New retail space proposed for the Burleigh Triangle is estimated to generate more than $1.3 million in new city real estate taxes, which the developer will ask the city to use to repay its investment in public infrastructure improvements for the project.
HSA Commercial, the Chicago-based developer for the proposed retail complex at Highway 45 and West Burleigh Street, initially will finance the costs of public infrastructure improvements, but will look to be paid back by the city through increased tax revenue generated by the development, said Timothy Blum, executive vice president and retail division managing director.
Although HSA has yet to present a formal application for tax incremental financing for the project, it is a typical financing option for major commercial developments. TIF agreements vary, and the TIF structure that HSA says it will propose is the most desirable for the city, according to city attorney Alan Kesner, as HSA will bear the financial risk.
The project, in some form of planning for more than six years, is in the first stages of gaining needed city approvals. HSA garnered a key preliminary approval Monday – unanimous support of the planned development by the city’s Plan Commission, give or take 17 conditions.
Blum said that first approval allows HSA to move into more detailed planning and financing stages, including TIF discussions with the city.
"The project (first) has to stand on its merits," Blum said. "If people believe this is a project they can embrace, then we will have discussions about TIF" financing for street and other public infrastructure improvements.
The , dubbed the Mayfair Collection at Wauwatosa, is primarily retail and has two components. One component springs from adaptive re-use of a quarter-mile stretch of warehouses along Highway 45, totaling nearly 250,000 square feet.
This component was tagged as generating an additional $900,000 in tax revenue. The second component includes more than 125,000 square feet of adaptive re-use and new construction for shops and restaurants fronting on West Burleigh, which could generate an additional $412,000 in tax revenue.
HSA will focus first on converting the warehouses and may simultaneously pursue the Burleigh Street front development if tenants can be secured .
Opting to convert rather than demolish the warehouses was the only way HSA could create retail space in the premier Mayfair shopping corridor with competitive lease rates. Recycling the warehouses allows HSA to be "ecologically sustainable and economically sensible," said Christopher Thomas, architect for the project with TOA Architects in Evanston, Ill.
Retail staffing in the first component is expected to generate more than 500 jobs, according to HSA estimates. Sales are projected at $78 million, which would deliver more than $4 million in state sales tax revenue.
Among the concerns cited by plan commissioners was the high percentage of retail proposed for the site – at nearly triple the projected use outlined on a 2005 city master plan for the Burleigh Triangle. Those early plans called for about 10 percent of the site to be devoted to retail; current plans push the retail percentage to nearly 36 percent, according to city planner Jennifer Ferguson.
Office space generates higher tax revenue, as well as higher paying jobs, which commissioner Gloria Stearns noted as a concern, one of 17 she detailed Monday.
Moving forward with retail only reflects a difficult market that lacks critical demand for office or multi-family development, according to Blum. The only market demand that currently exists, he said, is for best-in-class retail HSA proposes for the site. HSA has not named potential tenants for the project, but tenants could include stores such as Nordstrom Rack and the Container Store.
“We turned to adaptive reuse as an alternative to waiting out the market and to serve as a catalyst for the rest,” which could include office, residential or hotel development, Blum said.
Commission member John Albert said he has served on the commission long enough to have “lived through all the proposals” for the Burleigh Triangle, noting the consensus among plan commission members that the current HSA proposal is exciting and welcome.
“While it might not be as pretty as the plan that was presented previously, it probably is more economical,” Albert said.
Increased traffic due to development at the triangle will require widening West Burleigh on the south edge of the property from 2.5 lanes to three lanes in both directions, based on preliminary traffic analyses, said Kenneth Voigt, a consulting traffic engineer for the project with Ayres Associates.
HSA met with city and state Department of Transportation engineers in March, who will complete a full study on street improvements required to accommodate new traffic, more than half of which is expected to come from Highway 45, Voigt said. He said a second left turn lane from West Burleigh onto southbound Highway 45 also may be needed to ease traffic flow from the site.
The plan next goes before the Community Development Commission April 26. It also requires review by the city architectural review board before final plans will come back to the plan commission and the city council for approval. If HSA continues to receive the necessary approvals and financing for the project, HSA could break ground in fall, with the complex to open in spring 2013.