Jeramey Jannene

City Needs Act of Congress Because of Couture-Streetcar Delay

City officials admit project is behind schedule.

By - Feb 1st, 2022 04:43 pm
Streetcar extension in E. Michigan St. Photo by Jeramey Jannene.

Streetcar extension in E. Michigan St. Photo by Jeramey Jannene.

Even after shovels went into the ground, The Couture is still causing headaches at City Hall.

The 44-story project, according to multiple city officials, is behind schedule. And as a result, the city won’t be able to put the lakefront line streetcar extension into service this summer as required by a $14.2 million federal grant agreement. Milwaukee will need another extension on the grant, but is running into a fixed deadline on the grant program.

Meaning Congress must take action to bail the city out. The 2015 grant program expires on Sep. 30.

“To preserve remaining TIGER grant funding ($1.4 million), DPW, DCD, and Intergovernmental Relations are working with Wisconsin’s Congressional delegation to incorporate special legislation in the federal 2022 appropriations bill to make the City’s remaining TIGER grant funding eligible for reimbursement after September 30, 2022,” wrote streetcar system manager Dave Windsor in an email this week obtained by Urban Milwaukee.

A revised agreement, which will need Common Council approval, would allow the streetcar line to open by October 31, 2023.

“This puts the completion of the lakefront line five years late,” said Alderman Robert Bauman in an interview.

It also creates the situation where the city may have to collect on a $1.41 million personal guarantee from Barrett Lo Visionary Development leaders Rick Barrett and Tan Lo. The developers guaranteed the unspent portion of the federal grant in the event they weren’t able to meet a May 1 deadline to allow the city to begin streetcar track construction so that the line could be placed into use by June 30.

“While we are confident that we will be successful in enacting the special legislation, the development agreement requires that the developer personally guarantee remaining TIGER funding so that in no case will the City be responsible for any remaining TIGER grant funding that is not recovered through the TIGER grant,” wrote Windsor.

But that doesn’t answer a question Bauman raised in early 2021 when the council approved the revised agreement and again on Tuesday: what happens if the federal government asks for all the money back? Barrett and Lo’s guaranty extends only for the unspent grant portion.

The revised agreement, adopted in March 2021, created the guaranty, but also created a shield so that Barrett, no relation to the former mayor, and Lo were personally liable, not the project investors.

The city is providing $19.5 million for public infrastructure costs related to the project via a tax incremental financing district. Those funds cover the costs of a transit concourse, which will also be used by the East-West Bus Rapid Transit line, and a sewer relocation.

The Hop is intended to loop through a three-story concourse at the base of the building, but the tracks leading to the building have sat unlinked since 2018 as the tower was repeatedly delayed. When the rest of the system opened in November 2018, Barrett Lo was celebrating being invited to apply for a formal federal loan guarantee for its own project.

But Barrett Lo struggled to raise the equity to meet the terms of that federal loan guarantee under the U.S. Department of Housing and Urban Development‘s timeline. That triggered the need for the revised agreement, and the guaranty.

Construction is progressing on the $190 million, 312-unit apartment tower. A tower crane was installed in the past week.

During a November site tour, Barrett said the building was on track to be completed in 2023, but wouldn’t commit to a month or quarter.

“There were a couple of things below grade and we just haven’t figured out where we will end,” said Barrett.

In a statement issued Tuesday, Barrett expanded on those challenges. “As is expected with a major construction project on a 2-acre downtown site, there have been a few unforeseen conditions encountered while working below grade. In particular, we found two major discoveries that were not on the survey: more than 50 piles which needed to be identified and removed, and a We Energies transformer serving downtown which needed to be designed around. These challenges were addressed and construction is advancing,” said the developer.

“There is every reason to believe that the Couture, including the innovative transportation concourse, will be completed as envisioned,” said the Department of City Development in a statement. “However, based on the developer’s current construction schedule, commencement of Lakefront Line service is not expected to occur this summer as anticipated. Everyone, from our partners in the private sector to each level of government, is working in good faith to see the Couture completed and federal TIGER funding dedicated to the L-Line project preserved. We believe the development challenges of the Couture have been overcome and we look forward to the completion of this exciting addition to Milwaukee’s skyline.”

Bauman vs. Spencer

While the issues with the streetcar’s timing play out, the city remains stuck on another issue relating to the development agreement.

A third party is supposed to adjudicate whether Bauman acted inappropriately, as City Attorney Tearman Spencer alleges, in getting Barrett Lo Visionary Development to contribute $100,000 to an anti-displacement fund in exchange for the city granting a requested liability shield for the project investors.

The funding currently sits in an escrow account, and would be released to the nonprofit MKE United for its anti-displacement fund if Bauman is ruled to have acted appropriately. Otherwise Barrett Lo would receive a refund.

But retired judge Chuck Kahn had to recuse himself from ruling on the case after a Milwaukee Water Works main break flooded the basement of his Railway Exchange building in November. Kahn was to be paid up to $50,000 for ruling on the matter, but now finds himself in the position of having to potentially sue the city.

The council hired attorney Michael Maistelman to represent itself. The private attorney could be paid up to $50,000, which could trigger a debate over a $100,000 item costing an additional $100,000 to resolve. The City Attorney’s Office is representing itself.

November Construction Photos

May Construction Photos


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More about the Couture

Read more about Couture here

More about the Milwaukee Streetcar

For more project details, including the project timeline, financing, route and possible extensions, see our extensive past coverage.

Read more about Milwaukee Streetcar here

Categories: Real Estate, Weekly

One thought on “City Needs Act of Congress Because of Couture-Streetcar Delay”

  1. Mingus says:

    The Coture seems to be coming a Foxcon type of boondoggle. The developer was essentially given the most lucrative two acres on the western shore of Lake Michigan. For a developer who is ready to put up a $191,000,000 building, it is obvious that his shoddy and incomplete planning resulted in the delays that we are seeing. I would predict the city will continue to see construction issues with this project over the years.

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