Council Okays Largest Urban Manufacturing Deal in U.S.
West Milwaukee company will move to city, but will it create any new jobs?
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.
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.
We Energies will try 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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More about the Komatsu South Harbor Campus
- Eyes on Milwaukee: Council Okays Largest Urban Manufacturing Deal in U.S. - Jeramey Jannene - Dec 18th, 2018
- Komatsu statement on South Harbor Campus approval - Komatsu Mining Corp - Dec 18th, 2018
- Eyes on Milwaukee: Committee Okays $40 Million For Komatsu - Jeramey Jannene - Dec 11th, 2018
- Eyes on Milwaukee: Komatsu Deal Includes Commuter Rail Station - Jeramey Jannene - Dec 4th, 2018
- Eyes on Milwaukee: America’s Largest Urban Manufacturing Proposal? - Jeramey Jannene - Dec 3rd, 2018
- Eyes on Milwaukee: City Lands $285 Million Industrial Campus - Jeramey Jannene - Sep 27th, 2018
- Komatsu Mining Corp. to Build $285 Million Headquarters and Manufacturing Facility in Milwaukee - Gov. Scott Walker - Sep 27th, 2018