Since the City of Milwaukee announced that it
selected Madison developer The Neutral Project to redevelop the Marcus Performing Arts Center parking structure in downtown Milwaukee, questions about the city's RFP process, tax incremental financing (TIF) policy and the feasibility of the selected project have been raised by another developer and by the alderman representing downtown Milwaukee.
Most notably,
Milwaukee-based developer New Land Enterprises withdrew its proposal for the Marcus Center parking structure site, and its managing director
Tim Gokhman sent a letter criticizing the Department of City Development's (DCD) handling of the RFP process and echoed more widespread critiques about the city's use of TIF.
BizTimes spoke with Lafayette Crump, Milwaukee's commissioner of city development, about his response to the recent criticism and how the city is addressing its TIF policy:
As it relates to the Marcus Center parking garage RFP, how do you respond to the argument that the city/DCD mishandled the RFP process with poor communication, unprofessionalism and unrealistic expectations?
"A claim that we mishandled the process or that it was done unprofessionally is just factually inaccurate. I would add that I spent 22 years in the private sector before joining the city. I responded to multiple RFPs and I was never happy when I lost an RFP or it became clear to me that I was going to lose one. It is easy to find reasons why you were not selected that are not about the choices that you made and to lash out at others."
Beyond this specific RFP, there have been comments from the development community that the city's use of TIF is too limited for the current development environment. What is your response to that?
"DCD agrees that government has to think about how it can best impact the market, and that thought process has to include measuring potential unintended consequences. We are evaluating the use of TIF for workforce housing; the development community is well aware of that.
"We TIF what makes sense. When you look at the record of what we have TIFed over the past several years during the (Mayor Cavalier) Johnson administration and during my tenure, it's been a pretty spectacular set of projects that have come forth, whether that be corporate attraction projects or a number of affordable housing projects that are making it easier for Milwaukeeans to find housing."
What is the city's current approach to using TIF and why does the city avoid using it for market rate housing and hotel developments?
"The reason that we shy away from (using TIF) for market rate development and hotels is we believe that those projects can generally stand on their own where the market supports them. If the market doesn't support them, then it is a particularly risky situation for the city to inject itself into and artificially impact what gets built and where.
"When it comes to attracting businesses to the city that are increasing our tax base and therefore having the potential to lower taxes for everyone across the city, have the ability to bring jobs, to be catalytic for other developments, those are the kinds of things we want to support."
Are there any other comments that have been made publicly in the past couple of weeks that you wanted to respond to?
"One thing I'll comment on is there was a comment made about legacy staff within DCD. We stand by our staff, and we stand by the decisions that they've made. We will always evaluate where we can improve on a process, but with respect to our staff, they've done incredible work."
(In a July 30 post on X, formerly Twitter, Gokhman said "I believe in (Mayor Johnson's) vision of growing Milwaukee. (DCD) has excellent people in zoning/planning, legacy staff in economic development are stifling growth.")
The Marcus parking garage RFP received three responses and the rolling RFP at Vel R. Phillips and Wisconsin avenues has not received any yet. Is that fewer than what you'd expect and why do you think these sites haven't garnered more interest?
"We've had a number of conversations with the local development community and we're evaluating what's taking place across the country. With that in mind, receiving three solid proposals for the Marcus Center parking structure site, we were pleased with the quality of the responses we got. We selected one of those proposals, which we thought was a fantastic proposal.
"Now, the Vel R. Phillips and Wisconsin site we've made the decision to make part of it a gathering space. With respect to the other portion of the site, there were a couple of proposals several years ago where folks were waiting to see what would happen with the convention center, waiting to see what would happen with the economy. We expect that moving forward, given the impact the expanded convention center has already had, that more people will be taking a look at the site.
"I would also note that we have removed TIF restrictions so that people can dream and think about what they would like to do there and tell us what they think they would need to move it forward."
(Previously, the RFP documents for the Vel R. Phillips Avenue site said the city will not offer TIF for market-rate housing or a hotel development on the site.)
Is there any plan or thought for the city to address any of these criticisms?
"In respect to TIF, I would characterize that as not a criticism, but an ask. The development community is indicating that the current market is making it difficult to finance projects that are closer to market rate or market rate. Mayor Johnson has made it clear he'd like to grow this city while also ensuring that it remains affordable and accessible to everyone. We need to look at making tools available to ensure that housing is still built for the people who are here.
"We have proposed workforce housing metrics and we are evaluating that both internally as well as with the (Common) Council, and we have shared that with the development community.
"We heard one criticism on the professionalism of this department. That is not broad based criticism. As I've indicated, the RFP process was handled incredibly professionally."
Why did DCD choose the Neutral Project's proposal for the Marcus Center parking structure site?
"We picked it because we think it's spectacular. We want to grow this city. The mayor has said that Milwaukee shouldn't settle for being stagnant. If that is going to happen, we need to have housing for all those people. It's been universally talked about how beautiful The Neutral Project's development is, how it is aspirational for what Milwaukee can achieve. It thinks big, it maximizes tax base, it's dense, it ties the area together with paths."
What do you make of the feasibility of it?
"We certainly want any project we chose to be feasible, otherwise we wouldn't choose it. We believe that it is feasible, but part of the reason that we have also proposed a one year period of due diligence and negotiation with The Neutral Project is so that we can assure the public that what we ultimately approve is feasible."
Looking ahead to redevelopment of the former Northridge Mall site, the biggest piece of land available in the city, what is your outlook on that?
"It goes without saying that the mayor and the department care about this entire city. We need positive development throughout the city: jobs, housing. Now that we've entered the demolition and planning stage, still early stages, I am thrilled that we're going to have something there that people can appreciate and that is catalytic for the surrounding area."
