Jeramey Jannene
Plats and Parcels

ThriveOn King Project Grows By $20 Million

Cost of ambitious project now $105 million. Plus: A recap of the week's real estate news.

By - Nov 14th, 2021 11:16 am
Schuster's redevelopment. Conceptual rendering by Engberg Anderson Architects.

Schuster’s redevelopment. Conceptual rendering by Engberg Anderson Architects.

The ThriveOn King project, a conversion of the former Schuster’s department store into apartments and office space, is moving forward, but at a much greater cost.

The development, located at 2153 N. Martin Luther King Jr. Dr., was first announced in March 2019. It will include an affordable housing complex, a new home for the Greater Milwaukee Foundation (GMF) and office space for the Medical College of Wisconsin (MCW). Royal Capital Group was announced as the developer.

By Nov. 2019, the Common Council approved a $12.6 million tax incremental financing subsidy to support what was then a $84.5 million project.

In Sept. 2020, project partners announced a new name, ThriveOn Collaboration, for the historic 400,000-square-foot complex and surrounding neighborhood engagement effort and that things were still on track for a 2022 opening. “Hopefully January 2022,” said Royal Capital president Kevin Newell.

Then in January, the partners announced a final building name, ThriveOn King, as part of the larger “collaboration,” and that construction would begin in the coming weeks. “We are going to walk and chew gum,” said Newell.

But construction never started.

Now a revised term sheet is back before the City of Milwaukee, with a higher project cost and new start date.

The development has grown from $84.5 million to $105 million. The funding sources include $48.5 million from commercial loans, $22.5 million from historic preservation tax credits, $12.6 million from the TIF district, $9.4 million from low-income housing tax credits, $8.5 million in developer equity and $3.5 million as a deferred developer fee.

The city’s contribution, which comes as a developer-financed TIF that functions effectively as a property-tax rebate, remains unchanged. But all of the other amounts have grown, reflecting revised plans and increasing construction costs.

A key driver of the cost change is the increased number of apartments. The original plan called for 77 apartments, with 53 set aside at below-market rates. The new plan calls for 89 apartments, with 74 set aside at below-market rates.

Specific units would be set aside for individuals making below 30%, 50%, 60% and 80% of the area median income. Through the low-income housing tax credit program, those rents are capped at 30% of household income for each income threshold.

The revised term sheet also has a new start-by date: Feb. 28, 2022. Construction must be substantially complete by June 30, 2023 to access the TIF support.

The term sheet lists 100,000 square feet of office space, down from 131,000, and 50,000 square feet of early childhood education and community use space, up from 10,000. GMF and MCW have conducted a sustained collaboration with area residents to envision what uses they would like to see in the complex.

The council’s Zoning, Neighborhoods & Development Committee will review the revised term sheet on Tuesday and the board of the Redevelopment Authority of the City of Milwaukee on Thursday. The full council will also need to sign off on the change.

The city’s contribution to the project would come after the development team has first expended the funds. Following completion of the project, the city’s liability will start to accrue interest at 5.5% per year for up to 25 years. It is during that period that the development team would be repaid in an amount not to exceed the property taxes it pays.

Consistent with the earlier agreement, the $12.6 million would grow to $15 million in the event the property is assessed for at least $45 million.

In exchange for the city support, the project will be required to have 40% of its construction work hours performed by unemployed or underemployed city residents, spend 25% of its construction budget and supply budget and 18% of its professional services budget with Small Business Enterprises, and comply with the Anti-Displacement Neighborhood Preference Policy that sets aside units for area residents experiencing displacement.

The oldest building in the complex was built in 1907 as a home for Schuster’s Department Store and expanded many times. The Gimbels chain acquired Schuster’s in 1961 and operated the store until 1969. It was used as a warehouse by Gimbels (which eventually went out of business) until 1992 according to city records. It was then acquired by CH Coakley. which used the building for storage and office space. Many of the former department store fixtures, including escalators, can still be found in the building.

Much of the 112-year-old complex’s facade has been clad in metal paneling for almost three decades, hiding the department store’s historic facade. A portion of it was exposed in 2015 to assess its condition, with encouraging results.

A new parking garage would be constructed on the southwest corner of the block with approximately 315 stalls. Loading docks would be demolished along N. Vel R. Phillips Ave. creating a new, open-air entry area.

Included in the deal is a warehouse located across the street from the building at 2212-2228 N. Vel R. Phillips Ave. Royal Capital would redevelop that property as a “wellness” facility according to a 2019 site plan.

The development team purchased the buildings in Dec. 2020 from Coakley for $9.24 million.

March 2019 Unveiling

2015 Facade Exposure

Renderings and Site Plans

Weekly Recap

321 Jefferson Fills Up

The Historic Third Ward‘s newest apartment building quietly began welcoming its first residents in recent months.

Joseph Property Development‘s 321 Jefferson apartment complex now anchors the northeast corner of the neighborhood at N. Jefferson St. and E. St. Paul Ave.

The seven-story, 60-unit building is billed as luxury housing with floor plans ranging from an 821-square-foot, one-bedroom layout to a 1,945-square-foot, two-bedroom, 2.5-bath layout spread over two floors. A variety of one, two and three bedroom floor plans are available.

Read the full article

The Bindery Glues Together Milwaukee Creatives

Zachary Lifton didn’t set out to save a book bindery.

But when Lifton got turned around while looking for his car while exploring Bay View, it set in motion a series of circumstances that led to the development of the city’s newest creative hub, The Bindery.

Read the full article

Milwaukee Solar Program Has Record-Setting Year

A public-private partnership continues to power itself to new heights.

The Grow Solar Grower Milwaukee group buy program, designed to reduce the cost of installing solar panels, set a new record this year with 64 properties adding solar panels capable of producing 421 kilowatts of electricity.

Launched in 2013, the 2021 installations represent 33% of the total capacity of 1,292 kilowatts installed throughout the life of the program. But that also points to the growing efficiency of the panels, as the 64 participants this year represent only 23% of the lifetime participants (282).

Read the full article

Stone Creek Closing Bay View Cafe

Stone Creek Coffee is permanently closing its Bay View cafe, 2266 S. Kinnickinnic Ave.

“This was not something we had planned. We love this cafe and the Bay View community. We just finished remodeling and investing in our exterior seating area at the end of this last summer, and we were developing plans to refresh the cafe interior as well,” said the company in a Facebook post.

A citizen complaint raised concerns about the wall in late August.

“South Building Façade in imminent risk of collapse. Southwest corner of building gap at top of building between brick veneer has increase [sic] from 1 inch to 2 inch and now is at 4 inches. Temporary columns installed at south awning however awning not designed to take on that kind of load,” says the complaint to the Department of Neighborhood Services.

“It is not an imminent fall hazard. It is not going to collapse,” said DNS division manager Michael Mannan in an interview Thursday morning.

Read the full article

Should City Buy 30th Street Railroad Line?

The City of Milwaukee has big dreams for a lightly-used rail line that bisects the middle of the city.

The 6.7-mile 30th Street Corridor could be used for a paved trail for cyclists and pedestrians. The rail line itself could also be used as part of a larger commuter rail system. It’s a grade-separated corridor that runs from the Menomonee Valley north to W. Hampton Ave.

[Alderman Robert Bauman] introduced a file that requests the city administration to begin negotiations with Watco, the line’s current owner, about purchasing the corridor. “With the exception that they would continue to have access for freight service,” he said.

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Furniture Store To Become Apartments

For 118 years, the goal of the owner of the building at 1534-1542 N. Farwell Ave. has been to get people to carry furniture out of the building. Soon people are more likely to be carrying furniture into the building.

An investment group led by Illinois-based real estate investor Samuel Grossman acquired the Paul Weise Furniture Building for $900,000 and will convert the building to high-end apartments as part of a $3 million project.

It’s just the latest investment on Milwaukee’s East Side for Fairchild Acquisition, but it marks a notable change. Instead of rehabilitating an existing apartment building, Fairchild will be changing the entire use of a structure.

Read the full article

Affordable Senior Apartments Get Plan Commission Approval

Developer Cornelius McClendon secured an endorsement Monday from the City Plan Commission to support his redevelopment of the former industrial complex at 3040-3100 W. Meinecke Ave. into affordable senior apartments.

His firm, McClendon Capital Group, would redevelop the four-building complex with support of the state’s low-income housing tax credit program. McClendon is seeking credits that are reserved for seniors making 30%, 50% and 60% of the area’s median income. In exchange for accepting the credits, developers set aside specific units at rental rates not to exceed 30% of a household’s income.

“The project is a complement to The Community Within the Corridor two blocks away,” said McClendon of the 197-unit project built by a separate development team. That project, currently under construction, is targeted at families. “We are creating generational housing in relation to each other.”

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Altoro Leaves WHEDA for Federal Position

It was easy to call Joaquín Altoro a rising star in 2019 when he made the jump from Town Bank to the top job at the Wisconsin Housing and Economic Development Authority (WHEDA). Now he’s a shooting star headed to Washington D.C.

Governor Tony Evers announced Monday that Altoro submitted his resignation to take a job within President Joe Biden‘s administration.

Altoro, a Milwaukee resident, will serve as Administrator of Rural Housing Service within the U.S. Department of Agriculture’s Rural Development agency. He will oversee programs that provide loans and loan guarantees to develop rural housing. The USDA announced the appointment, not subject to Senate confirmation, Monday.

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Port Seeks To Develop Cruise Ship Dock

The City of Milwaukee is seeking a partner to develop a five-acre parcel that sticks out in Lake Michigan.

But don’t expect to see a new tower or other residential development. The parcel is on filled lakebed and any future use must comply with the Wisconsin Public Trust Doctrine.

“The Site is available for development of recreational, entertainment, tourism, cultural, passenger vessel and public access uses,” says a request for interest (RFI) issued Monday by Port Milwaukee.

Read the full article

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Related Legislation: File 211120

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