City taking loss on Century City building sale
A Milwaukee craft brewer’s pending purchase of a building that could help jump start a new north side business park will leave the city with a loss of over $300,000.
The 53,200-squarefoot building, south of West Capitol Drive on the west side of North 31st Street, is called Century City I.
It’s part of Century City Business Park and is being sold to an affiliate of Good City Brewing. The craft brewer plans to move its offices and warehouse there, and hopes to eventually build a new brewery at the site.
Development firm General Capital Group financed Century City I with a $3 million loan from Milwaukee Economic Development Corp., a nonprofit business lender.
Additional financing included $400,000 ownership stakes from both General Capital and the city.
The city funds, approved in 2015 by the Common Council and Mayor Tom Barrett, were raised by selling federal New Markets Tax Credits to investors and didn’t include any property tax revenue.
A Good City Brewing affiliate, Good Opportunity I LLC, will assume Century City I’s existing debt, according to a new Department of City Development report.
That includes around $3.05 million still outstanding on the Milwaukee Economic Development Corp. loan, as well as a $236,500 loan owed to the city Redevelopment Authority.
The $236,500 Redevelopment Authority loan covered Century City I’s land purchase.
The authority hopes to “collect some money from Good City if the rest of the development at Century City (Business Park) is successful,” said David Misky, authority assistant executive director.
Also, the Good City affiliate will pay $35,000 in cash to be split between General Capital and the city.
That 50/50 split of $17,500 apiece would leave the city with an initial loss of $382,500 — assuming the building sale is approved by city officials, including the Common Council. The council review is to occur in September.
That loss will be reduced by rent payments Good City will make before it completes its purchase of the building, and by the brewer’s payment of property taxes owed for part of 2018. The estimated amount of that reduction wasn’t immediately available.
The bottom line: a building which cost $4.1 million to develop is being sold for around $3.3 million, counting both the cash paid by Good City and its loan obligations. That calculation assumes an eventual full collection of the Redevelopment Authority loan.
The city’s loss is a trade-off for what officials hope will be additional development at Century City Business Park, said Jeff Fleming, Department of City Development spokesman.
“Both General Capital and the city didn’t do this as a speculative investment,” Fleming said. “They did this to generate activity and create jobs.”
General Capital partner Linda Gorens-Levey agreed.
“This was an investment in the city of Milwaukee,” she said Wednesday. “And what’s good for the city of Milwaukee is good for developers.”
Good City Brewing expects to double in size during the next year, cofounder Dan Katt said in last week’s announcement.
Good City will continue to operate a brewery and restaurant at 2108 N. Farwell Ave., where it has expanded several times and is running out of space.
The company also is developing a pilot brewery, tap room and events space at the new entertainment center just east of the Fiserv Forum — the new Milwaukee Bucks arena.
Century City I was completed in January
2016.
It’s the only new buildings ing so far developed at Century City Business Park, which includes three older buildings left from the old Tower Automotive/A.O. Smith complex.
Most of those older buildings were demolished to create lots for new light industrial developments.
But Century City Business Park has faced challenges. Those include neighborhood crime and poverty, as well as being 1.5 miles from the I-43/Capitol Drive interchange.
Amazon.com Inc. considered Century City for a new distribution center with more than 1,000 employees. But the online retailer is instead pursuing plans for a development in Oak Creek at a site just east of I-94 and south of West Ryan Road.
However, one of the former A.O. Smith build- owned by the city is leased to Spanish passenger rail manufacturer Talgo. The company is operating a maintenance facility at Century City.
Barrett and the council in 2009 approved a $35 million redevelopment plan for the Century City site, including state and federal funds totaling more than $9 million.
That money has paid for acquiring the property, demolishing several buildings, doing environmental cleanup work, and building new roads, sewers and other public improvements.
Of the $25.6 million in city funds, $15.6 million is to be repaid by 2035 through property taxes generated by development at Century City and by selling the business park’s parcels.
The city expects the business park to eventually host companies with an estimated 900 employees.