Agency recommends new loan for hotel project
New $5M endorsement comes after $4M in May
A city loan to help finance a planned hotel at West Fond du Lac and West North avenues should be increased from $4 million to $9 million, the Milwaukee Department of City Development is recommending.
The Common Council in May approved lending $4 million to developer Kalan Haywood, who plans to convert a former Sears store at 2100 W. North Ave. into an 80-room hotel along with a restaurant and retail or commercial space, and an adjacent conference center.
Now, DCD is proposing that the city lend another $5 million for the project, called The Ikon. In addition, the city should earmark a further $500,000 for infrastructure improvements such as street paving and better lighting, and $500,000 for improvements to commercial buildings in the area, DCD is recommending.
The Common Council approved the original $4 million loan despite a report from Comptroller Martin Matson warning of “significant risk” that the city would not be repaid and that a tax financing district surrounding the hotel would not be able to break even.
At the time, it was estimated that the
hotel project would have an assessed value of $3.6 million.
Since then, Haywood has had a market study conducted and, based on the study, estimates the hotel will generate operating income of about $1 million annually. Given that income stream, DCD now estimates the hotel project will have an assessed value of $10.6 million.
The city’s Redevelopment Authority will hold a public hearing at 1:30 p.m. Aug. 15 at 809 N. Broadway on the proposal to increase the loan amount and the spending in the tax financing district. The amendments to the project plan also would require approval of the Common Council and the Joint Review Board.