Milwaukee should explore how land sales are managed in order to achieve the highest and best use.  If Milwaukee can become better at converting land from public and vacant to private and developed it will only be a benefit to the entire city by building a better urban fabric and raising the city tax base.

Currently land sales in Milwaukee, be it those executed by the state, county, or city, don’t allow for speculation and restrict developer freedom with the current purchase options/request for proposal process.  The process currently in place is designed to protect the interests of the city and to attempt to create a level playing field for developers.  It succeeds, sort of.

The current request for proposal (RFP) process involving publicly-held land works by announcing a request for development proposals, judging the replies, and granting a time-limited purchase option for the land to the winning party.  The system is not without flaws.  Submitting the proposals is burdensome for developers and requires a clear picture for the use of all of the land in the parcel before ownership is even granted.  If a developer wins the option to purchase the land, there is very little control on their execution of the proposal.  The option contracts also are often structured as such that the time component is virtually meaningless as they are frequently extended to avoid having to restart the process.  The final large problem is that the process is slow and does not allow a market to form around the land as it would for private land.

The Changes

Applying more market principles to the RFP process might speed the transition from public and vacant to private and developed for publicly-held parcels.

The first of such adjustments should be to allow speculators into the market.  With the current process, developers are effectively the only parties that can buy parcels with a requirement that a proposal be submitted first.  By regulating the use of land with zoning the desired use can be created flexibly after the sale of the land.  Zoning codes would need to become more detailed to include explicit minimums (and potentially maximums) along with use types to ensure that any development of the land benefits the area around it.

The second of such adjustments should be to make the public land more closely mimic the properties or private property before it is developed.  Currently the RFP process requires land to frequently be bought as a single parcel, with no flexibility to sell portions to others.  Speculators should be able to obtain a contract for a plot of land at auction and have the ability to parcel it out to others to develop.  Parceling of large blocks of land could be done after the contract was obtained, not before as is currently required.

The third adjustment to the RFP process should be to enhance the time-limited option contracts currently created.  Allowing speculators into the market has the danger of creating parcels that remain undeveloped for years, and a safe guard is needed.  To encourage the ultimate goal of getting the land developed, contracts should be granted with yearly fees that grow annually.

A per square foot cost can be assigned to the land, so if a specular wishes to sell or develop a portion of a parcel they may.  When the land is ultimately developed, the portion used should be paid for in full, instead of just the option cost.  However, the amount paid on the option could be applied towards the cost of the land.  This would allow higher option prices to be charged, while further enticing development the longer a parcel is held (coupled with the higher option costs each year).  The price paid on the option will be able to exceed the actual cost of the land, encouraging the land to be developed or to let the contract lapse.

If a contract owner wishes to exit their obligations of the growing annual payments, they can simply sell their contract to another party or notify the land-holding agency that they wish to release their remaining contract options.  This would allow partial development (to corresponding zoning codes) of a parcel, while not forcing other portions to remain undeveloped.  To prevent the building of a structure by a developer and the failure to build any landscaping on small portions of the land remaining (which would then be released back to the government unit undeveloped), the contract would have to stipulate a minimum divided parcel size.

The Intended Effects

How would this change Milwaukee as it is now?  In the past ten years the largest example of the RFP process has been the reclaimed land from the former Park East Freeway spur.  While small border parcels are being infilled, almost all of the land that has come under the ownership of the county has remained undeveloped.  Why?  Simply the lots are too big.

By allowing speculators to buy the land at auction without proposals (but with strict zoning codes) and affording them the flexibility to sell smaller parcels, much of the land may have been developed already. Furthermore, the escalating annual payments would have begun to push developers like RSC & Associates off their block of land, opening it up to the market again.

Developers like Robert Ruvin, who win RFP option contracts, then struggle (or fail) to actually develop the land would be given options to reasonably scale back their projects by using less land (at less cost).

The state of Wisconsin Department of Transportation (WisDOT) will soon begin selling the parcels used during construction of the Marquette Interchange.  Allowing them to use a more market-based approach would allow them to sell options on the land to private interests, begin to see a revenue stream immediately, and have private interests searching for developers.

If you’re questioning the possibly that such a plan allowing subdividing would work, look no further than the former Pabst Brewery.  The Brewery Project stewarded by Joseph Zilber has successfully parceled off buildings that will create an entirely new neighborhood.