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The University of Wisconsin-Milwaukee Real Estate Foundation will have two extra years to make its second payment on county-owned property for its Innovation Park project. (Rendering courtesy of the city of Milwaukee)
Development could trump $5 million in maintenance projects if Milwaukee County agrees to delay payment on a $13.55 million land sale.
The University of Wisconsin-Milwaukee Real Estate Foundation is seeking a two-year deadline extension on its second $5 million payment to acquire county-owned property in Wauwatosa. The 89-acre tract of land will be the future site of the school’s Innovation Park, which would consist of school and private research buildings, as well as about 200 apartments.
The extension already gained a narrow 4-3 approval Monday from the Milwaukee County Economic and Community Development Committee, and the final decision will go before the County Board on Feb. 3.
But delaying the second payment from 2012 to 2014 will cost the county $5 million already allocated for capital improvement projects this year, including $540,000 toward O’Donnell Park maintenance, $996,000 in Milwaukee County Courthouse repairs and $1.17 million in building assessments.
The County Board allocated money from the second payment last year, anticipating the land sale would be complete by December 2010. Under the existing sales agreement, the second payment would be received one year after closing the deal.
“We kind of made our own bed here,” said Milwaukee County Supervisor Jim Schmitt. “I’ve always said we shouldn’t base our budget on land sales.
“Why did we put monies in our budget that we don’t even have in hand?”
VIEW A LIST OF PROJECTS TO BE FINANCED
WITH UW-MILWAUKEE’S LAND SALE MONEY
The original agreement called for the school to pay $5 million upon closing the land sale and a second $5 million installment one year later. That is not enough time to raise the money, said Bruce Block, chair of the UW-Milwaukee Real Estate Foundation.
Either the county approves the two-year extension to complete the second payment, he said, or risks losing the land deal.
“From our perspective, we want to get the county paid off, too,” Block said, “but there is no way any prudent businessman would go forward on this deal.”
That is not a comforting ultimatum, said County Supervisor Marina Dimitrijevic. If the second payment is postponed, the county then needs to decide how $5 million in non-financed maintenance work is going to proceed.
“Maybe a plan can happen before the board meeting,” she said, “and it sure needs to because I won’t be able to approve this until it does.”
But no alternatives should be discussed until the County Board grants the extension, said Renee Booker, director of Milwaukee County’s Department of Administrative Services. Once the board sets policy, county staff can then react accordingly, he said.
“We’ll look at all resources to determine where it makes sense to perform repairs,” he said, “but we’re not going to close for business.”
The $5 million gap could narrow if the school sells residential space for development, said Dave Gilbert, president of the UW-Milwaukee Real Estate Foundation. Under the amended sales contract, 75 percent of the money made from new deals would go directly to the county.
A property being marketed for residential use could bring the county $1.5 million to $2 million, said Craig Dillman, the county’s real estate manager.
“We’re trying to get a deal done as quickly as possible,” Gilbert said, adding he “wouldn’t discount the possibility” a deal is done before year’s end.
The county will continue plans to make $6.6 million in repairs on the O’Donnell Park parking structure, said Jack Takerian, director of the Department of Transportation and Public Works. Much of the work has been financed with borrowed money, he said, making it unlikely O’Donnell maintenance will be delayed.
But other projects that require standard maintenance can’t use borrowed money to finance the work.
“It might mean other projects get delayed,” Takerian said. “We’re going to work with them to make sure we can get fixed what we can get fixed based on the funding that’s available.”
Milwaukee County board members suggested the school borrow its own money to afford the second payment, but Block said the foundation has not spoke with any banks.
“And we don’t intend to,” he said, “because there are no substantial bank loans being given for vacant land.”
