Parking lot development stuck in neutral

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By James Briggs

Milwaukee is completing a $225,000 environmental cleanup of a downtown parcel the city has leased for decades as a surface parking lot.

The site should be free of contaminants by the end of the month, city spokesman Jeff Fleming said, but parked cars likely will stay a while longer.

City officials want the remediation to make the property at Fourth Street and Wisconsin Avenue more appealing to developers — hotel builders in particular — and, in turn, help solve a conundrum related to the Frontier Airlines Center, which is across the street.

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The convention center is long overdue for an expansion, said Franklyn Gimbel, chairman of the Wisconsin Center District, which manages the building. The city is losing major conventions, such as the National Rifle Association, he said, because other Midwestern cities have built more attractive venues.

But the city unlikely is to gain favor for an expansion, he added, as long as Milwaukee lacks sufficient hotel rooms to accommodate large gatherings.

“If developed as a hotel property of significant size,” Gimbel said, “the hotel property would give great impetus to our energy in getting the kind of public and political support we need for expanding the convention center.”

The Frontier Airlines Center, which opened in 1998, is paying its debt by collecting $22 million a year in taxes for hotels and food and beverage. Additional financing would be required to pay for what Gimbel estimates to be a $150 million to $200 million expansion on property the center already owns to the north.

Such a project, though, makes little sense without making available to attendees a new hotel of at least 750 rooms, Gimbel said. There are several conventions a year, he said, that fill the area’s 2,000 hotel rooms to capacity and push people to the suburbs.

Several proposals, mostly for hotels, have fizzled, most recently in 2009 when Charlotte, N.C.-based Ghazi Co. failed to follow through on a development. City leaders want to bring a hotel to fruition, Fleming said, but won’t offer financial incentives beyond the environmental work under way.

“The city,” Fleming said, “has been pretty consistent about saying it will not subsidize hotels in the downtown market. The city is not prepared to step up to fill any gap that might exist in development proposals.”

Paul Upchurch, president and CEO of Visit Milwaukee, the convention and visitor’s bureau, said the best-case scenario would be for a hotel and convention center expansion to be built simultaneously.

About 34 percent of Milwaukee’s tourism demand comes during June, July and August, Upchurch said, which either would mean trouble for a new hotel during the winter months or a lack of rooms to accommodate an expanded Frontier Airlines Center during the summer.

Even worse, though, is the current predicament in which neither project is close to happening. A convention center expansion probably is at least five years away, Gimbel said, and so far no one seems interested in building a hotel across the street.

Upchurch said he has not heard of any suitors either.

“There have got to be some demand generators,” he said, “that would drive hotel construction.”

Gimbel has been promoting the hotel project to investors, he said, but he understands why none is ready to step up and build.

“There aren’t a lot of folks,” he said, “looking right now to invest in real estate.”