DeLong, Michels Making Large Investments In Port
New buildings, new jobs, new leases for port.
The DeLong deal calls for a $31 million agricultural export facility that will be used to ship a byproduct of ethanol manufacturing that is used as animal feed in other markets. It would be the first facility of its kind on the Great Lakes.
“This is one of the highlights of my career,” said Port Milwaukee executive director Adam Tindall-Schlicht on his second anniversary with the city. “DeLong’s investment at the port is the biggest at least since the 1950s.”
The Board of Harbor Commissioners unanimously approved a 4.42-acre lease agreement with DeLong that would pay approximately $3.5 million in lease payments over 30 years.
And that’s the plan. The indoor facility will be used for transloading train and truck loads of “dry distillers grain with solubles” (DDGS) and other agricultural products onto ocean-going vessels. The material is a by-product of the ethanol production process whereby corn is converted into fuel. Global demand for DDGS, which is used as a nutrient supplement for livestock, is growing according to a city report.
The project partners hope to export 200,000 metric tons annually, approximately $40 million worth of the product, from which the port will collect a tariff fee in addition to lease payments.
“This is a brand new tenant to the port and we welcome the DeLong family,” said Tindall-Schlicht of the Clinton-based company.
A new rail line servicing the AMEF will directly connect the system to Union Pacific and Canadian Pacific‘s rail network. An ethanol export facility already exists at the port. Approximately 20 percent of DDGS exported is expected to come from Wisconsin ethanol plants, with the remainder coming from Iowa and Minnesota.
The city will borrow $4.3 million to contribute to the capital cost of the project. DeLong is investing $6.2 million in the facility’s construction. Federal and state grants, first announced in February, are anticipated to cover the remainder.
DeLong would pay approximately $30,000 per buildable acre it leases. The facility, located at 1711 S. Carferry Dr., is expected to be completed in 2023.
Infrastructure contractor Michels Corp. has leased a portion of the port’s “Grand Trunk” site since 2016 and used it for staging for area projects. That lease was scheduled to expire in June 2021.
The company, which is building a $100 million mixed-use complex with an eight-story office building upstream on the Kinnickinnic River, will now lease even more of the Grand Trunk property after winning a competitive request-for-proposals process.
“What we know at this point is that there is going to be some construction of office buildings and loading and unloading at this site,” said Tindall-Schlicht.
David Stegeman, Michels chief legal officer and vice president of business administration, was present at the virtual meeting, but didn’t elaborate on the plan.
In a brief phone interview after the meeting, Stegeman told Urban Milwaukee the plan isn’t on the scale of the $100 million River One plan.
“We are very excited, but are not sharing any details until we are through the approval process,” said Stegeman.
Tindall-Schlicht said more information would be available in September when the proposal is reviewed by the Common Council.
“This is an excellent use of a piece of land that we have been trying to find what to do with for at least the last 20 years I have been around,” said commissioner Ron San Felippo. The property, a portion of which is being restored as a publicly accessible wetland, is named for the Grand Trunk Railroad which once used the site for loading train cars onto ships designed to bypass Chicago.
Michels will lease 17.40 acres, 13.5 of which are buildable, for up to 99 years. An initial lease period is for 20 years with extensions offered every decade.
Michels is estimated to pay $23,130,000 over the life of lease, about $17,000 per acre.
Commissioner Craig Mastantuono asked how such a long lease could be calculated. “I have no idea what competitive rent is going to look like 57 years or 74 years from now,” he said.
Tindall-Schlicht said the lease had inflation adjustments, tied to the Producers Price Index, scheduled every five years.
Commissioner Claude Krawczyk asked why the rent was nearly half that of the DeLong deal on a per-acre basis.
“The dockwall at Grand Trunk requires significant repair,” said Tindall-Schlicht. Michels will pay to remediate that in the first three years of its a lease, one of the terms of the deal.
The site, addressed as 632 E. Bay St., is also accessible only by smaller ships, primarily tugboats and barges.
“Location, location, location,” said Krawczyk.
The Michels lease was unanimously approved.
“Today’s votes and agreements have awoken what many think is a sleeping giant,” said Borkowski.
Another Possible Cruise Line Coming
Milwaukee scored a win when Viking Cruises announced in January it will bring new cruise ships to the Great Lakes. The company plans to enter the Great Lakes market in 2022 and will use Milwaukee as a turnaround point 10 times in the opening year, bringing an estimated 8,000 visitors through the city.
Jazmine Jurkiewicz told the Harbor Commission that another company is interested in using Milwaukee’s port and she anticipated having more in the coming months after a promising meeting.
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