City Attorney Blocking The Couture

Nothing is ever easy with The Couture, a proposed 44-story lakefront apartment tower first introduced in 2012.

City Attorney Tearman Spencer is now refusing to sign a revised development agreement between Barrett Lo Visionary Development and the City of Milwaukee.

He’s objecting to an amendment added by Alderman Robert Bauman, and accepted by Barrett Lo, that would have the development team contribute $100,000 to the anti-displacement fund administered by MKE United, a city partnership with several non-profits. The fund helps fight gentrification by helping residents in the greater downtown area pay their property taxes.

Spencer believes Bauman overstepped his authority as an alderman and committed an ethics violation by pushing for this donation.

Bauman offered the amendment after developer Rick Barrett, no relation to the mayor, failed to meet the latest deadline to start construction by February 1st.

Barrett and business partner Tan Lo would personally guaranty the remaining $1.41 million balance on a federal grant, creating a liability shield for investors who reportedly were otherwise ready to provide the equity necessary to gain a $103.5 million, federally-guaranteed construction loan to back the $188 million tower. The city is providing $19.5 million for public infrastructure costs related to the project via a tax incremental financing district.

The personal guaranty amount is the unspent portion of a $14.2 million, 2015 federal grant to extend the streetcar to the lakefront and through the development site at 909 E. Michigan St. The city must complete the work by June 2022 and needs the remaining funds to do so.

The city would also waive the right to pursue a claim against Barrett Lo or the investors related to the full $14.2 million grant should the federal government claw it back.

Bauman offered his amendment at a February 23rd committee meeting in response to what he said was a development agreement amendment that otherwise benefitted Barrett.

The Department of City Development is neither for, nor against Bauman’s amendment. It negotiated the guarantee and waiver.

“Our preference would be decisions like this would be made on a more global policy scale,” said Commissioner Lafayette Crump during the committee meeting.

Pushed for clarity on where DCD stands, Crump offered: “I wouldn’t say we are objecting to this.”

But Crump was previously very enthusiastic about the idea.

“I love this idea, and will talk this up with the team,” wrote Crump in a late night email exchange on February 3rd when Bauman first floated the idea. Urban Milwaukee obtained the emails through an open records request.

By the next day, the commissioner was less enthusiastic.

“Discussing with the team, I think we want to be careful about implicitly tying any approvals to contributions, but I do want to start discussing such contributions more often with developers and contractors as an additional way that they can be supportive of increased equity in the city,” wrote Crump.

Spencer didn’t offer an opinion on the proposal until after the council unanimously approved it. His first letter on the matter is dated March 9th.

The attorney doesn’t believe Bauman has the authority to even make the deal in the first place.

“Our office intends on not signing approval of the contract’s provisions because individual Alderpersons do not have the authority to negotiate or to draft Development Agreements or provisions therein or amendments thereto,” wrote Spencer. But council members have added similar amendments in the past, including to the Fiserv Forum financing package.

Spencer, in two follow-up letters to Council President Cavalier Johnson, has reiterated his opposition to signing the agreement. He also said he is consulting the citizen-led Ethics Board on what to do with Bauman’s motion.

The independently-elected City Attorney believes Bauman violated state statute 19.59 and city ordinance 303-5-3 that “prohibit a local official from soliciting or accepting, directly or indirectly, anything of value if it could reasonably be expected to influence that official’s vote.”

He also believes the council violated city ordinance 304-21 in approving a contract greater than $25,000 without city attorney approval.

But that ordinance applies only to the transfer of property. Barrett Lo has owned the 2.2-acre site since 2016, acquiring it for $500,000 from Milwaukee County.

It’s just the latest disagreement between the council and newly-elected city attorney. Spencer has accused the council of leaking documents and City Hall of having a toxic culture, while council members have expressed frustration with Spencer, particularly related to matters surrounding the demotion of former police chief Alfonso Morales.

Where does the mayor stand on things?

Mayor Tom Barrett, on March 2nd, pledged to return the resolution unsigned to the council, a rarely used move that would have him neither approving, nor denying the amended deal. He said Barrett Lo had already agreed to the contribution but his preference was for a global policy going forward.

But Spencer’s resistance prevents the mayor from doing something internal emails reveal his commissioners would like him to do promptly: sign the actual development agreement to advance the project.

Barrett’s spokesperson said that the mayor is receiving legal advice on how to proceed.

The City Attorney’s resistance also raises another issue. The council resolution approving the agreement explicitly directs all relevant city officials to sign the agreement. That could create an issue for the city on multiple fronts.

The council could pursue a writ of mandamus in court to compel Spencer to sign the deal. But that could take many weeks or months.

The explicit direction might also open up the city to exposure from Barrett Lo. The firm could, in a lawsuit seeking damages, argue it has an agreement with the city and city-induced delays are costing money.

“The Common Council is diligently working with all parties to reach a resolution regarding The Couture so that we can advance this catalytic $188 million lakefront development that will add to our tax base, bring new investors to Milwaukee, improve transit connections, improve our skyline, bring new residents and income into our central business district, and most importantly put Milwaukeeans to work,” said Johnson in a statement.

What happens if everything falls apart? The city maintains an easement on the property to complete the streetcar. But that work would need to start by May, according to a 2020 report, to meet the 2022 deadline. Administration officials in emails expressed concern that pushing the issue now could trigger a lawsuit and further delay the streetcar.

Should the agreement be signed, construction on the tower is scheduled to begin by July 1st and be completed in 2023. The streetcar would open before the tower above it.

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Related Legislation: File 201365