Milwaukee has Plan B for Couture streetcar link
City officials working on fallback plan should financing for apartment high-rise fall through
The developer of Milwaukee’s planned Couture apartment highrise, which would include a key part of downtown’s new streetcar system, hopes to break ground in October.
But, with the Couture’s financing package not yet final, city officials are working on a fallback plan to complete the streetcar’s lakefront loop — which is to feature a transit concourse within the apartment tower’s base.
Neither Couture developer Rick Barrett, who operates Barrett Lo Visionary Development LLC, nor officials from Mayor Tom Barrett’s administration are eager to talk about the backup plan involving the streetcar, known as The Hop.
All say they’re confident the $122 million, 44-story high-rise, which has faced delays, will soon complete its financing package.
“We look forward to starting the vertical construction on this transformational development, which will be built — from the ground up — to be a multimodal transportation hub, including the lakefront stop for The Hop,” Rick Barrett said in a statement.
“We remain optimistic about the Couture,” said Jeff Fleming, Department of City Development spokesman.
But, city officials have long prepared for the possibility of an alternative plan to complete the lakefront loop without the Couture’s transit concourse.
“They’ve always said they have a Plan B,” said Ald. Robert Bauman, whose district includes most of downtown.
The streetcar’s fate was linked with the Couture in November 2014.
That’s when the Barrett administration proposed using cash from three downtown-area tax incremental financing districts, including one at the Couture, to help finance the passenger rail service.
The Hop begins operating in fall
About $59 million in property taxes from new buildings within those financing districts are helping pay for the streetcar's $124 million construc-
tion tab.
Most of that money is being used on The Hop’s initial main route, which begins operating this fall.
It runs through downtown and the Historic Third Ward between the Milwaukee Intermodal Station, 433 W. St. Paul Ave., and Burns Commons, at East Ogden and North Prospect avenues.
The streetcar proposal, which the Common Council approved in February 2015, included a new financing district, which helps pay for the main route and the lakefront loop.
The lakefront loop runs on East Michigan and East Clybourn streets, between North Milwaukee Street and North Lincoln Memorial Drive.
The Couture is an important part of that loop.
The 312-unit luxury apartment tower’s plans include a concourse for both Milwaukee County Transit System buses and The Hop. The concourse would connect the tracks on Michigan and Clybourn streets.
That $6 million concourse would be part of $17.5 million in public improvements at the Couture. Those would include plazas, green space, and elevated walking and biking paths connecting the high-rise to O’Donnell Park and the lakefront.
That financing district also is providing $15.9 million to help pay for The Hop’s main line, and $15.1 million to pay for the lakefront loop.
The transit concourse solves problems for both Barrett Lo Visionary Development and local officials.
Barrett Lo needed to buy the Couture site, a former county bus facility at 909 E. Michigan St., at a deep discount to help make the project feasible, according to the county’s consulting firm, Chicago-based S.B. Friedman & Co.
But, the county was on the hook to pay $6.7 million to the Federal Transit Administration if it didn’t sell the property at market value. That’s because the agency helped finance the bus facility with a 1988 grant.
So, city Development Commissioner Rocky Marcoux suggested Barrett Lo redesign
the Couture to include a transit concourse for the streetcar and buses.
That met the Federal Transit Administration’s condition that the county would not have to pay back the federal grant as long as the Couture site’s sale proceeds were used for another transit project.
Barrett Lo later bought the 2.2-acre county site for $500,000, and last year demolished the bus facility.
Loan guarantee sought
The firm continues to wait for U.S. Department of Housing and Urban Development officials to complete their review of its application for a loan guarantee. The Couture’s main financing source would be a private loan backed by HUD.
“We’ve been working closely with HUD and have made great progress,” Barrett said in a statement. “We are in process on our response to their latest request for information and remain confident in a successful outcome.”
A HUD spokeswoman declined to say when a decision will be made. The agency said it received the application in
early January, and such reviews typically take several months to complete.
The agency provides loan guarantees in return for fees from developers.
Other Milwaukee-area apartment projects that have used the program include downtown’s Moderne high-rise, also developed by Barrett Lo, and Element 84, which Ogden & Co. is building in West Allis.
Along with an $80 million loan, Barrett Lo also expected to raise $5 million from the firm and its partners, as well as $20 million from other investors, according to a 2014 Department of City Development report. The $122 million development tab includes the $17.5 million in city funds for the transit concourse and other public improvements.
Meanwhile, the tax financing district’s only other property, the 18-story 833 East office building, 833 E. Michigan St., was completed in 2016 and is getting close to full occupancy.
The privately financed 833 East’s assessed value is $71.1 million. That’s expected to rise to $79 million once the building is filled.
With 833 East alone, the financing district should generate enough property tax revenue over 21 years to pay the $31 million streetcar construction tab, including the lakefront loop, according to a city comptroller’s report.
The lakefront loop’s tracks have been installed on both Michigan and Clybourn streets east of Milwaukee Street. The tracks end just west of the Couture site.
The Department of Public Works says the lakefront loop is to begin operating in 2020.
That would be well after the Couture begins construction if the project breaks ground in October. The building would take about 30 months to complete.
But, the Department of City Development’s report on the tax financing district said there would be a backup plan.
If the Couture isn’t developed, that report said, the site’s public improvements would be financed only “to the extent necessary” to provide access to the lakefront loop and the lakefront, and “to provide related pedestrian and bicycle amenities.”
Neither that report, nor the Department of Public Works, which oversees The Hop, provide any further explanation.
“The City of Milwaukee fully expects that the transit concourse at The Couture will be completed in time to meet our schedule,” Sandy Rusch Walton, department spokeswoman, said in a statement.
“Other options could be considered to complete the lakefront line turnaround if needed, but we have no reason to doubt the Couture’s construction schedule will accommodate the opening of the lakefront line,” the statement said.
Walton declined to elaborate. The lakefront tracks aren’t usable without that final connection between Michigan and Clybourn streets.
“If we don’t have some connection there, we basically have two long rail sidings,” said Bauman, who chairs the Common Council’s Public Works Committee.
Tom Daykin can be emailed tdaykin@jrn.com and followed Instagram, Twitter and Facebook.