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Salon Owner Holds Key to Developing Old Firehouse Lot

The city wants to redevelop not only its single vacant lot on Underwood Ave. but another on a key Village corner – but the small business owner of that property is interested in selling only to the developer she trusts.

At first blush, it looks like the kind of scuffle often seen in Wauwatosa and elsewhere when a developer wants to place a new commercial project adjacent to residential properties.

Neighbors are shocked at the scale of the proposal and accuse the developer of trying to squeeze every dime of profit out of the project without regard to the character of the surroundings.

The developer pleads that the project has to achieve a certain scale to be reasonably profitable at all — and promises that the maximum good to the community comes from maximizing its economic benefits, such as its tax contribution.

The municipality plays referee, but even when compromise is reached, seldom does anyone, much less everyone, come away very happy, no matter what the result.

Those elements certainly are present in the case of the proposed redevelopment of a property left vacant by the demolition of the old Wauwatosa Fire Station No. 1 on Underwood Avenue in the Village.

Neighbors are shocked by the proposed scale — at four stories and 52 feet high, it would be the tallest building in the Village area, rising over Underwood Avenue and backing up to five homes on Church Street.

And the developers who jointly proposed it, Sean Phelan of Phelan Development and Blair Williams of WiRED Properties, have said that the project needs to reach that scale to be economically viable.

But there is much more to it than that. And the crux of the matter hardly involves the one old fire station lot at all.

More critical to the entire effort is a small business owner and single mother – Linda Craite – who owns the adjoining salon and the property on which it resides. She just wants to keep that business. She could sell to the developer, or not, and she wrestles with the knowledge that her decision is bound to make someone unhappy.

Village Plan comes in to play

When the city started in about seven years ago on plans to build a new fire station, it was a matter of necessity, of modernization and enlargement to accommodate larger modern fire trucks. After looking at several suggestions for siting a new station — including one developer's wild and short-lived proposal to mount it over the Menomonee River — the city turned back to Underwood Avenue and decided to rebuild there.

The outdated and cramped old station on Underwood was just one lot off Harmonee Avenue. Building the new, larger station would take out four homes farther up Underwood, and would leave one lot vacant nearest Harmonee.

That lot has sat idle since the demolition, and redevelopment was put on hold not just until after the new station was complete but also until the city finished completely restructuring its community and economic development processes — in part through the creation of a new Community Development Authority intended to streamline those processes.

In the meantime, the city also adopted a new Village Development Plan into its master plan. One of the elements of the Village Plan is realignment of the intersection of Underwood and Harmonee avenues, straightening out its odd angles.

And so, when the Community Development Authority, which was given ownership and disposition of the remnant fire station lot — just one little city lot — put out a request for proposals, it referenced the Village Plan and the city’s desire to redevelop and realign the whole corner.

Among three proposals accepted for review by the CDA, from Phelan/WiRED, Metropolitan Development and Wangard Partners, Phelan’s was identified as the “preferred” proposal.

Each of the three proposals called not only for redeveloping the remnant fire station lot but also the corner lot. (Phelan/WiRED, it should be noted, was the only proposer to also offer an alternate plan for only the fire station lot.)  

But only the Phelan combined-lot proposal really took into account that someone other than the city — Craite, a private citizen and business person — owns that lot and does business there.

A private business becomes the focal point

Linda Craite set up shop in the Village of Wauwatosa in the early 1990s. As anyone who remembers the Village of that time will tell you, it was nearly a ghost town.

“There was nothing there but the hardware store (Robertson’s) and The Chancery,” Craite said. “At night, you could throw a rock toward The Chancery and not hit anyone.”

Nevertheless, Craite bought a rambling old house, circa 1908, that stood in the dark at Underwood and Harmonee, and turned it into Cody and Company, a hair salon. Over the years, she built up a good, solid business and, she says, grew to love her customers, her staff and the Village.

Craite already had a longtime affection for Wauwatosa. Her father for many years owned Amann Galleries in an old log cabin on Wauwatosa Avenue.

But since talk of a new fire station began seven years ago, Craite said, she’s had little peace. At first she couldn’t be sure her property wouldn’t be taken in that project.

People talked about eminent domain — and continue to to this day (a landmark Supreme Court decision in the interim that on precedent bars municipalities from such takings of private property for economic development makes that all but unthinkable).

Craite said that several years ago, during a meeting unveiling the draft Village Plan, there were conceptual design boards posted throughout the room — all of which showed a new mixed-use development on her property — and her salon simply blotted out.

Although no one had spoken formally to her about it, Craite had heard rumors. She confronted a consultant who began explaining how the “fire station corner” would be redeveloped.

“I said, ‘There’s a property between the fire station and the corner,’” Craite said. “’What happens to that?’ “And he said, ‘Oh, that’s gone.’”

Home-grown developer eyed Underwood site

Sean Phelan grew up in Wauwatosa, had a paper route, imprinted on the place. Of the properties he owns, his favorites are in Wauwatosa, and he’s proudest of part-owning the building that now houses Café Hollander.

“I see this as a very special place that activates the corner,” he said in an interview there. “I will hold on to this for a very long time.”

But another property, not in the Village, might even better illustrate his interests in Wauwatosa — he approached the long-suffering developer of the Hyde Park condo project at 68th and Wells that now is being transformed into the first ground-up, standalone Alterra Café project.

“I have a passion for doing mixed-use developments in dynamic, vibrant communities, and making sure that they have a positive impact,” Phelan said. Neighbors who were adamantly opposed to the condos were relieved by the café plan. Peace and happiness settled over Hyde Park.

It’s hard to imagine that happening in the fire station kerfuffle. Phelan/WiRED convened a meeting last week with neighbors, in which they made it clear they couldn’t stomach his proposed four-story project, and he and Williams also made it clear they couldn’t make a profit with much less under the financing plan they had developed.

The CDA met the next morning and tried to split the baby, Solomon-wise.

Looking for a way to make smaller work

Besides wanting to go up four stories, Phelan had told the CDA that his development proposal had a $1.4 million “financing gap” — the difference between what he could pay up front or borrow and what the whole $7 million project would cost. He was hoping the city could help fill that gap with public financing assistance.

The CDA, after the neighborhood meeting and their own, voted to continue discussions on the project but stipulated it be less than four stories. The CDA also signaled that the financing gap identified by Phelan/WiRED needed to be closed considerably before the city would be likely to offer assistance.

Phelan/WiRED, however, has one trump card, of sorts — it has an accepted offer to purchase Crain's property.

Phelan says that the city can recoup any investment it makes in far less than the life of the project.

“The combined lots would go from producing $4,500 a year in property taxes to over $160,000,” he said. “The project will last many years. It should have a lifespan similar to other buildings that stand in the Village.”

That said, Phelan and Williams are already revisiting their proposal and their financing plan in hopes of working out a way to satisfy the neighbors and the CDA's requests, Phelan said.

Part of the proposed project budget — more than $1 million — rests on the cost of relocating Craite. And if Phelan/WiRED can't satisfy the demands of lower scale and lower cost and still make a profit, Craite is in a position to just stay put if she wishes.

Phelan/WiRED would pay market value for her property, pay off the current mortgage, would pay to relocate her business for the approximately one-year build-out, pay to set up a temporary salon, pay the rent in the temporary location during the Underwood build-out, and then pay to bring her business back into that development. There, she would own her space within the project and again become a Wauwatosa business taxpayer, would pay her own maintenance, utilities and overhead, just like before.

Actually, Craite said, another developer, HSI, offered her substantially the same package that Phelan did. The others did not. HSI opted to pull out and not submit its plan for review after Craite signed an offer to purchase from Phelan/WiRED.

‘What do you need to make this work?’

Phelan had asked Craite what it would take to allow her property to be part of the redevelopment, and she told him.

“I just want to keep my salon, my business,” Craite said. “I want to stay in the Village. I love what I do, I love where I am, I love Tosa. There is no place I’d rather be.”

Craite said that the two other developers whose proposals were reviewed did not offer her anything for the property or to re-establish her business. Basically, she said, they offered her only an equal property swap, into an empty “white box.”

“It would cost me a tremendous amount of money to set up a new Aveda salon,” Craite said, “and at this stage in my life, I can’t go into debt trying to recreate what I already have.

“Sean (Phelan) was the only one who came to me and said, ‘What do you need to make this work?’”

At the same time, Craite said, even Phelan’s offer does not enrich her in any way. There is no cash involved, just reinvestment.

“I selected (Phelan/WiRED) not only because they are making it possible for me to stay, which the two remaining developers didn’t, but also because they gave me a tremendous level of comfort with guiding me through the whole process,” Craite said. “I have a lot of admiration and respect for how they have conducted themselves through this process.”

What Phelan offered, both of them say, was to keep her whole. Craite is a divorced, single mother, with a child in college and a 14-year-old who is in eighth grade. Cody and Company salon is her sole means of support.

“It’s all I have,” Craite said. “It’s my livelihood. It’s been my life for over 20 years. Sean asked me what it would take, and I said, ‘I just need and want to keep my business, and I want to stay here.’ I didn’t ask him for anything specific, just that I wanted to stay where I was, in the Village.’”

“That’s all I asked,” Craite said, “all I wanted. Just to have my business where it is. I could stay right where I am and not sell at all, but I understand the need for a development there.  It’s a great corner in a great area of a great city. And I’d like to be able to help the city accomplish what it needs to accomplish."

Young Conservative January 18, 2013 at 05:44 PM
There is a %$%#load of parking under the Harmony Bridge that is basically empty. There is plenty of parking in Tosa, only the lard ass lazy folks who don't want to walk a few extra steps for their ice cream and nachos are complaining.
Random Blog Commenter January 18, 2013 at 06:08 PM
Correct. There is ample parking under the bridge and on the south side of the RR tracks. The city just spent a pile of money fixing the pedestrian bridge so people can continue to park and walk. Once again, people need to understand that walkable access is not always 10 feet from one's destination.
Absolutelyfabulous January 18, 2013 at 11:18 PM
At what point does Wired Development stop receving $1,000,000 TIF's and hundreds of thousands of $$$ in grant monies for the communities they come in to? Approximately $1.5 & $1.4 million in TIF/Grant monies free land in Shorewood. Barry Mandel taught you well. BTW, how much $$ are you seeking for your development in Mequon and what have you promised the owner of the parcels necessary to make the development work in Mequon and with whom you are partnering with? Seems you have this formula down pretty good Video: Daykin discusses Mequon development. http://www.jsonline.com/blogs/business/187453641.html#comments
Absolutelyfabulous January 19, 2013 at 11:37 PM
Did Craite sign an "offer to purchase" or "an option to purchase"..There's a difference. An option means there are conditions attached and if those conditions/time frame are not met, then the offer can be revised, extended or just evaporate. Why would you purchase a property when you do not know if your $1,400,000 financing request is not guaranteed? BTW..Here's an interesting series from the NY Times UNITED STATES OF SUBSIDIES A series examining business incentives and their impact on jobs and local economies Part 1 How Taxpayers Bankroll Business http://www.nytimes.com/2012/12/02/us/how-local-taxpayers-bankroll-corporations.html?_r=0 Part 2 Winners and Losers in Texas Part 3 When Hollywood Comes to Town ____________________________________ Wisconsin Wisconsin spends at least $1.53 billion per year on incentive programs, according to the most recent data available. That is roughly: $268 per capita 10¢ per dollar of state budget http://www.nytimes.com/interactive/2012/12/01/us/government-incentives.html
Alol January 20, 2013 at 11:50 PM
That rendering of what they want to build there is hideous. Another ugly, modern, cold building. Who designs this crap and why are people building it? It's like that "Dwell" condo building that went up in Bay View on KK a couple of years ago; so out of sync with the rest of the architecture in the area, a towering mammoth of ugly. Surely this must signify the end of humanity as we know it--we can't even build attractive-looking buildings anymore. It's like we've given up.

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