Council Approves Ikon Hotel Deal Despite Objections
Plus: Council unanimously endorses host of other development projects.
Despite the objections of four council members, the Milwaukee Common Council approved the second financing package for the One MKE Plaza – Ikon Hotel development proposed for the busy intersection of W. North Ave. and W. Fond du Lac Ave.
The $36 million project, from the Haywood Group, is centered around the redevelopment of the former Sears department store into the 80-room Ikon Hotel, conference center and co-working space, and will rely on a variety of funding sources.
The city approved a $4 million loan in May to kickstart the work, and Department of City Development Commissioner Rocky Marcoux said at the time that an additional funding allocation would ultimately be needed when a final project budget was assembled. The additional $5 million would be added, as a second mortgage, after developer Kalan Haywood secures $15.5 million from a bank loan and Opportunity Zone equity investors. The funds would come from a tax-incremental financing (TIF) district created for the project.
“We are certainly excited to move this forward,” said Marcoux last week when the project was before the Zoning, Neighborhoods & Development Committee. “One of the reasons we are bringing this forward now is he needs to have confidence in dealing with banks.”
But a report from independently-elected City Comptroller Martin Matson deemed the project a “significant risk” from what Matson says is an objective financial recovery standpoint based on comparisons with other hotels. But Matson said his advice was limited to just that, and didn’t consider whether the city should be seeking to reverse a cycle of disinvestment.
After three council members objected Tuesday morning when it was before the full council, triggering the need for a special roll call on the item, Alderman Russell W. Stamper, II, in whose district the project would be located made his case to his peers.
“I understand the opposition, but it’s time for us to make a significant difference in the city of Milwaukee with this development, with this opportunity,” said Stamper. “I ask for your vote.” He echoed Marcoux’s earlier comments that the deal would allow Haywood to secure private financing.
Only Ald. Michael Murphy explained his opposition to the deal. “Based on the Comptroller’s analysis, I have concerns about the aggressiveness of the rate of return,” said Murphy.
Describing the worst-case scenario where the city ends up opening the property, Murphy said: “I don’t think I want to have our taxpayers be in the hotel business.”
“I hope I’m wrong and it’s successful,” concluded Murphy.
Haywood has previously described the project as more than a hotel, instead characterizing the hotel as a bonus to the 25,00-square-foot conference center. Marcoux has echoed those remarks, noting that the conference center would create an event venue capable of hosting things like the Milwaukee Business Journal’s Central City Business Awards in the central city instead of the Historic Third Ward.
JCP Construction is leading the general contracting on the project, with Engberg Anderson Architects leading the design. Haywood said last week that JCP would be on site over the coming months to perform additional pre-demolition work and secure the facility in advance of actual construction once financing is secured.
Council Approves Other Projects
The Common Council unanimously approved a host of other projects during its Tuesday meeting.
A land sale at 6767 N. 60th St. that would advance a tiny homes housing project for homeless veterans was approved unanimously with great fanfare. The council paused, at the direction of Ald. Chantia Lewis, to applaud the members of Veterans Outreach of Wisconsin that were in attendance. The non-profit is proposing the project based on a similar facility in Racine. A zoning change is still required for the project.
The council granted site control to two developers proposing projects on the north side of the city. Developer Brandon Rule is seeking to redevelop the former Johnson’s Park entertainment center near N. 76th St. and W. Good Hope Rd. into apartments, a possible boutique hotel and “entertainment entity.” Bria Grant was also granted an exclusive right to negotiate for a city-owned property at 2501-03 W. North Ave. which would house a restaurant with a social mission and Grant’s health-focused non-profit UniteMKE.
A zoning change and street vacation were approved for Master Lock and its W. Center St. campus that would allow the company to expand its security perimeter and better direct deliveries. Ald. Robert Bauman had objected to the proposal at committee, but was silent on the matter before the full council.
It advanced a bureaucratic change to enable a future home for the Office of African American Affairs to open at 4830 W. Fond du Lac Ave.
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More about the One MKE Plaza project
- Eyes on Milwaukee: Developer Assembling Land for Ikon Hotel - Jeramey Jannene - Oct 1st, 2019
- Eyes on Milwaukee: Council Approves Ikon Hotel Deal Despite Objections - Jeramey Jannene - Sep 24th, 2019
- Eyes on Milwaukee: Committee Okays $5 Million More for Ikon Hotel - Jeramey Jannene - Sep 17th, 2019
- Eyes on Milwaukee: Council Okays Subsidy for One MKE Plaza - Jeramey Jannene - May 7th, 2019
- Eyes on Milwaukee: Committee Okays City Funds for Ikon Hotel - Jeramey Jannene - Apr 30th, 2019
- Eyes on Milwaukee: 7 Takeaways From Ikon Hotel Deal - Jeramey Jannene - Mar 28th, 2019
- Eyes on Milwaukee: Old Sears Building to Become New Hotel - Jeramey Jannene - Mar 27th, 2019