Bruce Murphy
Murphy’s Law

Is O’Donnell Purchase a Sweetheart Deal?

Northwestern Mutual won’t sign full deed restriction for county deal, leaving it free to develop a high-rise development on lakefront land.

By - Nov 25th, 2014 10:38 am
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O'Donnell Park Parking Garage

O’Donnell Park Parking Garage

Something doesn’t seem right about the proposed sale of the O’Donnell Park garage to Northwestern Mutual by Milwaukee County. A small group of opponents argue the public interest is not being protected by Milwaukee County Executive Chris Abele, and I’m beginning to think they’re right.

The rationale here at first glance seems compelling: the county dumps a deteriorating garage that doesn’t make much money and will some day have to be replaced, and Northwestern Mutual (NM) buys it, fixes it up and gets a place for employees to park while allowing public parking on nights and weekends. True, the county only gets $14 million and after paying off the debt is left with just $5 million, but it dumps a fiscal headache and gives the garage to an upstanding Milwaukee company that promises to maintain the rooftop plaza as a public space.

So what’s not to like? Quite a bit, actually.

First, NM seems to be getting the property at a very attractive price. At county hearings, “five in all,” Milwaukee County Supervisor Patricia Jursik notes, “a range of $14 million to $40 million was discussed in valuations.  Clearly $14 million is at the low end of this continuum.”

Lakefront Gateway from 2010 Downtown Plan

Lakefront Gateway from 2010 Downtown Plan

Second, the company isn’t just getting the parking garage. The sale also includes green space along E. Michigan St., which a city plan has envisioned as an ideal spot for a a high-priced, high rise development like Kilbourn Tower. If that happens, NM could sell the land for a very hefty price. So why don’t the valuations include the potential value of this land?

Third, the deal also includes the Miller Brewing Company Pavilion, the building housing Coast Restaurant and the Betty Brinn Children’s Museum. Yes, the parking garage is also below that building, but why not a public-private partnership with the county retaining ownership of the building and NM getting the garage below? Why does the deterioration of the parking garage justify selling the pavilion, which is in fine shape. And what’s to stop NM from jacking up the rent for Betty Brin or replacing the entire building with something that makes far more money, given its spectacular location overlooking the lake?  True, Betty Brinn’s leaders support the sale to NM, but that seems to be based solely on trust in the company rather than any legal guarantees.

Fourth, why doesn’t the deal include a prohibition that prevents NM from selling the green space or replacing the Miller Pavilion? The Abele administration has stressed there is a deed restriction that assures the land can only be used for public purposes but it doesn’t cover the entire property being sold. If you draw a line from E. Wisconsin Ave. east to N. Lincoln Memorial Dr. only the portion north of that line is covered by the deed restriction. County corporation counsel Paul Bargren has advised, “The County has the right to block any attempt by NM or any future owners to lift the parks-only deed restriction on the northern portion of the O’Donnell parcel.” And two other lawyers, Jursik and Bill Lynch, chair of the Lakefront Development Advisory Commission, both emphasize that there is no deed restriction whatsoever. Bargren says there are city zoning restrictions for the southern portion of the property, but that could be changed any time, as the city wants to do to accommodate construction of the high-rise The Couture.

Fifth, why won’t Northwestern Mutual agree to sign a deed restriction for the southern portion of the property? Jursik says she has spoken with NM representatives three times, including one conversation with NM CEO John Schlifske, and the company refuses to sign such a deed. “Part of what we’ve said all along is that we don’t ever envision that Northwestern Mutual would want something right across the street that blocks our view to the lake,” NM representative Sandy Botcher told WUWM radio. That is certainly a reason to avoid developing the north portion of the property (which is deed restricted anyway), but the company could develop the southern portion without losing its lake view.

If NM officials don’t envision ever approving such developments, why won’t they sign a deed restriction to that effect? “There have been a lot of representations by NM saying the property will remain an available to the public,” Jursik notes. “And yet when you look at the contract, it does not contain any language to that effect. They have said to me they don’t want their hands tied on that south portion. They will have the ability to completely redesign the property should they want to.”

Sixth, why did the Abele administration give the impression the entire property was restricted as to future development? “We were misled at the outset that the entire property was, quote, deed restricted,” Jursik complains.

Sixth, why won’t Abele change course and insist on a deed restriction for the southern half of the property? “I’m really concerned Abele is not protecting the public interest on this,” Jursik says. Abele says Northwestern Mutual has other land it could build parking on and “if we push for too much they are able to do other things.” He also notes the county’s past problems developing real estate on land it owns (largely because of board vs. executive squabbles he refrains from noting) and says he wants to send a message to developers that the county is a reliable partner: “We want to build on a reputation as easy to work with.”

But this may be a case of being too easy to work with. From a market rate perspective, NM seems to be getting a pretty good deal even without the southern portion of the property. But if it has the ability to develop that portion of the property, the deal looks like a steal. With that land included, Jursik says, “there’s no way that’s a market-rate proposal.”

And it’s not as though Jursik is demanding all that much. “As an attorney I know it’s easy to create deed restrictions,” she says. So why the opposition to adding it?

All concerned here emphasize that NM is a great company. “They are a wonderful corporate citizen of Milwaukee,” Jursik says. “But,” she adds, “they have to do the right thing for their community.”

Drawings and Photos

Short Takes

-Two different parks groups have broader concerns, arguing that the county should not be selling parkland and this is a slippery slope that can lead to more such deals. Lynch, who has long been a parks advocate, wrote a lengthy legal analysis of the proposed deal pointing out what he believes is a dearth of language protecting the public. He certainly seems to be right about the southern portion of the property.

-Am I the only one who finds it strange that the Lakefront Development Advisory Commission made no recommendation regarding the sale of O’Donnell Park? The commission has representatives of the city, county and state and its mission is to “Preserve and protect the scenic and natural beauty of the lakefront” and “Provide access throughout the lakefront and especially to the water’s edge by all Milwaukee County residents and visitors.” If this deal doesn’t relate to that mission, what does?

-Speaking of maximizing the lakefront as a community asset, there is a broader issue here I’ve previously addressed: how the O’Donnell parking garage has never belonged on the lakefront.

20 thoughts on “Murphy’s Law: Is O’Donnell Purchase a Sweetheart Deal?”

  1. Dudemeister says:

    This article neglects to mention why it would be a bad thing if a NM developed the southern part of the property.

    I, for one, think it would be awesome if a high rise went up where that Miller Pavilion is today. The space is already developed, and doesn’t block WI Ave sight lines to the museum. That ugly structure always seemed out of place there. If they built upward, they already have ground floor tenants!

    Jursik will probably take any chance she can to say Abele isn’t protecting the public interest, though her point may still be valid. I suppose it depends on how you construe “the public interest.” Is it preserving part of a concrete park with a restaurant on it, or is it developing an underused assets as we are trying with the Transit Center? The latter would, after all, bring in tax revenue.

  2. Dave Reid says:

    @Dude True it would definitely help build tax base for the city.

  3. Bruce Murphy says:

    I’m not saying it’s necessarily a bad thing if NM developed it. That’s also a discussion worth having. But we’ve been told they can’t and won’t develop and therefore the market-rate value of this land isn’t included as part of the deal. That’s what I question.

  4. Dudemeister says:

    A worthwhile question. Maybe Abele is aware of some long-term redevelopment plans and really wants to make them happen, so he’s willing to sell at current price. In that case he oughtn’t shortchange the county coffers in such secrecy. Especially if NM were to hypothetically sell the development rights to a third party for a large profit, as you hinted.

    In any case, public opposition to this sale (and others like it) is shrinking. The extreme stance POP is taking with the transit center sale has painted them as simply anti-development. That gets the talk radio types riled up enough to blindly fight for anything POP opposes. We saw how many filled the public hearing in support of the sale.

    Interesting to see what the Board decides.

  5. Cheryl Nenn says:

    Thanks, Bruce for a good overview of some of the issues that many have with this proposal not protecting the public interest. I would also add that the property along Michigan St. (at the southeast corner of the property) is formerly a part of Lake Michigan, and as such, is supposed to remain in public use per the Public Trust Doctrine. I know a lot of people think that an exception should be made in this case, but adherence to the PTD is why we have a beautiful, publicly accessible lakefront that Milwaukee is known for. If you don’t think that is an important and amazing feature of our city, I’d encourage you to visit Cleveland or Toronto, where you can only enjoy the lake if you own a high rise apartment (at least in the downtown sections). If we allow development on former lakebed, then that opens up all other former lakefront properties for development (a big chunk of the green space west of Lincoln Memorial Drive for example). Would you be OK with condos lining the west side of Lincoln Memorial? Maybe some would think that is desirable, but I disagree.

    Also, POP (I’m on their board) is not anti-development. In fact, of all the dozens of development projects that are happening in the City right now, we are concerned with only this proposed O’Donnell Park sale and the Transit Center sale– for both the same reasons that we believe the Public Trust Doctrine should be upheld and that we shouldn’t be selling off our park property, and certainly not at fire sale prices. I personally think the Couture could be developed on the non-lakebed side of the Transit Center site, but that is not being considered as a compromise. Why? the refusal to look at other building configurations is most likely due to the fact that developers want to create this precedent to allow development on former lakebed, as its then “open season” along the lakefront for other projects.

    The County seems to be treating our parks and lakebed lands like they are a business in liquidation. I’m all for public/private partnership or even a lease, but if the Board has to take an up/down vote on the current deal on the table, it seems pretty obvious that their vote should be no. I’ve heard of one other proposal already where a City wants to purchase a south-side park, presumably for development. The slippery slope has begun.

  6. Virginia Small says:

    When you visit or view O’Donnell Park from Wisconsin Avenue (or other upper streets) you barely see or experience the parking structure below this 9-acre park that offers plenty of grass and other greenery (as the above image illustrates). But this park is all about the incomparable view. That’s why our smart ancestors decided to keep the best overlook of the lake for all citizens, not just the well-heeled few. And that’s why any buyer who could come up with $12.7 million (and some for a whole lot more) would want to own it.

    Despite some design shortcomings on the site, it’s still a very accessible and well-used park. And the parking operation is a cash cow, the only profit center in the county parks system, other than golf courses. So why do we need to sell it off?

    And why are so haughty that we think efficient use of below-ground parking is “beneath” us, that including a parking facility in any multi-use complex is so awful. If we don’t want to accommodate cars, why not get them off the beautiful Lincoln Memorial Drive? Parking garages below city parks has been embraced in Chicago (Milennium Park) and Boston (Post Office Square). Both are featured in Forbes magazine’s recent list of the Top 12 Best Parks in America. I doubt that anyone in those cities refer to those spaces as mere add-ons to a parking garage.

    And it’s very “pro-development” to keep parks, especially in dense urban areas. Parks are the best thing that ever happens to promote economic development and neighboring real-estate values. Just ask any economist or urban planner.

  7. Eddee Daniel says:

    Thank you, Bruce, for the clear and critical analysis of this bad deal. It’s refreshing to hear a reasoned argument about this issue.

  8. One could also point out the press has left everyone with the impression that NML gets the garage while retaining the public green space for the public.

    It’s such a tragic and obvious question to have gone unreported.

  9. Virginia Small says:

    Great point, Tom. It should be noted that if NM wanted to “preserve” O’Donnell Park “for all,” as NM’s CEO pledged in his Journal Sentinel op-ed October 26, there are great models nationwide for doing so. Park conservancies are the main legal way that parks are preserved, when governments bow out. Public-private partnerships can also protect a public asset.

    O’Donnell Park was built through a “public-private partnership,” with donations large and small coming from individuals, foundations and corporations. Their names are on a plaque outside the Miller Brewing Company Pavilion (soon to be renamed?) and I hear there are about 8,500 bricks throughout O’Donnell that name donors and memorialize lives and special events (like all those weddings on O’Donnell’s upper and lower plazas, which may soon be be ‘history” when the public loses access). Those donors thought they were investing in something permanent for the whole community, for longer than two decades. That “partnership” can only be continued if the public retains its stake, not if a corporation takes over a public park, protects its private ownership rights (as Lynch’s contract analysis reveals), and leaves the public holding on to little more than high hopes.

    Philanthropist Norman B. Leventhal had a dream of leaving a community-enriching park legacy for Boston. He invested money, time and visionary zeal to make that happen at Post Office Square, a now-legendary public park built above an underground parking facility, a “Garage Mahal” as the Wall Street Journal called it.

    Let’s hold onto to public ownership of O’Donnell Park, keep its annual $1.3 million revenue stream flowing into the parks budget, and worry about reinventing this site, for the common good, when the time comes, or when a Norman B. Leventhal comes along.

  10. Justine quisk says:

    First of all there are 2 huge parks north of this concrete structure and 1 to the west. Why don’t the nay sayers focus on improving these parks. It’s a parking lot not a park. Someone said throw some green space on there. It’s an afterthought. No one has improved it for years. Now a very small fraction of the community is crying to save a park. How about you focus your attention on fixing cathedral and the park off prospect before we need to have private companies improve those too. They need a lot of attention. Nm wants to come in and Improve a crap parking lot that no one obviously cared about before this.

  11. Tom deter says:

    Lets be honest here. I live in patricia jursiks diacritic in south Milwaukee. She claims to care about the parks. It’s absolutely a lie. She has let grant park and the oak leaf trail completely crumble. Until recently the friends group is making progress however resources aren’t there. I’ve when riding the bike trail in her distric it’s horrible outside her district the path is enjoyable.

    This is all politics and this is a complete joke. Sell the parking structure. Don’t let Bruce Murphy fill peoplea Brain with all these what ifs and fear of what isn’t going to happen.

  12. Mary Smith says:

    “36 Hours in Milwaukee”

    http://www.nytimes.com/2013/10/27/travl/36-hours-in-milwaukee.html?pagewanted=all

    The New York Times chose 5 photos to illustrate “36 Hours in Milwaukee.” One was taken from O’Donnell Park. It shows two people crossing the Reiman Bridge from O’Donnell Park to the Quadracci Pavilion.

    Another, (probably taken from the Reiman Bridge) shows the Cudahy Gardens in front of the art museum.

    Compare these two photos with the photo which illustrates the link to this article. That photo (like others used by the Journal Sentinel,) shows the entrance to the parking garage.

    Perhaps it is the persistent use in the local media of these parking garage photos which influences some to see O’Donnell Park as a parking garage and not the unique Lake Michigan and architecturally significant vista location that it is.

    The view from the O’Donnell Park plaza is unique facing both east and west. Facing west is a view straight down Wisconsin Avenue. This is a priceless location which should remain publicly owned and publicly accessible.

  13. Paul says:

    After attending a public input session and reading all articles on this matter the facts about this theft of the public land trust are being exposed. Representatives know the sale is not best for the public in the long run. Vote no on the sale and let’s keep pushing for our park to become more of an asset to Milwaukeeans, not less.

  14. Tyrell Track Master says:

    Interesting points… but I agree that it wouldn’t be the end of the world to see this whole thing developed, though some public space should certainly be required. I believe this is a gift horse… be careful what you wish for!

  15. Frank says:

    I don’t agree it’s a park. Parks don’t have structural problems and falling concrete on their undersides. It has a lot more in common with MacArthur Square than, say, Lake Park. It does have a great view, a rarely used green space, a building that might be called an eyesore if it weren’t so modest and THE most significant public art work in Mke. Whatever it is, it’s ours, and it seems like it’s worth a lot more than $14 million without deed restrictions on its southern half.

  16. Pat Jursik says:

    To Deter of So. Milw. (part of my district): You are entitled to your own diatribe and opinions, but not your own set of facts: Last year I helped over ride an Abele veto to get $500,000 to fix up the Oak Leaf trial and this year added $850,000 to fix up the Grant trail. Since Abele got roundly criticized for the prior veto, I’m glad to state he was on board for the second phase. For thirty years, I minded my own business running a law practice with no intention of putting myself out there for untoward criticism from all corners, but when my 2007 opponent introduced his campaign slate that included selling off Warnimont Park since we “had too much park land”, I put aside my private practice to run against this candidate. It is true our parks are neglected, but I have championed Parks my entire political career as short as it may be.

  17. Sura Faraj says:

    Thanks Bruce, for highlighting these issues. This sale represents more than a slippery slope leading to more parkland sale. it will mean losing an annual revenue that is feeding our county budget now, and will cause the sale of more parkland. We will lose Milwaukee’s wonderful legacy which so many generations worked so hard for.
    We need to have a longer view and a broader view, and understand that parks ARE development also. Unfortunately, Abele, who is also a developer, can’t see that and is taking the short-sighted approach. We deserve better.

  18. Dudemeister says:

    To those who claim a revenue loss, don’t forget that new property taxes will come into play. And the cost of maintenance will disappear. And the garage probably won’t kill any more people.

    I didn’t say that POP was anti-development. However, it does not matter if the organization believes it’s pro-development or anti-poverty or in favor of wormhole creation – it’s about perception. And while most in the city would certainly support the stated goal of POP, the belief among many in the talk-radio listening county is that the group has an anti-development sentiment. You won’t convince them otherwise.

    The importance of the public’s beliefs here takes a secondary role, of course, as the Board can decide what it wants. They don’t need a referendum to sell the garage.

    Wow, Patricia Jursik commented! And apparently several Preserve Our Parkers. This place just keeps getting bigger.

  19. Virginia Small says:

    Re: the revenue loss, the County has reported the annual tax-base revenue it will get as about $66,000 a year. Then there’s the interest it will yield if it invests a $5 million net gain from the sale in a “parks stabilization fund.” That would likely be $150,000 or so (unless it can get better-than-average yields). The $1.3 million O’Donnell Park now generates annually is after all its general maintenance expenses .And the County has confirmed that this income supports the upkeep of all the other parks. The only way to make up for that shortfall will be through higher taxes, or further slashing of the already-decimated parks budget.

    O’Donnell Park’s parking rates are among the lowest in the area, and it’s listed on the streetcar map as one of the top-ten parking facilities downtown in income. Aside from all its value as a cultural and lakefront gateway, and all the other benefits it provides for the public through the plaza gardens and pavilion venues, O’Donnell Park is a cash cow. It makes no economic sense for the County to abandon it, and no urban planning sense for the City of Milwaukee to seal the deal. Selling off your prime lakefront park for a pittance is a bankrupt move. Even Detroit avoided that. And Milwaukee’s in a new boom.

    The County already has spent money to make repairs to ensure the garage’s safety. It delayed a $1.3-million repair in the garage’s rooftop “membrane.” Was that because it was already in negotiation to sell it, since those involved say this sweetheart deal has been in the works for over two years? You don’t sell a money maker because period maintenance means you might not always make the same huge amount of money. And you don’t sell parks because you think they have no value except as cash cows. If people think that’s a winning idea, those who love Milwaukee may be in worse trouble than we thought.

  20. Marie says:

    Bruce, you are not alone in finding it strange that the Lake Development Commission made no recommendation on the sale of O’Donnell Park. You can ask Teig Whaley-Smith, the County’s head of economic Development, and Rocky Marcoux, who oversees development for the City. They’re members of the commission and lobbied hard at a hearing to make sure the LDAC voted that this deal was “not in their purview.”

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