Milwaukee cannot ignite a redevelopment of a Menomonee Valley property without further straining the limits of the city’s 2010 budget.
The city usually relies on tax-incremental financing to pay for projects that support particular developments, but the price of installing sewer and storm-water pipes for the valley redevelopment is more than a TIF district can bear.
The envisioned $14.3 million redevelopment of a former industrial site will include renovating historic buildings for new offices, including a new space for Zimmerman Architectural Studios Inc. But the site along the Menomonee River requires expensive sewer and storm-water work. A lift station must be built for the sewer pipes, and all of the storm water must be cleaned on site.
“There are challenges of taking storm water and creating storm-water quality before dumping it in the river,” said Doug Barnes, vice president and principal at Milwaukee-based Zimmerman.
The redevelopment project needs $2.5 million from the city for street, sewer and storm-water projects. The city plans to use a TIF district to cover $2 million and would pay off the project debt with increased property taxes. But it would take 26 years for the redevelopment to pay off the TIF district debt. The state only lets TIF districts last for 27 years, meaning there would not be enough time to pay off the remaining $500,000 needed for sewers.
So the city’s proposed 2010 public works budget will include $500,000 for the project. Alderman Michael Murphy on Monday challenged that decision, asking whether the money will be diverted from other projects.
The valley project will face scrutiny because Zimmerman is the only company to commit to moving into the development, he said.
“In the very difficult budget that we face for 2010, there will be some who ask, ‘Why are you doing this project at all?’” he said.
City Engineer Jeff Polenske said the money will not come directly from other projects.
“It isn’t a detriment to any other program,” he said.
Barnes said the utility work is a good use of city money because the site would otherwise not be redeveloped. If the city TIF is approved, renovation of the Zimmerman office can begin this year so the architecture firm can move in next year, he said.
“It allows all of the other buildings to then be redeveloped,” he said.
Future phases of the redevelopment will occur in 2013 or later. They include renovating 55,000 square feet of space in other buildings on the property into offices and commercial space.
The property is on the north shore of the Menomonee River between 16th and 27th streets. It was formerly used by the Wisconsin Gas Light Co. to generate coal gas to power city street lights and has several historic buildings. Owner Guiffre VIII LLC uses the site to store trucking and construction equipment and leases one building for an indoor skate park.
Milwaukee’s Zoning, Neighborhoods and Development Committee on Monday unanimously approved the TIF district. The full Common Council on Tuesday will consider the district.