The Moderne Project Held for Special Committee Meeting
The Moderne, if approved, would be located at 1141 N. Old World Third St. The high-rise project would include 203 rental units, 14 condominiums, 214 parking spots, and a retail component. The plan included expanding the Park East TID by $11 million to provide for $9.3 million in loans for the Moderne, $650,000 for the construction of a new park, and $850,000 for administrative costs. The majority of funding for the project, a $41.4 million loan, would be serviced through Capmark Financial Group, funded with AFL-CIO pension funds, and guaranteed by HUD. Alderman Michael Murphy pointed out that with a 221(d)4 HUD loan, “you can’t go to a private bank anyway, you have to go to a municipality.” The discussion revolved around the risk taken on by the City of Milwaukee if the 14 condos were not sell over the course of four years.
Rocky Marcoux, the Commissioner of the Department of City Development, explained that similar rental units in Milwaukee have an occupancy rate of 97 to 98% and that “we believe the current credit crunch necessitates a short term change in policy,” indicating that generally DCD wouldn’t support this type of city financing for residential units, but that on a limited scale during this time in the market it was open to funding a few projects. He added that “I believe it will jump start the west end of the Park East.”
Alderman Bob Bauman explained his point of view saying that “this is a highly risky project, everybody understands this,” then added that “this is basically a stimulus project.” He indicated that if the developer could secure his personal guarantee then he would be open to the project. Alderman Willie Wade stated “I have some issues with participation,” referring to the RPP levels proposed for the projects. Alderman Jim Witkowiak stated that “in my case I’m looking for the personal guarantees to be shored up a little bit,” but added that “the benefits of doing this project, far far outweigh the risks.”
The Committee generally indicated that the primary issues revolved around the better defining of the default clause, securing the developer’s personal guarantee, and improving the RPP numbers. The project was held until by the Committee, until a special meeting immediately prior to the November 3rd Common Council meeting, with the intention that these three main issues could be resolved, and the project could possibly receive approval.