discussions (with Milwaukee County),” Northwestern Mutual spokesman John Gardner said. “We are moving forward.”

Northwestern Mutual is building a $450 million, 1.1 million-square-foot expansion to its corporate headquarters across the street from O’Donnell Park and plans to add 1,900 employees there by 2030. It needs additional parking spaces as it expands employment. The company wanted to buy the O’Donnell Park property so it could upgrade the parking structure and provide parking spaces for its employees. But the company also planned to make improvements to the park on top of the structure. As it is making a huge investment in its own campus, the company saw an opportunity to also upgrade the park across the street, which it pledged to maintain as a public space.

With the O’Donnell Park deal dead, Northwestern Mutual is now turning its focus to two blocks that it owns west of its downtown campus. The company owns the entire block southwest of Van Buren Street and Wisconsin Avenue, which includes its 611 E. Wisconsin Avenue office building and the surface parking lot to the south of the building. The company also owns all of the property on the block bounded by North Van Buren, North Jackson, East Mason and East Wells streets, except for the Whiskey Bar building at 788 N. Jackson St.

The company has declined to disclose details about its plans for a parking structure, residential and retail development. Department of City Development commissioner Richard “Rocky” Marcoux said he has discussed the project with company representatives, but declined to disclose any details.

“Since it’s being done by Northwestern Mutual it will be done the right way,” Marcoux said. “Whatever it ends up being, it will be well done. They are extremely savvy, smart and successful real estate investors. They know what they are doing in real estate.”

Although Northwestern Mutual’s statement describes the development plans as a single structure, Marcoux said the company could meet its parking needs with multiple projects, since it won’t need all 1,000 parking spaces right away.

“Perhaps they will move forward with multiple sites,” Marcoux said. “They could phase it.”

The residential component of the project could provide a convenient housing option for Northwestern Mutual employees. It could also help meet the robust demand for apartments in downtown Milwaukee. Developers completed 400 new apartment units in 2014 in the downtown area and another 700 units are under construction, Marcoux said.

“There is still very strong demand (for downtown apartments) in the marketplace,” he said.

The Northwestern Mutual parking/residential/retail development will add yet another major development project to an already hot area of the city. In addition to Northwestern Mutual’s 32-story Tower and Commons project, Irgens is building a 17-story, 358,017-square-foot office tower at 833 E. Michigan St; Jackson Street Management LLC plans to build a 200-room Westin hotel on a vacant lot south of the U.S. Bank Center at 777 E. Wisconsin Ave. in downtown Milwaukee; and Barrett Visionary Development plans to build The Couture, a 44-story, 302-unit apartment tower, at the site of the Milwaukee County Downtown Transit Center located southwest of Lincoln Memorial Drive and Michigan Street. The County Board did approve a purchase option to sell the Downtown Transit Center to Barrett Visionary.

However, the board’s action on O’Donnell Park means that Milwaukee County will maintain control of the property. The facility needs a $1.3 million roof repair and has other deferred maintenance issues. The county still owes $6.6 million in debt on the facility.

Had it sold the structure to Northwestern Mutual, the county would have gained a net of $5 million that would have gone to the Parks Department. Plus, it would have been added the property tax rolls.

Northwestern Mutual planned to spend more than $6 million on improvements to the parking structure and to improve the park. Now county officials must figure out how to pay for needed repairs and improvements to the structure.

“It is now incumbent on the County Board to find solutions to the long-overdue deferred maintenance issues at O’Donnell,” said Sandy Botcher, vice president at Northwestern Mutual and head of the company’s downtown campus expansion project. “The board needs to make good on (its) dialog about better options for O’Donnell Park, including how to pay for the millions of dollars in deferred maintenance.”

Some County Board supervisors who opposed the sale said they opposed the idea of selling any public park to a private entity and said a sale of O’Donnell Park to Northwestern Mutual would set a bad precedent. Despite a deed restriction for the northern half of the property, parks zoning for the entire site and Northwestern Mutual’s pledge to maintain the park on top of the structure, some supervisors felt there were not enough protections in place to preserve the park for the public.

“A community’s soul is defined by its public spaces,” said County Board Supervisor Pat Jursik.
Some supervisors said they were reluctant to give up the parking revenue that the 1,332-space structure provides to the Parks Department. The county expects about $1.9 million in parking revenue from the structure in 2015. Some supervisors also felt the $14 million sale price was too low, especially since the southern portion of the property is not protected by a deed restriction.

“(Northwestern Mutual is) not giving us a good business deal,” Supervisor John Weishan Jr. said. “We will not be played as a bunch of chumps. We want what’s a fair deal.”

Jursik accused County Executive Chris Abele’s administration of neglecting O’Donnell Park because they wanted to sell the property to Northwestern Mutual. County Board supervisors are already talking about improvement plans for the property, she said.

“I will very much want to (improve) the park,” Jursik said. “First of all it needs to be cleaned up. Plant flowers, change the light bulbs, pull weeds, just clean the place up…You could easily have a beer garden there. I think a beer garden is a no-brainer there. I think a coffee shop might be looked at.”

Brendan Conway, the spokesman for Abele, said suggestions that O’Donnell Park was intentionally neglected were, “kind of silly.”

The County Board’s rejection of the O’Donnell Park deal is a missed financial opportunity for the county, Conway said.

In addition, the O’Donnell Park parking structure could struggle to compete with Northwestern Mutual’s project and other nearby developments that will have their own parking structures, he said.

“If you had to decide where to park are you going to the structure that is brand new or the one that is older, run down and has had problems?” Conway said.

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Andrew is the editor of BizTimes Milwaukee. He joined BizTimes in 2003, serving as managing editor and real estate reporter for 11 years. A University of Wisconsin-Madison graduate, he is a lifelong resident of the state. He lives in Muskego with his wife, Seng, their son, Zach, and their dog, Hokey. He is an avid sports fan and is a member of the Muskego Athletic Association board of directors.

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