The City of Milwaukee's request for proposals (RFP) to redevelop the Marcus Performing Arts Center (MPAC) parking structure site downtown garnered three responses, but it should have garnered a dozen, according to
Tim Gokhman, managing director of Milwaukee-based
New Land Enterprises, which submitted one of the responses to the RFP.
Mounting frustration with the City of Milwaukee and its Department of City Development (DCD) has disincentivized developers from pursuing more projects in the city, according to Gokhman.
Citing its own frustration with the process, New Land withdrew its redevelopment proposal for the Marcus Center parking structure site, located at 1001 N. Water St., on the same day that
the city announced it had selected a proposal from Madison-based The Neutral Project.
Before the city's announcement, Gokhman sent a letter to DCD saying "The RFP criteria and subsequent interview questions were handled unprofessionally and inconsistently," and that "(DCD) had all the information it needed to make a decision by May 31st, which is when we were told to assume a decision would be made. That timeline has come and gone, with no warning, explanation, or follow-up."
"DCD’s lack of accountability and slow, inconsistent (and at times, inaccurate) communication during the RFP process is a clear indication of what the relationship would be like when the real complicated work starts," the letter states.
The Neutral Project is proposing a multi-phase development which could include 750 residential units, 190,000 square feet of office space, 40,000 square feet of retail space, 300 hotel rooms, 1,100 structured parking spaces and public plazas and walkways for the Marcus Center parking structure site. Comprised of three buildings, one would be the tallest in the state.
BizTimes spoke with Gokhman about the company's experience with the city's RFP process and decision to withdraw:
Are there any details about what went wrong during this RFP process that you can share?
"For a project of this size and magnitude, it's been very clearly communicated to the city by the real estate development community that projects like this take economic support from the city. You can see in the RFP how that already starts getting chipped away at. The city's asking for a lot: affordable housing, parking podiums to be wrapped and activated, public plazas. These are things that are not asked for in traditional developments. When requests go above and beyond, then the support needs to go above and beyond. The expectations are not symmetrical. There's a lot expected and little provided."
Language from the Marcus Center parking garage RFP on tax incremental financing: "Historically, the City has not considered TIF or other City assistance for market-rate housing or hotel development downtown. However, the City may consider TIF for projects that meet our goals of attracting or retaining major employers and/or providing affordable housing that meets the City’s affordable housing policy. TIF may also be used to fund infrastructure improvements surrounding the site that meet the goals of the Downtown Plan. Proposals will in part be judged by the amount of incremental assessed value created."
"During the interview process, it became clear that, while the (Mayor Cavalier Johnson) administration has talked about the need for affordable and workforce housing, there were no questions about it during the interview process. There was also an expectation that this would be executed quickly, that construction has to be completed 24 months after start time, and it was clear that wasn't going to be adhered to.
"Once we saw where that was going, we were very troubled and we communicated that to DCD, but ultimately we came to believe that, even if you could work through those limitations, that given the current economic development policies, specifically as they relate to TIF, even if the project were awarded there would be no way to make it economically feasible."
When did New Land last respond to a City of Milwaukee RFP and why did you choose to respond to this one?
"The last time we responded to an RFP was the Army Reserve site (in Bay View) in 2009. The reason we responded to the Marcus Center RFP was because we believed in the mayor's vision of growing the population and turning Milwaukee around, and we saw this site as a perfect opportunity to demonstrate what a new era of partnership between public and private could look like.
"It's such an important site for the city, and it has so much potential. We thought that our track record and expertise would be a good fit for that site."
Why did New Land go so long without responding to other RFPs?
"(Because of) The processes or lack thereof. The approach to how RFPs were done became so dysfunctional that there's no viable way to create successful projects. I think you see that in the results. (The Army Reserve site) still hasn't been built. The 4th Street (Vel R. Phillips Avenue) and Wisconsin Avenue site still hasn't been developed."
Do you have any thoughts on what is at the core of the dysfunction?
"We withdrew so that there would be a public conversation about this. I want to be very clear that we're not talking about DCD as a catch-all. There are excellent policies and people working on those policies in zoning and long-range planning, and there has been success in bringing corporations to Milwaukee, but that's not population growth. That's a component in population growth, and we support the vision of population growth, but in order to do that, we need to produce housing. The current policies of DCD are not producing housing, and whether that's because those policies are built on the prior administration's policies, or whether that's because the people are from the prior administration, we don't know."
"There's clearly a problem, and we're not the only ones having it. The entire development community has pointed time and time again to the failure of the economic policies in place to produce the results that the mayor has asked for. We're not here to solve the problem, we're here to bring everybody together to stop talking about what we would like to do once a year, and get policies in place that actually get it done."
You mention how some developers are looking to other communities that are better business partners. What are other communities doing that's drawing them?
"I can't speak for every other community, but you can see it in the results: projects get done and they get done well and with the right amount of speed. What I can tell you about our experiences is that when an administration reaches out to us and we have a conversation, they deliver on what they say — the timelines, the specific deal points are adhered to. That is a friendly business environment. That is what we have experienced elsewhere, and that is not the current environment in the City of Milwaukee."
You've said that withdrawing publicly is a big business risk. Why'd you choose to do it?
"I live in the city of Milwaukee, my family is in the city of Milwaukee, New Land has been building exclusively in the city of Milwaukee for the last 30 years. We are invested in the city, and I want to see it succeed. I think the mayor also wants to see it succeed. One-on-one conversations behind closed doors have clearly not produced results. That's the way it's been done for the last 20 years and that's clearly not working. I can say that the amount of outreach, both public and private, that I've received since going public with this has very much reinforced that notion."
DCD response
“The City of Milwaukee has an outstanding record of supporting development projects and developers, particularly under the leadership of Mayor Johnson and Commissioner Crump, and will continue to do so.
The City continues to be bold with TIFs, whether that be to attract commercial development or expand housing throughout the City. In July alone, the Department of City Development advanced three important housing projects through the Zoning, Neighborhoods & Development Committee, all of which will create affordable housing opportunities for hardworking Milwaukeeans, some of them as owner-occupants.
The administration has also signaled that it is open to financially supporting additional housing development for the missing middle, and is working with the Council to build support for these efforts.
Evaluating and building support for developments and unique proposals, particularly those that are outside the bounds of clear and longstanding policies, takes time. We have been vocal about our interest in supporting expanded financing options for housing developments and have had a number of conversations with members of the development community and the Council regarding how to best accomplish this work in a manner that is supported by elected officials, the community at large, and developers.
We welcome any developer that wants to do business in or with the City of Milwaukee, whether they are a sizable well-known entity, a small firm, a majority-owned firm, or one led by people of color or other emerging developers, to reach out to the City and even directly to Commissioner Crump to speak about their plans, their ideas or any concerns they may have.”
Gokhman's letter to DCD:
Dear Commissioner (Lafayette) Crump:
After much deliberation, I am writing you today to inform you that New Land is withdrawing our proposal from consideration on the RFP for the Marcus Center Parking Garage.
We did not make this decision lightly. New Land chose to respond to this RFP with optimism about the new administration’s vision for the city, with this critical development site serving as an example. Unfortunately, after working with your department on this RFP and other economic development policies over the past year, we see that DCD’s actions are not matching the administration’s rhetoric.
Our company has developed exclusively in the City of Milwaukee for the last 30 years, with a long and successful track record with RFPs. We have seen when the process has worked well, creating successful developments, growth, and tax base, and we have seen what it looks like when the RFP process fails, with few awards and awarded projects that never get out of the ground.
Unfortunately, this RFP has been handled in the same manner as the prior administration, which, contrary to its predecessor, failed to manage a single successful major RFP. The RFP criteria and subsequent interview questions were handled unprofessionally and inconsistently. The process since has been opaque and misleading. The Department of City Development had all the information it needed to make a decision by May 31st, which is when we were told to assume a decision would be made. That timeline has come and gone, with no warning, explanation, or follow-up.
DCD’s lack of accountability and slow, inconsistent (and at times, inaccurate) communication during the RFP process is a clear indication of what the relationship would be like when the real complicated work starts.
It also saddens me to withdraw on a personal note. New Land has dedicated itself to Milwaukee even as, over the last decade, most other developers have started to favor projects in the suburbs and neighboring cities. While other communities are demonstrating what it means to be a business partner, the unspoken message being sent in Milwaukee is something much different.
I hope you can effect serious changes soon. Without such changes, the city will continue to fail in reversing the population loss that has plagued our city for so long.
Sincerely,
Tim Gokhman
[caption id="attachment_575664" align="aligncenter" width="1115"]
The Marcus Performing Arts Center parking structure at 1001 N. Water St. in downtown Milwaukee.[/caption]
