Park East developer takes TIF request back to the drawing board

Gatehouse Capital Corp. is re-considering its TIF request for the Hotel Palomar project.

City officials were preparing legislation for a $2 million tax incremental financing (TIF) proposal for a hotel, retail and condominium development planned by Dallas-based Gatehouse Capital Corp. for a vacant block in Milwaukee’s Park East corridor. The TIF proposal was expected to be introduced and begin moving through the approval process this month, said Gatehouse president and chief executive officer Marty Collins.

However, Collins says Gatehouse is reconsidering its TIF proposal and will come up with a new proposal for the city.

"We’re re-thinking the tact we want to take with the city on the TIF," Collins told Small Business Times. "I just want to sit for a month or so and work on an alternative proposal. We’re formulating it right now."

The 22-story development would have a 175-room Palomar boutique hotel and 65 residential condominiums. Collins declined to say why Gatehouse is reworking its TIF proposal.

Department of City Development Commissioner Richard "Rocky" Marcoux also declined to discuss the TIF negotiations for the project.

"We’re in active discussions with the development team on this project and as such we’re not at liberty to discuss details at this time," he said.

The project has been targeted by labor and health care reform advocacy groups, who say they are concerned that workers in the Palomar hotel will not have adequate health care benefits.

Gatehouse has said that the construction workers to build the development will be union laborers and workers in the hotel will be paid prevailing wages with benefits.

"We’re not anti-union at all," Collins said.

However, Antony Dugdale, national co-director of hotel workers union Unite Here, said his organization is concerned that the hotel workers will end up receiving health insurance that is subsidized by the state, providing a hidden taxpayer subsidy for the development. Unite Here represents workers at the Pfister, Hyatt and Hilton hotels downtown.

"We’re concerned because the company isn’t willing to make any clear commitments one way or another (about health insurance benefits to the hotel workers)," Dugdale said. "What often happens in the industry, the employer will provide health care that costs an exorbitant amount, but pays the workers wages that are so low they qualify for state subsidized health care, and they go that route rather than have their whole paycheck go for health insurance."

Although the property where the Palomar development would be built, located northwest of Old World Third Street and Juneau Avenue, has been vacant for years, Robert Kraig, program director for Citizen Action of Wisconsin, called it "highly valuable land" and said the city should not subsidize a development that will produce low-wage jobs without adequate benefits. Citizen Action of Wisconsin is an advocacy group pushing for health care reform in the state.

"For the city to use its hard-earned economic development money for a project with low-paying jobs that don’t provide health benefits is counter-productive," Kraig said.

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