DRS move raises questions about Milwaukee’s Century City project

Defense contractor Leonardo DRS could have developed its new $56 million factory and offices, with more than 400 workers, at Century City Business Park — less than a mile from its outdated facility on Milwaukee’s north side.

Instead, armed with up to $25 million in state and local government financing help, the company will move to the Woodland Prime business park in Menomonee Falls.

That Monday night announcement marks the second high-profile prospect this year that passed on Century City — raising questions about the $35 million effort to create a business park at the former A.O. Smith Corp./Tower Automotive Inc. site.

“Certainly, it’s not a positive sign,” said James T. Barry III, president of Barry Co. commercial real estate brokerage.

DRS now is located at 4265 N. 30th St., where it operates an aging plant at full capacity.

The company in 2020 will move to a

350,000-square-foot manufacturing facility to be built on 19 acres in Woodland Prime, north of Good Hope Road and west of I-41. DRS also will use a neighboring 120,000-square-foot office building that will be remodeled.

DRS, which now has 449 full-time employees, could add 220 new jobs after the move, according to the Wisconsin Economic Development Corp.

The state will give DRS up to $18.5 million in income tax credits over the next seven years. Also, Menomonee Falls is providing $6.4 million in tax incremental financing for the new facility.

DRS needs a more modern and efficient facility to accommodate its growth, according to a statement from Russell Marsh, vice president and general manager of the global company’s naval power systems business.

The company “looked all over the state, including sites in Milwaukee, and the Menomonee Falls location met the requirements for us to best serve our U.S. Navy customer,” said Michael Mount, senior director of public affairs.

Mount said other sites “did not meet our requirements.”

Mount said he couldn’t immediately provide additional information on why DRS rejected Century City. The business park has 45 acres available for development south of West Capitol Drive and west of West Hopkins Street.

Company executives years ago may have decided they wanted out of Milwaukee, said Ald. Ashanti Hamilton, whose district includes the DRS facility.

“It feels that way to me,” said Hamilton, Common Council president.

DRS executives for years have talked to Hamilton and other city officials with their concerns about dilapidated buildings in the area, as well as crime.

The city responded with increased police presence, Hamilton said.

Also, Mayor Tom Barrett and the Common Council in 2005 agreed to provide $1.5 million in city funds to help DRS with an $11.5 million upgrade to its facility.

In turn, the company had to keep 450 employees at its Milwaukee plant through the end of 2018.

But the most visible step occurred in 2009.

That’s when Barrett and the council approved a $35 million plan to redevelop the former A.O. Smith/Tower Automotive site into Century City Business Park.

That money, including state and federal funds totaling more than $9 million, 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.

Century City recorded a win in July after Good City Brewing agreed to buy a 53,200-square-foot building.

City officials say filling that building, which was completed in 2016, will help attract other companies to Century City.

But the building sold at losses of more than $300,000 for both the city and development firm General Capital Group.

Also, it was learned in July that Amazon.com Inc. was considering a large distribution center, with more than 1,000 employees, in Oak Creek — after passing on Century City.

Century City “was challenged from a vehicular access standpoint,” according to information filed about the Amazon project with state officials.

Construction recently started on the Amazon distribution center immediately east of the I-94/Ryan Road interchange.

Industrial developments that have a lot of distribution needs want to be as close to a freeway interchange as possible, said Barry.

Woodland Prime, like Amazon’s Oak Creek site, meets that criteria.

By contrast, Century City is about 1.5 miles from the I-94/Capitol Drive interchange.

“That will be an ongoing issue,” Barry said.

But there are industrial prospects that rely less on heavy distribution flow, he said.

Meanwhile, Century City can tout its proximity to a large number of production workers, and its freight rail access.

But those features no longer met the changing needs of DRS, which has added more engineers at the Milwaukee facility. That’s according to a source familiar with the company’s site search who asked not to be identified.

Also, Woodland Prime’s advantages included the existing office building. It’s less expensive to renovate existing space than to construct new office space, that source said.

Milwaukee 7, a southeastern Wisconsin jobs development group, is working with city officials on finding prospects for Century City, said Tim Sheehy, president of Metropolitan Milwaukee Association of Commerce.

Milwaukee 7, which is part of the MMAC, was involved in the DRS process. Sheehy said that included offering Milwaukee sites, which DRS rejected.

“It is in our interest to tap into every asset the city has as part of growing a more business-friendly environment to attract jobs and capital investment,” Sheehy said.

City Development Commissioner Rocky Marcoux couldn’t be reached for comment.