City Providing Environmental Cleanup Loan For New Midtown Apartments
Contaminated soil, underground tank buried under former Walmart parking lot.
Midtown Commons. Rendering by Gorman & Co.
An environmental cleanup loan fund controlled by the Redevelopment Authority of the City of Milwaukee will be used to help close a financial hole in the development of 200 units of affordable housing atop a former Walmart parking lot. It comes in addition to a city subsidy through a tax incremental financing district.
A $1 million loan from the Brownfield Cleanup Revolving Loan Fund will allow Gorman & Company and development partner One Five Olive to remove an underground storage tank installed for the long-demolished Capitol Court mall, haul away contaminated soil and install a vapor mitigation system and soil cap.
The RACM board unanimously approved the loan at its Aug. 20 meeting.
“The main environmental concern with this site is that there was an underground storage tank,” said RACM senior environmental project engineer Tory Kress during a presentation to the board.
The Midtown Commons development calls for two 100-unit affordable apartment buildings on 6.31 acres of parking lot at 5825 W. Hope Ave., immediately north of the vacant former Walmart store at Midtown Center.
The site has a long commercial history. Kress said it was first developed in 1937, with the Capitol Court shopping center constructed in 1955. The mall was eventually demolished as part of a redevelopment that included construction of the Walmart, which opened in 2002 and closed in 2016.
The underground storage tank was located along N. 60th Street, where the first apartment building is planned.
Despite the newly identified environmental work, Gorman Wisconsin market president Ted Matkom said the development itself has not been redesigned.
“We did not change anything,” Matkom said.
Construction is expected to begin by the end of August, he said.
The cleanup assistance adds another layer of public financing to a project already receiving substantial government support.
The city approved a tax incremental financing subsidy in July for what was then projected as a $61.1 million development. The financing package could provide the developer with up to $3.95 million over as many as 20 years.
Unlike an upfront city grant, the TIF assistance functions as an effective property tax rebate. The developer would receive payments from the incremental property tax revenue generated by the project.
A primary financing source for Midtown Commons is low-income housing tax credits from the Wisconsin Housing and Economic Development Authority.
Gorman previously secured tax credits for the first 100-unit building. The developer intends to construct a second, virtually identical building as a second phase.
Each building is planned with 25 one-bedroom, 40 two-bedroom and 35 three-bedroom apartments. The development would also include community and fitness rooms, on-site property management and a social service office.
The brownfield loan carries a 5% interest rate, with Gorman guaranteeing the interest-only payments. The arrangement is expected to continue for approximately 15 years while the development pays off a deferred developer fee.
“We want to pay off the loan,” Matkom told the RACM board.
Any principal remaining at the conclusion of the loan’s 20-year term would be due as a balloon payment. Such a structure is common for the cleanup loans.
The fund has received $17.4 million from the U.S. Environmental Protection Agency since 2002, with another $500,000 expected in October, and has executed 28 loans, she said. Several additional loans are currently under development but have not yet closed, creating what Kress described as a “balancing act” in managing the available funds.
Projects supported by the program have leveraged approximately $929 million in development and resulted in the cleanup of 298 acres, according to Kress.
Midtown Commons is part of a broader effort to redevelop the former Walmart property and reactivate Midtown Center.
Affordable Family Storage is pursuing a redevelopment of the former big-box store that would include approximately 108,000 square feet of indoor self-storage. The city would receive a long-term lease for approximately 51,000 square feet at the front of the building for $1, providing space for a replacement Capitol Library and another community-serving tenant.
The City Plan Commission approved that proposal in July after Affordable Family Storage dropped a controversial plan for a 19,000-square-foot computing facility, derided as a “data center.”
The housing development represents the first residential construction within the Midtown Center complex.
Gorman’s involvement emerged after city officials rejected an earlier proposal to convert the former Walmart almost entirely into self-storage. Area Ald. Mark Chambers, Jr. and Department of City Development officials pushed for a broader redevelopment that would add housing and other community uses to the struggling shopping center.
Gorman is partnering with One Five Olive on the development.
Photos and Site Plan
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