Council Okays Largest Urban Manufacturing Deal in U.S.

The Milwaukee Common Council approved city financing and associated land sale for the $285 million Komatsu Mining manufacturing campus proposed for Milwaukee’s Harbor District.

The proposed campus for industrial giant Komatsu’s mining division would be built on approximately 68 acres of waterfront land at the east end of E. Greenfield Ave. Komatsu Mining intends to relocate its operations and 598 employees from suburban West Milwaukee and its office building on the west side of Milwaukee to the site in 2022.

Under terms of the deal negotiated by the Department of City Development, the company would be eligible to earn a total of $18.2 million plus interest over 25 years if it employs 946 people and up to $25 million if it can reach the 1,300 jobs. It would receive less, a prorated amount of the $18.2 million, even if it fails to create any new jobs. The funds would come from incremental property taxes generated by the development. The deal, which also includes $59 million in state income tax credits, was first announced at a press conference on September 27th.

To create the site the city would sell a 13-acre parcel long used for coal storage for the Valley Power Plant run by We Energies. The city land would be combined with a 46-acre brownfield site owned by We Energies, and long-known as the Solvay Coke site, to form what Komatsu is calling its South Harbor Campus. The Solvay site is the largest brownfield in the city. Both sites would be sold to a real estate affiliate of Komatsu for $152,000 per acre.

Komatsu intends to build a 410,000-square-foot manufacturing facility on the We Energies site. The city site, divided from the We Energies site by railroad tracks, would be used for a 170,000-square-foot office building and 20,000-square-foot company museum and training facility. Both Department of City Development Commissioner Rocky Marcoux and Komatsu surface mining president John Koetz have characterized the deal as the largest urban manufacturing proposal in the United States. “Most companies that are expanding choose the easy route. They go into suburbs and plow up a cornfield,” said Marcoux about the proposal last week.

Council members Robert Bauman and Nik Kovac expressed displeasure with the use of city land to generate only 11 jobs per acre, while noting the Harbor District Water and Land Use Plan called for nearly twice that. “The reason there are so few jobs per acre here is because they have sprawling, suburban-style plans,” said Kovac. Both council members said they would support the deal if it used only the We Energies parcel. Bauman, who objected to the deal at length when it was before the Zoning, Neighborhoods & Development Committee, said he would support an even greater subsidy if the company was to relocate to Century City or other impoverished areas of the city.

“Anyone who is pro jobs should vote against this deal,” said Bauman. A roll call vote on the proposal never happened, though, because of council rules. Three of the 15 members must object to the file to trigger such a vote, but only Bauman did so. Thus, the financing district and land sale effectively passed 14-1 as part of a broader package of unanimously adopted files from the zoning committee.

In addition to the $25 million maximum for Komatsu, the city will expend up to $15 million building a riverwalk and other infrastructure. In an unusual move, it would retain ownership of the riverwalk and a 45-foot-wide strip of land underneath it on the site. We Energies will retain ownership of the waterfront portion of its property as well, which is designed to insulate Komatsu for liability involved in environmental cleanup and allow We Energies to proceed with that work in the future. The city will entirely fund the construction of the riverwalk, approximately 4,300 linear feet, over both sites.

Kovac and Alderman Michael Murphy praised changes made to the plan that expanded the width of the riverwalk. “I think, with Alderman Perez and the Harbor District’s pushback, we got a [riverwalk] design we can all be proud of, that wouldn’t have happened with the plan originally presented by DCD,” said Kovac. The company has yet to hire an architect for the final design of its campus, but the city won’t have design control over it following the land sale because it complies with zoning for the site.

We Energies will pay to lower the roadways under the railroad bridge on E. Greenfield Ave. and the railroad bridge on S. Kinnickinnic Ave. south of the Kinnickinnic River by one foot. The adjustments will allow large trucks to access the site. More significantly, the utility could end up spending over $40 million on its environmental remediation according to Marcoux. The company was a customer of Solvay Coke and is one of many parties liable for the site’s cleanup. Cleanup was underway on the site before the Komatsu deal was announced.

The Department of City Development and Port Milwaukee have a number of aspirational goals for the land left over from the development. As part of the deal, the city will get a purchase option on the .79 acre site owned by We Energies located on the north side of E. Greenfield Ave. for use as a future commuter rail station. The utility had acquired the small, triangular lot as part of its acquisition of the larger site to the south.

Port Milwaukee, the city-owned port, is also looking at developing a cruise ship terminal along the riverwalk. One ship docked in Milwaukee this year in the middle of its journey, but the port’s vision is to become a destination for the more lucrative start or end of trips by vessels. It previously received leasing revenue from the city-owned site proposed to be sold to Komatsu.

Komatsu Site Plans

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