Jeramey Jannene

Palomar or Streetcar?

By - Jan 22nd, 2009 03:31 pm

Tom Daykin did some digging and was able to uncover that the final request from Gatehouse Capital Corp. was $18 million in public money for the Palomar.

What else does $18 million buy us?  Well, it would be about the salary Bucks’ star Michael Redd will earn in the 2010-2011, around the time the Palomar would have opened down the block.  If you had bought one of the condos financed with $18 million in taxpayer dollars you would have been able to get a good view of Redd’s jump shot from the luxury box that the Palomar was going to buy for residents.

Also, you could get Prince Fielder for two years (story just broke).

But how about something that would have impacted the city the way the Palomar was supposed to (and in case you can’t remember Mary Beth Waite had a whole list of great things the building was going to do), what else could we do with that $18 million?

What if we as Milwaukee spent $16 million on the local funding share required to access the $91.5 million available to build a new type of transit system and executed Mayor Tom Barrett‘s transit vision?  Well instead of a hotel and condo project, we would have a streetcar system that links downtown together, as well as an express bus system.

Sure, there is a question of a funding source for operating costs for that system, but the RTA (which we endorsed) has a solution in the works.

Would you spend $18 million on a building that may or may not encourage development on the land around it?  Or would you spend it on a system that links up not only downtown, but the region and encourages development on (and increases the value of) every property near the route.

It’s not a choice between the two, but it’s important when considering the potential value of the Palomar to consider what else you could get with a similar amount of public dollars.  Spending that much on a luxury project with dubious catalytic potential is just too much.

In case you’re not yet convinced it probably wouldn’t have been a good investment to make.  Manpower received a $25.3 million TIF for their new headquarters just a few blocks away from the project.  They brought 900 permanent jobs, as opposed to the 200 or so permanent jobs the Palomar would have created.

More about the Milwaukee Streetcar

For more project details, including the project timeline, financing, route and possible extensions, see our extensive past coverage.

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Categories: Real Estate

7 thoughts on “Palomar or Streetcar?”

  1. Ryan Tomolo says:

    $18 million, unbelievable. And Mary Beth GAspar Waite had the gaull to blame the City and the Mayor for the project failing..


  2. Durkee Grow says:

    Well said. God I wish this city would get some priorities. Hopefully Obama will come through and that will just make it happen

  3. Stephen F. Thiel says:

    In Palomar’s defense, their request was for TIF financing, wasn’t it? TIF financing is a loan, secured by the property taxes on the building. The City has dozens of TIF districts and they almost all are current and self-amortizing. The Park East corridor is a unique parcel and may require TIF financing in the future.
    Personally, I would love to see the UWM engineering campus fill a chunk of this parcel.

  4. Jesse says:

    The problem with a TIF request for hotel space and condos is that unless it is a catalytic project, you will just be taking demand away from other nearby projects that aren’t asking for a subsidy. There is only so much demand right now in the market, and a subsidised project moving here may mean other condo/hotel projects such as the Moderne may not move forward.

    Also, TIF financing isn’t a loan secured by the property taxes, it is a grant to the developer paid by the property taxes of that specific parcel or district

  5. It might be worthwhile to remember Milwaukee’s premier hotel operator, Marcus Co. which might not be fond of outsiders using city financing to do what Marcus managed with its own funds, to wit the city’s three premier hotels. The company has a history of scaring away competing hostelries. The city assisted financing had a target on its back.
    I’d be happy to live in the Palomar model until they find a re-use for it.

  6. Jeramey Jannene says:

    @Horne I know Marcus has publicly rallied against TIFs for other hotels in the past (I want to say the RSC deal), and I’m sure they’ve lent a comment to the Mayor on this one. I was going to wait to mention it until anything from them became public or there was further debate about the TIF.

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