Tallest Building in Wisconsin Proposal Could Be Downsized, Stalled

Marcus Center garage replacement complex. Rendering by MGA.

An announcement Wednesday from the Department of City Development (DCD) that a Madison developer intends to build a 55-story tower that would be the tallest in Wisconsin generated considerable buzz.

But it also has area Alderman Robert Bauman calling for an independent market study that could stall the development and a Milwaukee developer publicly criticizing how DCD handled the process.

The Neutral Project, according to a city press release, would build a multi-phase, $700 million development on the site of the Marcus Performing Arts Center parking structure, 1001 N. Water St., that includes three buildings with “up to 750 residential units, 190,000 square feet of office space, 40,000 square feet of retail space, 300 hotel rooms, 1,100 structured parking spaces and public plazas/walkways.”

The signature component would be a 55-story, 613-foot mass timber tower that would be state’s tallest building and the tallest mass timber building in the world.

DCD, with Mayor Cavalier Johnson‘s backing, intends to give The Neutral Project a one-year exclusive right to negotiate to purchase the 2.45-acre site. The period would allow the firm to solidify its plans without the city giving up control of the land.

But it’s how and when that signature building would be constructed that has Bauman asking questions. “This sounds way above what Milwaukee will be able to digest,” said the alderman in an interview about the real estate market.

The 55-story building would be constructed in the third phase of the development and, according to comments Bauman said the development team made, could be shorter than proposed.

Bauman, citing a planned office building at the Harley-Davidson Museum campus that never materialized and resulted in more surface parking, said the city has previously been “burned” by phased projects.

He is calling for an independent review of The Neutral Project’s plans and the two other bids on the city-owned site.

“I’ve learned in real estate there are certain laws of gravity, and you violate those laws, and you fail,” said Bauman in an interview. “And Milwaukee’s laws of gravity are, we see in the kind of buildings that tend to be built, the 20, 25, 30-story type of thing and that requires certain rent levels… and now we’re talking, basically, a Chicago scale building.”

Bauman said he met with the development team and DCD’s economic development officials earlier this week.

He said the development team told him it doesn’t have financing lined up and is pursuing the building height not because of market demand, but to make it the tallest.

“And I said at this point, I’m not supporting that,” said the alderman.

“I get it, vision, that’s fine,” said Bauman. “This is a quality building, there is no doubt about it.”

The alderman had a file drafted to require DCD to hire an outside consultant to review all three submitted proposals “based on construction costs, based on the Milwaukee market and its ability to absorb a project of this scale.”

He said members of the real estate community are skeptical of the proposal’s viability. “But maybe they’re all wrong and The Neutral Project is right,” said Bauman. “We owe ourselves an independent review of that rather than just believing four people in the Department of City Development.”

Without it, he doesn’t intend to sponsor DCD’s request for the exclusive negotiation period. Given the council’s practice of aldermanic privilege, where deference is given to the local alderperson, his lack of sponsorship could imperil DCD’s selection.

New Land Enterprises is the other publicly identified bidder. The Milwaukee-based firm proposed a $350 million, single-phase mixed-use development for the site. It would have included workforce housing, targeted at a price point between federally-recognized affordable housing and new high-end buildings. Achieving the mid-level price point in a new building often requires subsidies.

New Land managing director Tim Gokhman, in a social media post, previously said he believes the market for high-end housing might be saturated given the supply of new buildings. The firm secured approvals in recent years for a 24-story East Side tower with high-end amenities and prices, but it hasn’t advanced to construction.

But even with Bauman’s proposed study, the firm’s Marcus Center garage site submission might be moot.

New Land, said Gokhman, was still working with the city until voluntarily withdrawing its proposal Wednesday.

“We think that the process is so broken, not just with the RFP, but with economic development [with DCD] in general, that there was no way to negotiate a successful project,” said Gokhman in a brief interview with Urban Milwaukee.

The city, according to emails obtained by Urban Milwaukee, sent out its press release awarding the deal to The Neutral Project less than one hour after Gokhman sent an email withdrawing.

“We did not make this decision lightly. New Land chose to respond to this RFP with optimism about the new administration’s vision for the city, with this critical development site serving as an example,” wrote Gokhman of Johnson and his vision for one million residents. “Unfortunately, after working with your department on this RFP and other economic development policies over the past year, we see that DCD’s actions are not matching the administration’s rhetoric.”

Gokhman, in his letter, said DCD handled the process similar to how former mayor Tom Barrett‘s administration did: “unprofessionally and inconsistently.” His letter to Department of City Development Commissioner Lafayette Crump said the process following an interview has been “opaque and misleading.”

A winner was expected to be announced in May, said Gokhman, but the process dragged on. Proposals were initially due in December.

“It also saddens me to withdraw on a personal note. New Land has dedicated itself to Milwaukee even as, over the last decade, most other developers have started to favor projects in the suburbs and neighboring cities,” wrote Gokhman, a Milwaukee resident. “While other communities are demonstrating what it means to be a business partner, the unspoken message being sent in Milwaukee is something much different. I hope you can effect serious changes soon. Without such changes, the city will continue to fail in reversing the population loss that has plagued our city for so long.”

Suburban communities have increasingly used tax incremental financing to subsidize new development. For housing, Milwaukee has only used the tool in recent years on affordable housing or for related public infrastructure.

Bauman thinks the timing of DCD’s announcement was driven by Gokhman’s letter.

“They clearly jumped the gun in response Tim Gokhman… I think it was an emotional response to a pretty direct criticism of the department,” said Bauman. ” And it was sort of a ‘we’re going to show you. We’re going to release our proposal and your criticism is just sour grapes.’ And I think it’s way more than that, but that’s for everybody to draw their own conclusion.”

Bauman and DCD have been at odds over major proposals before. After years of limited progress, and an idle streetcar line, Bauman proposed in May 2020 that the county claw back The Couture site. In 2021, he praised the project and development team during a groundbreaking ceremony.

The alderman is currently at odds with DCD over Kendall Breunig‘s proposed redevelopment of a vacant Cream City brick building, 324 N. 15th St., into housing in the Menomonee Valley. Bauman supports it, DCD wants it kept industrial.

DCD and Bauman seem to be heading in the same direction when it comes to redeveloping the 100 East office tower into housing. Both sides have indicated some willingness for a TIF subsidy in exchange for some amount of affordable housing.

DCD declined an interview request.

A representative of The Neutral Project didn’t respond to a request for comment.

The Neutral Project continues to advance the neighboring The Edison mass timber apartment tower at 1005 N. Edison St. Construction is expected to begin on that 32-story building this year, but Bauman noted that financing has yet to be finalized. Test piles are currently being driven for the building’s foundation. The alderman has publicly supported the project, which has been revised upwards in size to 32 stories and 383 apartments, since it was first proposed in 2021 for a privately-owned site.

Renderings

The Edison Renderings

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