West Allis upscale apartment plan faces delay
Ogden working to obtain loan
The developer of a higherend West Allis apartment community is seeking a federally guaranteed loan to end delays on obtaining project financing.
The situation involving Element 84 amounts to another example of a slowdown in Milwaukee-area apartment construction activity.
Ogden & Co. had until March 31 to complete its financing for Element 84, a $34 million development that would bring more than 200 upscale units to a site near State Fair Park.
The West Allis Common Council last year approved Element 84, including $5 million in city financing help. It would feature four buildings on about 5 acres east of S. 84th St. and south of W. Greenfield Ave., which the city would sell to Ogden for $1.
But Ogden has faced difficulties obtaining a bank loan.
The Community Development Authority’s board voted 3-3 Tuesday night to reject Ogden’s request to extend the deadline for completing its financing package until Sept. 30.
Board members were frustrated that Ogden hasn’t obtained financing, said John Stibal, city director of development. He characterized it as a “kick in the butt” to get Ogden to work harder to complete the financing package.
Both Stibal and Jon Ross, an Ogden principal, said Wednesday they believe that Element 84 can still move forward.
Commercial lenders have been tightening their requirements for loans on apartment developments, Ross said.
Most banks are willing to provide loans for up to 60% to 65% of a project’s costs, he said, compared to what had been 75% to 80% of those costs.
That change is partly tied to concerns about whether too many new apartments are being built within a relatively short time, Ross said.
Similar concerns have led to the cancellation of a 164-unit Milwaukee project, delays on other downtown-area apartment developments and the downsizing of projects in St. Francis, Greenfield and the Brewers Hill neighborhood.
Ross doesn’t believe oversupply is an issue in West Allis.
The community has one other major apartment proposal pending: Mandel Group Inc.’s plans to develop The Market at Six Points, a $62 million project that would create nearly 220 apartments and several commercial buildings near the West Allis Farmers Market.
Also, Ross said the city’s financing help would allow Ogden to offer high-end apartments at monthly rents as much as $200 to $400 less than similar units being built in Brookfield, Wauwatosa and downtown Milwaukee.
“We feel like we have a competitive advantage,” Ross said.
So, Ogden is seeking a loan guarantee from a U.S. Department of Housing and Urban Development program. That’s similar to what Barrett Lo Visionary Development LLC is seeking for The Couture high-rise on downtown Milwaukee’s lakefront.
That program provides loan guarantees in return for fees from developers. It allows developers to obtain loans that are repaid over 40 years, which makes the periodic payments lower.
It also covers loans that provide up to 85% of construction costs, Ross said.