In a far-ranging discussion Tuesday night of the city's part in UWM's Innovation Campus, and in the related fate of the historic Eschweiler buildings, Wauwatosa's Common Council finally got the word on what's really driving this bus.
That word is: Parking.
As with so many urban development plans, the mundane problem of providing enough parking emerged on the County Grounds projects.
But here, the matter is so complex that whether the Eschweilers are saved or demolished in a redevelopment plan, or even whether any redevelopment of their grounds can proceed at all, is tightly tied to how parking is handled on the rest of the UWM Real Estate Foundation's property.
At the same time, providing public financing for private developers to have enough parking is considered potentially critical to getting those developers to build here in the first place – and Wauwatosa's ability to do so could also be dependant on whether and how the Eschweiler property is developed.
The Committee of the Whole – a meeting of the full Common Council without the mayor presiding, and taking no official action – was called to hear an update on the status of Tax Incremental Financing District No. 6, which was created to fund infrastructure for Innovation Campus.
Also part of the agenda was a presentation on the findings of a consultant's study of the feasibility of restoring the Eschweiler buiidings as part of an apartment development.
A tale of two TIFs
Creating both great opportunities and extraordinary complications is the fact of overlapping TIFs. All of Innovation Campus including the Eschweiler Campus is encompassed in TIF No. 6. But only the Eschweiler Campus itself is also part of TIF No. 2, created two decades ago to support the development of the Research Park.
Aldermen learned first, to their delight, that in combination with the newly taxable value of the land Innovation Campus sits on, plus that of UWM's first building, known as the Innovation Accelerator, the addition of UWM's first private development, ABB, alone would be sufficient to pay back the city's entire investment over the life of TIF No. 6.
However, that is somewhat simplified math. While ABB has an agreement with the UWM Real Estate Foundation to build three stories, 95,000 square feet, on Innovation Campus, at an easily calculated value, no plans have been approved by Wauwatosa.
The negotiations – again, mainly over parking – will be key to whether ABB actually builds here, and in what way, shape and form.
City Finance Director John Ruggini and City Administrator Jim Archambo laid it out in stark terms. Companies looking to move or expand have choices. There are good reasons that they might want to be in the middle of the mix, near the urban core, near the transportation hub, near the Medical Center and the Research Park.
But cost is always a concern, too, and a reason to look at other options.
If you don't build it, they won't come...?
"Green field" business parks in the exurbs, Archambo said, can offer more land for less, allowing a company to develop a new site surrounded by ample surface parking at a few dollars per square foot, a few hundred dollars per stall.
Wauwatosa, even as it opens up new developments like Innovation Campus, is land-poor, constricted. All of the seven projected private, and therefore taxable, buildings in UWM's plan, must fit on just over 32 acres.
Ruggini offered the sobering equation: You can fit 108 parking stalls per acre. The planned 475,000 square feet of development on Innovation Campus would require 1,663 parking stalls. If accommodated with all surface lots, parking alone would eat up nearly half of the developable land within Innovation Campus, almost 16 acres.
Developers, then, will want, will demand, structure parking, which is much more expensive – $18,000 per stall. And as an incentive to build, they will want the city to help pay for it, or possibly to pay for all of it, because of the enormous additional cost compared to surface lots elsewhere.
So, even though the simplified math showing only ABB's added value appears to support the TIF, it really might not depending on what sort of deal can be struck to pay for parking structures or under-building parking (even more expensive at $22,000 per stall).
You can pay a lot, or a lot more, for Eschweilers
The surplus funds generated by TIF No. 2, which is currently scheduled to be retired in 2015, are expected to help pay for $12.5 million in basic infrastructure costs for both Innovation Campus and any development of the Eschweiler tract.
The city-owned roads and utilities needed to give access to the developments and supply them with power and water are essentially split into north and south segments, with much of the north end of Discovery Parkway plus an access road and utilities to the Eschweiler Campus potentially to be paid from fund No. 2.
But Mandel Group, the developer chosen by UWM Real Estate to build apartments in and around the Eschweiler buildings, has determined that it could not after all afford to refurbish the historic buildings without a $6.5 million infusion of city money.
Alternatively, Mandel says, it could tear down all but one of the buildings and develop its project – but it would still have a $2.5 million financing gap to fill. Barry Mandel has made it clear that the city would have to fill that gap if he is to proceed.
Opportunity has its cost
The conundrum for city policy-makers is this: If Wauwatosa wants to save all the Eschweiler buildings by directing $6.5 million in TIF money their way, or even by earmarking $2.5 million to save just one building, it does so at a cost that risks its ability to fund structure parking for any new developments in Innovation Campus.
But offering no funding whatsoever to Mandel's project means he might just back out all together. That would leave the Eschweilers standing, but with no other tax-generating plan in place to redevelop them and their campus property, would lock out much of the TIF No. 2 funding for infrastructure – and would leave UWM Real Estate $4 million shorter in its payments to Milwaukee County for the land.
Ruggini repeatedly referred to the "opportunity costs" the city faces in deciding how to allocate TIF dollars: If we spend this here to do this, that's money we can't spend there to do that. Opportunity do one thing comes at the price of not being able to do something else.
A TIF, with a life of up to 27 years, can be fragile. Ruggini likes them robust. He wants to see projections of a TIF being 125 percent funded over its life. Much less and he worries about the unforeseen of 27 years of uncertainty.
There are scenarios in which Wauwatosa could easily afford to pay for preservation and restoration of the Eschweiler buildings and still make a profit on both TIFs. There are scenarios, too, dependant on the difference between providing one parking stall per 1,000 square feet per customer, or two, or none, that could sink TIF No. 6 with debt if any significant money were allocated elsewhere – such as, to any assistance to Mandel.
Old Eschweilers have a grip on the future
If anyone wants it crystallized, perhaps it comes down to this: If enough businesses want to be in Innovation Campus so badly that they will pay through the nose to be there, including paying for all their own enclosed parking, Wauwatosa could preserve the Eschweiler buildings, restore them, cover them with gold leaf and still make a profit.
If enough businesses hold Wauwatosa's feet to the fire over parking and insist that they need substantial public assistance to provide that parking if they are to ever to come to Innovation Campus – and if they win that hand – then there is little hope of any TIF money going toward the Eschweilers.
And yet that could spell curtains for the whole project if the only interested developer for the Eschweilers backs out.
Somehow, a group of loved but dilapidated and hard-to-use 100-year-old buildings still holds the upper hand – but not for reasons anyone expected.