A consultant's draft study, commissioned by the city, by and large supports the cost analysis presented by Mandel Group last year for a residential development on the campus of the historic Eschweiler Buildings.
Essentially, the study concludes that preserving and rehabilitating the Eschweilers as part of the development would by economically infeasible for the developer, with a "financing gap" of $6.5 million.
Demolishing all but one of the historic buildings and using only new construction for apartments, as Mandel has proposed, would be feasible, the study found – but still, only with some level of public financing assistance.
The actual difference in total project costs with available financing between the two proposals is about $4.25 million, the study showed, which would still leave Mandel a gap to fill. Mandel has made it clear that he would need help from the city in any case, but the gap would be significantly smaller without the cost of rehabilitating all the Eschweilers.
The draft study, released Wednesday to Wauwatosa Patch, was conducted by Springsted, an independent firm that provides financial advice to public and non-profit organizations. Springsted in turn sub-contracted part of the study to Concord Group, which is more specialized in project cost analysis.
The study was to be introduced to the Wauwatosa Historic Preservation Commission at its meeting scheduled for 7 p.m. Wednesday.
Projections about on target, analysts say
Mandel Group was selected in December 2010 as the preferred buyer and developer for the property by the UWM Real Estate Foundation after it purchased the Eschweilers from Milwaukee County as part its larger Innovation Park project.
The foundation's request for proposals stipulated the preservation of the Eschweilers, and Mandel's winning response included preservation of the buildings along with new construction surrounding them.
But last May, Barry Mandel, the president and CEO of the firm, announced that a detailed financial analysis showed that he could not make a return on investment bearing the cost of reconfiguring the buildings for apartments – and proposed instead that all but one of the buildings be demolished.
The consultants' estimates of both the added cost of reconfiguring and rehabilitating the historic buildings as apartments and the return on such an investment, projected over 15 years, fell within a close range of Mandel's own estimates, Sprinsted said in its report.
Springsted concluded, as Mandel had, that given the financing options available, the project was probably not economically viable with preservation and adaptation of the Eschweilers as part of the project.
On the other hand, demolishing three of the four Eschweiler-designed structures, so that all apartment units would be of new, more efficient construction, would be economically feasible, the study says. (The fifth structure, a utility building, was not designed by Eschweiler and was always proposed to be demolished in either of Mandel's plans.)
Preservationists not likely to be swayed
Those findings likely will not satisfy those who have blasted Mandel's proposal to demolish any of the buildings, because they feel the terms of UWM's request for proposals, stipulating preservation, ought to be enforced, and because they believe Mandel should have done the due diligence to discover the financial shortcomings of his plan before proposing it.
Also, preservationists have made it clear that they would not consider Springsted's findings conclusive if they looked only at Mandel's dilemma and not at the feasibility of entirely different uses than residential development.
There have been calls since May for Mandel's proposal to be rejected by the city so that the UWM Foundation would have to issue a new RFP – again demanding preservation of the Eschweilers.
Caught somewhat in the middle are city leaders who have gone on record for many years in favor of preserving the Eschweilers but who are also adamant that UWM's Innovation Park project succeed.
The Springsted study for the first time confirms the proposed sale price of the Eschweiler campus from UWM to Mandel as $4 million – and the foundation says it must have that money in hand before its next payment on its purchase of the entire Innovation Park tract from Milwaukee County comes due in February 2014.
Derailing the Mandel proposal now might leave the UWM Foundation with too little time to find a serious and viable proposal that included preservation of the Eschweilers, they say – if, indeed, there is a financially viable option to save them.
There is also little appetite among Common Council members for the city to provide public financial support to Mandel under any scenario. The city's TIF District No. 6 was created to support road and utility infrastructure for Innovation Park – more than $12 million worth – and did not take into account propping up a private developer as well.
One proposal that has come forward – but that would work only in conjunction with Mandel or some other developer's investment as well – has come from John Gee, the director of the nascent Forestry Exploration Center.
Gee has offered to put his planned environmental charter school, associated with the Forestry Center, in the Eschweilers instead of in a new building north of Swan Boulevard. But Gee would need private donations to the tune of more than $10 million to accompish that, he says.