Eitel Cancels Plans For Vel Phillips Plaza Cafe After Council Questions, Public Opposition

Vel R. Phillips Plaza. Rendering by TKWA.

Egg was supposed to be on the menu, not the landlord’s face, at Mike Eitel‘s cafe at Vel R. Phillips Plaza.

The deal to develop the cafe is now dead and no one appears happy, or willing, to talk about why.

Mayor Cavalier Johnson‘s administration announced the proposed cafe to great fanfare in early January. Eitel, owner of Caravan Hospitality Group, would lease the new cafe building across from the Baird Center and anchor the plaza with a cafe that would serve food and drinks all day long. An early morning coffee bar was to transition to a great place to grab a lunch and ultimately a fun place for a happy hour.

The city appeared to have found a winner for its signature $17 million plaza. Eitel operates the Nomad World Pub, SportClub, Barrel Burrito Company and the newly-opened Experts Only bar.

At multiple meetings, Department of City Development economic development specialist Dan Casanova praised Eitel for understanding the vision for the new plaza and the growth of Westown. “While others were maybe concerned this was an unproven opportunity, he saw the opportunity,” said Casanova.

Then, the Common Council’s Zoning, Neighborhoods & Development Committee took the unusual step of allowing public testimony on the $60,000 per year minimum lease.

Representatives of the Milwaukee Turners and Turner Hall, Art Heitzer and Emilio De Torre, said that Eitel had quit paying his lease, months before the COVID-19 pandemic took hold, for the short-lived Tavern at Turner Hall. A civil judgment awarded the Turners $95,734 in unpaid rent, but Eitel had no personal guaranty and dissolved the limited liability legal entity that held the lease, BarCity LLC. Heitzer said it would be “unseemly” for the city to issue Eitel a lease for a marquee location without adding a personal guaranty.

Eitel said he offered a “very fair” settlement to resolve the Turner Hall situation. He said COVID-19 played a role in the tavern’s demise and that he was being pilloried unfairly.

The committee voted to hold off on approving the lease, instead proposing a special meeting for next week to approve a revised lease. “This situation is disturbing,” said Alderman Robert Bauman, who represents the area and said he learned of the Turner situation informally and welcomed the Turners to speak at the committee. “It is a red flag. I think we do need a personal guaranty.”

Eitel said he was open to a guaranty.

“I think it’s very easy to solve for any kind of innuendo with my ability to maintain integrity in a lease situation,” said Eitel.

The meeting, scheduled for Feb. 5, would also allow for a clear resolution on whether Caravan or the city was responsible for cleaning the public restrooms facing the plaza.

Friday morning, the special meeting was canceled at Eitel’s request.

“After further consideration, our organization has decided not to proceed with its plans for the new Vel R. Phillips Plaza in Downtown Milwaukee’s Westown neighborhood, and we have withdrawn our proposal in order to focus on our current operations ahead of a very busy year. It’s an incredible project honoring a most worthy historic leader. Nonetheless, we have decided to step back from what is a terrific opportunity for the right operator. We are confident that the City will partner with a quality organization that will successfully activate the new space and make it a positive addition to all the exciting and encouraging things happening in the Westown area of Downtown,” said Eitel in a statement to Urban Milwaukee.

While he didn’t explicitly say what happened, emails between city officials indicate things snowballed after Tuesday’s meeting.

Two different individuals, Manuel Torres and Eric Torres, emailed city officials and said Eitel, without offering any explicit evidence, was delinquent on payroll. Both said they weren’t employed by Eitel and encouraged more due diligence by city officials. Bauman, in an email to his colleagues, administration officials and Eric Torres, asked if the city had completed a thorough background check.

On Tuesday, city officials said the city had done due diligence work on the proposal and were comfortable advancing it. Additionally, a recent liquor license hearing for one of Eitel’s establishments encountered no opposition related to finances.

“There are a lot of disputes that arise in this business,” said Casanova, who noted the city had spoken to multiple people familiar with Caravan’s operations.

Now, the city will need to find an entirely new vendor.

Bauman, in an email, said Eitel changed his mind, and Eitel offered only the statement. DCD also offered only a statement.

“The Vel R. Phillips Plaza is going to be a great asset for the community when it opens,” said a department spokesperson. “Our goal remains to secure a vendor that provides an amenity to the surrounding area and activates the plaza.”

When asked for a follow-up, the DCD spokesperson said: “the City is evaluating options going forward.”

What’s Next?

The city doesn’t have any obvious options. And it now has a major financial complication beyond losing the tenant.

For starters, there is no backup option. No one bid on the city’s request for proposals (RFP), which Casanova admitted was unusual for the restaurant and cafe industry. The city ultimately received an unsolicited offer from Eitel after plaza architect and frequent Eitel collaborator Chris Socha turned him on to the opportunity. “There really isn’t a plan B here,” said Bauman at the meeting. Eitel said one of the reasons he, and likely others, didn’t respond to RFP was an assumption that the operator would end up responsible for maintaining the plaza.

The council scheduled the special meeting to keep the lease to be approved in time to satisfy a looming financial deadline.

The city had planned to award the tenant a $750,000 grant to build out the interior of the 2,900-square-foot building. But Casanova, on Tuesday, said there was a timing issue. The funds come from the Park East tax incremental financing district, which due to state law and its age, must have its funds allocated by March.

“We didn’t want to build out the interior until we knew who the tenant was,” said Casanova of why the city didn’t build out the cafe alongside the shell of the under-construction building.

On Friday, DCD declined to explain what options would be available concerning the grant.

The plaza is expected to be open in time for the Republican National Convention in July, but the cafe building was already scheduled to open after the convention.

The lease Eitel negotiated was for a base payment of $5,000 per month for three months, with an additional payment owed if 6% of the point-of-sale systems sale exceeded the base amount. Casanova said the base price was fair for an unproven space downtown, while the 6% provision benefitted the city if the space proves popular.

“This is a critical plaza for the city of Milwaukee,” said committee chair Ald. Michael Murphy. And now it lacks a vendor.

Vel R. Phillips Plaza Renderings