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Nonprofit group snags downtown Milwaukee building

The long-vacant building at 728 N. James Lovell St. in Milwaukee will become the new home of Community Advocates, a nonprofit organization that helps homeless people. (Photo by Kat Berger)

The long-vacant building at 728 N. James Lovell St. in Milwaukee will become the new home of Community Advocates, a nonprofit organization that helps homeless people. (Photo by Kat Berger)

By Marie Rohde

The bad news is business is booming for Community Advocates, a Milwaukee nonprofit organization that helps the homeless.

The good news is the recession that put people out of their homes also positioned the group to buy a downtown Milwaukee building that otherwise would have been unaffordable.

Community Advocates bought the long-vacant building at 728 N. James Lovell St. from an investment group organized by David Jorgensen, a partner in VJS Construction Services Inc., Pewaukee, for $1.8 million.

That’s more than the building’s assessed value of $1.166 million and far more than the $600,000 the Jorgensen group paid for the 45,000-square-foot building in 2004.

Still, Advocates Executive Director Joe Volk said the group got a good deal.

“Jorgensen intended to convert the building to condominiums,” Volk said. “They poured a ton of money into the building before the condo market sank. All the windows are new. The roof is new, and all the mechanicals are new.

“It’s essentially a white box that we can convert to meet our needs.”

Still, Volk said, it was not an easy decision for the $18 million-a-year agency. Most of the money the agency takes in is from government contracts.

“This is a big deal for us,” he said. “We’ve never undertaken anything close to this.”

The building was constructed in 1911 and has been vacant for at least 15 years, said Jeff Fleming, a spokesman for the Redevelopment Authority of the City of Milwaukee. It was underused for at least five years before that, he said.

The additional work on the building will cost Advocates another $2.65 million, Volk said. The project is expected to begin in September, and Advocates expects to occupy the building by year end.

The group has asked the Redevelopment Authority to issue a redevelopment bond to cover those costs. The Redevelopment Authority is to meet Thursday to vote on the request to back the tax-exempt bond.

But the city is not inclined to do this kind of favor for a nonprofit group that doesn’t pay taxes.

“We made an agreement to make payments in lieu of taxes,” Volk said. “The assessment is not in yet, but we expect we’ll be paying $20,000 a year for city services. The city would never agree to issue the bonds without the agreement.”

Nonprofit groups make such payments to cover fire, police and other city-provided services, but they do not cover the portion of the property tax bill that would have been made to other taxing entities such as school districts, the county and the state.

The Jorgensen group paid $30,822 in property taxes on the building for this year.

Jim Scherer, vice president of the Milwaukee Economic Development Corp., a nonprofit group that helped Advocates through the loan process, said the city’s bond issuance lets Advocates get a lower interest rate and avoid paying federal taxes.

“The city is not at risk,” he said. “We are the conduit for the loan, but the agreement is between the bank and the borrower. We are not involved in that.”

Town Bank is the lender.

The new headquarters will let Advocates put most of its programs under one roof. More than 100 employees will work out of the building. Others will continue to work at a home for victims of domestic abuse, a halfway house for women recently released from prison and a safe house for the mentally ill.

“We have been overcrowded for some time,” Volk said.

If the economy turns around, he said, Advocates will not find itself rattling around in too much space.

“The unfortunate part of our business is that there will always be people who need our services,” Volk said. “We now serve about 40,000 a year. That’s an increase of 50 percent over three years.”

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