The Burleigh Triangle – a nearly 70-acre site dubbed a blighted area, ripe for redevelopment – remains in its unkempt, vacant warehousing state as negotiations between a developer and the city to provide property tax-based financing support notch a one-year anniversary.
At stake for both parties is a $45 million retail development plan on the parcel.
The Chicago-based HSA Commercial Real Estate Inc. received city approval in May 2011 for preliminary plans for the first phase of its project, which calls for converting empty warehouses to nearly 275,000 square feet of retail space.
The city's Community Development Committee earlier this week approved a second six-month extension for submission of final plans for the project, as with the city continue.
A second extension is unusual – in fact, if the full Common Council approves it Tuesday, it will mean overruling a standing city policy of "negating" any approved preliminary plan agreements if a final plan isn't brought forward after no more than a single six-month extension.
But the city wants Burleigh Triangle to stop being a dirty word as much as HSA wants Mayfair Collection to start being a happy one, and so far HSA is the only name in the game.
So the extension will likely be granted, so long as aldermen believe that Wauwatosa can craft an acceptable tax-supporting arrangement that is a little different than any it has granted before.
Wanting to proceed, agreeing to delay
HSA initially hoped to break ground in late 2011 or early this year, with a targeted completion date of spring 2013. Due to the lengthy negotiations, HSA now projects construction could begin in spring 2013, with the retail complex to open in spring 2014, said Timothy Blum, executive vice president and retail division managing director with HSA.
Providing TIF support for a retail development would be a first for the city, which likely accounts for the lengthy negotiation period, Blum said.
“We would like it to move forward quicker... but you have to move as fast as the machinery will allow you to move,” Blum said. “The city is inching their way out... and wants to do what is best for their constituents, and I can’t blame them for that.”
Blum and the city’s economic development director, Paulette Enders, both said a TIF agreement and related formal approvals can occur well within the current six-month extension period for HSA to submit final plans for the project.
Once a TIF agreement is in place, Enders said, the city then can proceed with creating a tax incremental district (TID), typically a two-month process that includes a public hearing at one of five public meetings.
TIF support a key component
Securing a TIF agreement with the city that would allow HSA to recoup public infrastructure costs to redevelop the site at Highway 45 and West Burleigh Street, however, is a critical first step for the project to move forward, according to Blum.
HSA has estimated infrastructure costs at $8.67 million. Although HSA will front all costs for the project, the firm seeks a TIF agreement that would allow increased property taxes generated by the development to flow to HSA to pay off its debt related to public infrastructure costs.
Under such a TIF agreement, once the developer is reimbursed, the new tax revenue then would stream to the city, the school district and other local taxing entities.
TIF support is “part and parcel of the process,” Blum said, adding that the retail development “won't happen” without TIF support.
Blum said HSA is poised to sign lease agreements with up to five tenants, but the lease agreements won’t be inked without a TIF agreement in place.
“The TIF is very important, and we’ve told our tenants that,“ Blum said. “Everybody would like sooner, but everybody likes the project.”
The project at a glance
The Burleigh Triangle is a nearly 70-acre site on the northeast quadrant of the Highway 45 and West Burleigh Street intersection. HSA’s plans are to fully develop the site over time to create a dense, walkable urban development that incorporates higher valued office space and residential use along with retail.
As the market allows, HSA expects the site will include nearly 1 million square feet of office space, more than 400,000 square feet of residential space and nearly 425,000 square feet of retail space.
HSA has yet to identify specific tenants for the first retail phase, saying only that the development calls for best-in-class retail that has yet to enter the Milwaukee market, such as a Nordstrom’s Rack or The Container Store.
The first phase also may include high-end grocers along the lines of Trader Joe’s or Whole Foods, if HSA is able to simultaneously move ahead with new construction fronting on West Burleigh while converting the nearly quarter-mile stretch of warehouses along Highway 45.
HSA has projected the first phase of retail development along the western edge of the site will generate an additional $900,000 in city tax revenue, or 10 times the $101,810 city tax bill for the property in 2010, based on an assessed value of $4.65 million. HSA also estimates retail tenants in the first phase of the project would employ up to 500 full- and part-time workers.