South Milwaukee apartment project canceled after financing shortfall

By ERIK S. HANLEY

USA TODAY Network via Reuters Connect

A project that could’ve brought 63 apartments and 5,000 square feet of commercial investment to a South Milwaukee property that’s been vacant for over a decade is canceled after the developer was unable to secure financing.

That’s according to South Milwaukee City Administrator Travis Wells who noted in an email to the Milwaukee Journal Sentinel that AK Development was unable to obtain financing for the Canal Transit Lofts project at 2318 10th Ave., the site of a former gas station.

The proposal included a 64,000-plus-square-foot commercial building with 63 market-rate apartments and approximately 5,000 square feet of commercial space. The South Milwaukee Common Council chose the proposal in January 2023 after the city requested proposals for the site in 2022, Wells said.

The approved development agreement required AK Development to secure financing and close on the property by June 30, 2025, Wells said. At the developer’s request, the city amended the agreement to extend the deadline to March 31, 2026, to allow more time for financing.

The developer was not able to meet the extended deadline.

“After carefully considering a subsequent request for additional time, the city determined that a further extension was not warranted,” Wells said. “As a result, the development agreement terminated in accordance with its terms.”

The project budget was approximately $18.9 million. AK Development had sought to use about $12.6 million in WHEDA funds and was also seeking $1.5 million from South Milwaukee through tax incremental financing.

South Milwaukee owns the 0.7-acre parcel and Wells said the city is committed to redeveloping the site and is pursuing opportunities in the best interest of the community with a realistic path to successful completion.

A former Amoco/BP gas station was demolished on the property which included the removal of fuel tanks in 2018. Prior to that the property was unused for over five years.