Market forces are more important than city incentives, developers say
But current economic conditions are proving that the market, and not government incentive programs, is the arbiter of how quickly redevelopment takes place.
And the decision of City of Milwaukee officials to restrict all redevelopment activity west of I-94 to industrial land uses has some developers concerned that other projects that would be good for the city may be needlessly bypassed.
While some aspects of the redevelopment process being managed by Menomonee Valley Partners (MVP) are proceeding, others have been hung up in bureaucratic red tape.
MVP has issued a request for proposals for design of the extension of Canal Street, a major east-west thoroughfare traversing the valley, which would be rebuilt and extended further west to Miller Park.
The design team should be chosen by the end of October, according to MVP executive director Lilith Fowler. Construction could start as early as next year, she said.
One component of the redevelopment process that is hung up is development of green building guidelines that must be met if new developments are to be eligible for Brownfields Grants of up to $250,000 from the Milwaukee Economic Development Corp. (MEDC).
MVP this spring retained Cedarburg architectural firm Kubala Washatko to develop the guidelines, but discharged them by mid-summer. The guidelines were to be completed by now, but the estimated time of arrival has now been rolled back to some time next year, according to Fowler.
"They are not mandated," Fowler said. "There is no regulation that people need to comply with them."
Between MVP, MEDC and other partnership members including Focus on Energy’s daylighting expert Abby Vogen, Fowler said they thought they had the expertise to complete the job.
"We have scheduled a workshop that would include city permitting folks late this fall," Fowler said. "That will help us refine our draft."
One of the first companies to reclaim a brownfield in the valley is Sigma Environmental Services, an environmental remediation firm currently in Oak Creek.
Because Sigma’s new facility at Canal and 13th streets was in the design phase while MVP and other entities were still tweaking their design guidelines, the environmental firm had to work closely with the city to make sure it would qualify for the brownfields grants.
According to Sigma president David Scherzer, the process of taking title to the land has been slow and cumbersome. By the time earth is actually moved on site, the guidelines may have been completed.
"We were notified last week our permit was approved," Scherzer said. "We have yet to close with the city on the deal. The permitting process has been much longer than I had anticipated … I thought this would have been done in October of 2001."
Creating a realistic set of guidelines will be difficult, according to Scherzer, as many of the principles of green building don’t mix with brownfield redevelopment.
"One of the ways to remediate contaminated soil is to cap it with an asphalt parking lot. Green building says you should have a permeable parking lot to allow stormwater to absorb into the soil. But when you need an engineered barrier, in some cases they are just not going to get along."
"We know (use of the guidelines) is not possible for every site," Fowler said. "That is why we need people like the permitting folks involved."
Sigma’s extended permitting timeline points to another challenge to businesses intent on building in the valley.
"This is not a normal real estate transaction," Scherzer said. "We are dealing with the city."
Giuffre goes it alone
Dealing with the city, particularly when it comes to incentive dollars that have various strings attached, is enough to make at least one major Menomonee Valley property owner turn his back on government funds altogether. Frank Giuffre, who with his brother, Dominic, owns Milwaukee-based Mallory Properties, eschews any number of grant, subsidized loan and tax credit programs. He is redeveloping the former Wisconsin Gas property at 200 N. 25th St. without the benefits or encumberances associated with participating in government programs.
The 415-acre parcel features four existing brick structures totaling 100,000 square feet under roof. Current tenants include a trucking hub and an inboard skateboard park. Giuffre also owns 12 acres just west of the former Wisconsin Gas site and intends to turn the two properties into a business park.
Work has started on what Giuffre referred to as a "facelift" on the property. Landscaping, outdoor lighting and a new red metal roof will "help people envision what the site will be like when it is done. We’ll get it to about 60%. Right now it’s at 0%."
Giuffre said he is not applying for any city, state or federal funds to renovate the site. The costs associated with program requirements are too steep, he said.
"At this moment, we have not seen any programs that make sense," Giuffre said.
For the Wisconsin Gas structures, Giuffre envisions a two-story open-concept office space with catwalks bisecting the vaulted space in the middle of the structure.
"The tower will be spectacular when it is done," Giuffre said. "It will have to be some offices or living quarters. If we could get some residential zoning in there, it would fill up right away."
In the zone
But Giuffre’s vision runs counter to the way the Menomonee Valley is currently zoned. Fowler said the city must retain and attract manufacturing jobs, and prevent companies from relocating to Waukesha County when they are ready to expand.
"The west end is zoned industrial," Fowler said. "The DCD is very committed to the industrial zoning. When we looked at our availability of land, we realized we needed industrial land. This is the last significant tract of land we have available that could be used in this way."
But Giuffre says strict industrial zoning may hamstring the redevelopment process. Manufacturing is experiencing a global shift, with more manufacturing moving to low-wage nations including China. That shift is one reason Giuffre has made a regular habit of purchasing manufacturing space and redeveloping it for other uses.
"Who built the last manufacturing plant around here?" Giuffre asked. "Even in Waukesha County, we have seen a lot of distribution and warehousing, but not manufacturing … Manufacturing space is more expensive than storage. Yet we are leasing this building as distribution and storage. What does that tell you? Products are housed here, transported here and distributed here. But are they manufactured here?"
One manufacturer that has already committed to building in the valley said his project is being delayed by economic forces – and China is at least part of the problem.
"What are we waiting for? An increase in sales," said John Stollenwerk, president of Allen Edmonds Shoe Corp., Port Washington. A site at Canal and 7th streets for the shoemaker’s new facility has already been cleared, and after building the manufacturer would close its facility in Milwaukee Enterprise Center South at 816 W. National Ave.
"In sales, 2000 was the top of the peak, if you will," Stollenwerk said. "We saw a decline last year. We should be flat this year. Our customer is still there. You buy a pair of shoes from China – and they last six months. You buy a pair of shoes from us, and they last six years. The fellow – instead of coming in and buying three pair or two pair – he is buying one pair."
A number of factors will determine when Allen-Edmonds builds, according to Stollenwerk.
"It’s really just the old gut feeling," he said "If the country goes to war with Iraq, that might push consumer buying to be even more cautious. These are all things to take into consideration before we build."
Fowler said the current woes faced by the manufacturing sector are cyclical and should not prevent successful redevelopment.
"Manufacturing is cyclical, and when it comes back, we will be ready for it," Fowler said.
Industrial realtor Sam Dickman, president of the Dickman Company, Milwaukee, said he has already noticed an uptick in industrial property sales and leasing. And the huge number of manufacturing jobs still in the region could drive redevelopment as the economy improves, according to Dickman.
"With a high percentage of manufacturing jobs here are in Milwaukee, there should be a demand because it is close to labor from both the near north and near south sides," Dickman said. "Manufacturing has slowed here like it has everywhere, but we see signs of vitality, particularly among small to medium-size firms. There are a lot of opportunities for people serving the 20,000 to 30,000 square foot range are moving fairly well."
But even Dickman, who is a proponent of many aspects of the approach MVP and MEDC are taking in the valley, thinks some flexibility in the zoning is essential for success.
"I think you have to go back to the market," Dickman said. "You can gear the development toward manufacturing, but if there are other desirable uses that come along for some sites down there, they should be considered. If they add to the desirability of the area, these are things that should be considered."
Oct. 25, 2002 Small Business Times, Milwaukee
