Monday, July 24, 2006

Do the math on Park East project

A recent story on two competing proposals for projects in the Park East development zone was puzzling, to say the least. You could tell from the tone of the story, and its placement on page one, that the reporter and newspaper editors found it a little peculiar, too. Here are the basics:
Smaller Park East plan finding favor
County panel sees it as community friendly


One downtown Milwaukee development proposal - call it Plan A - would generate $2 million in annual property tax revenue, create over 500 construction jobs and involve a national firm that has developed luxury hotels in Los Angeles and other major cities.

A competing proposal - Plan B - would provide a much smaller tax benefit, fewer construction jobs and is offered by a local company known mainly for operating gas stations and convenience stores. In fact, a gas station/convenience store/car wash is a key part of its plan.

Members of a County Board committee, reviewing both proposals at a Monday meeting, seemed to lean toward Plan B.

The Committee on Economic and Community Development held off making a recommendation to the full board. The committee might meet next week in a special session to make its recommendation.

But committee members had some tough questions for Ruvin Development Inc., author of Plan A, and some kind words for Rana Enterprises, the firm behind Plan B.

Ruvin wants to buy a county-owned parcel, bordered by N. Old World 3rd St., N. 4th St., W. Juneau Ave. and W. McKinley Ave., and create a $104 million mixed-use development. The Ruvin project would feature a 175-room hotel, 70 condos, 55,000 square feet of offices, 31,000 square feet of retail space and a 330-car parking structure.

Rana wants to build a $34 million development on the same parcel. Rana's plans call for a 202-room hotel, a gas station/convenience store, 14,000 square feet of offices, 9,000 square feet of additional retail space and a 400-car parking structure.

The site is part of 16 acres made available for development when the former Park East Freeway stub was demolished.
Why on earth would county supervisors prefer Plan B?

One of them, Peggy West, called it more "community friendly" -- people can use a gas station, I guess -- and said she couldn't imagine that anyone in Milwaukee could afford to buy Plan A's expensive condos.

But what it's really all about, it appears, is participation in the project by minority contractors. Plan A includes a goal of 27% minority participation, Plan B 35%. Goal is a key word; there is really no legal way to hold a contractor to that number, except for looking over his shoulder every step of the way and complaining loudly when he isn't meeting the goals. It appears, if you read the whole story and read between the lines, that committee members doubt Contractor A's commitment.

I have only one comment: People, do the math.

-- 27% of Plan A's $104-million project is $28-million that would go to minority contractors.

-- 35% of Plan B's $34-million project is $11.9 million for minority firms.

If Contractor A somehow got only halfway to its minority participation goal, it would still be $14-million, more than Plan B.

Not to mention the disparity in job creation and taxes generated by the two projects.

Do the math, people. Do the math. (Is there a song in there somewhere?)

UPDATE: Charlie Sykes notes that we agree on this issue, but jumps to the conclusion I've been listening to his show. I haven't heard it in months -- I am now a 1290 WMCS listener -- and have no idea what he's said about the Park East. But if he agrees with me on this, can opposition to the gay marriage/civil union ban be far behind? ADDENDUM: I think of Sykes more as a blind pig (not squirrel) that finds an acorn once in awhile. But if he considers himself a squirrel, I have no quarrel with that.

UPDATE 2: Rick Esenberg agrees with me, too. Have I lost my political compass?


At 4:42 PM, Blogger Casper said...

Not that the committee was necessarily motivated by it, but there's more to this than the math.

This area needs a gas station and doesn't need more condos. Condos will only enhance the tax base if they're actually purchased.

And the real estate boom is on its last legs.

At 4:58 PM, Blogger Xoff said...

I guess the county sups would be a better judge of the market than the people who want to invest millions there.

At 5:16 PM, Blogger realdebate said...

Someone please explain to me why % of minority participation in the construction process matters.

Why don't we try something unique like giving it to the best qualified low bid.

No room for common sense in politics.

At 5:27 PM, Blogger Xoff said...

Methinks realdebate is realconfused.

They are not bidding on a public works project. They are proposing to spend their own money to develop something.

At 10:25 PM, Blogger steveegg said...

You have to forgive those County Board members; they're likely graduates of MPS, so their math skills aren't up to snuff.

It also seems that, running through the numbers, "Plan B" would leave more fallow fields, thus staying true to former mayor John Norquist's vision for the city.

At 10:40 AM, Blogger Van Manwich said...

Thanks for doing "the math." Even if the $140 million and $35 million refer to the value of the projects, not the construction budgets, they serve as approximate stand-ins for the value of construction jobs. So 35% of the jobs creating a gas station/budgetel is peanuts compared to 27% of the jobs creating the premium mixed-use development that will establish a high-value pattern for the area. And is the gas-n-stop plan really going to yield $35 million? That's a stretch.

Great to hear from my supervisor Willie Johnson last night that he's deciding to support the Ruvin Development. He did the math!

Finally, could Egg be more wrong about John Norquist's vision? The former mayor did as much as anyone to bring life and high value development to the banks of the Milwaukee River from Humboldt to the Hoan Bridge. He matched smart plans from top-notch planner Peter Park with the strength to reform the permitting and approval process. Clearly Egg needs to get out of the burbs more often and check out the new city.


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