Ri­val firms seek in­vest­ments to put com­muter rail on area tracks.

One group has al­ready spo­ken with Union Pa­cific

Milwaukee Journal Sentinel - - Front Page - Rick Romell and Raquel Rut­ledge

A com­pany or­ga­nized in Wis­con­sin a lit­tle more than a year ago is seek­ing to raise more than $1.4 bil­lion from pri­vate in­vestors for what might seem like an un­likely project: a com­muter rail sys­tem in the Mil­wau­kee area stud­ded with high-den­sity real es­tate devel­op­ment.

But a com­pet­ing ef­fort spear­headed by a ri­val group says it is fur­ther along in a sep­a­rate quest to place pas­sen­ger trains on the freight lines that criss­cross the area.

Pit­ted against each other in the rail­road bat­tle are two lit­tle-known firms: Tran­sit In­no­va­tions LLC and Wis­con­sin Tran­sit & Realty Group.

Tran­sit In­no­va­tions is seek­ing the $1.4 bil­lion. The com­pany, formed in Oc­to­ber 2017, has hired a New York in­vest­ment bank­ing firm to help raise cap­i­tal for a Mil­wau­kee rail and real-es­tate project dubbed “E-Way.”

The com­pany’s plans en­vi­sion run­ning com­muter trains along 55 miles of ex­ist­ing freight tracks in Mil­wau­kee and Wauke­sha coun­ties, and build­ing an es­ti­mated 7,000 units of new multi-fam­ily hous­ing and other real es­tate, such as re­tail and of­fices.

“We have un­tapped de­mand for peo­ple to go from Point A to Point B,” said Greg Du­gan, Tran­sit In­no­va­tions’ pres­i­dent. “But we have no way of get­ting there ex­cept for tra­di­tional means. This sys­tem ba­si­cally fills a gap.”

Du­gan would not say how much money, if any, has been raised for the project.

“We have some very, very, very in­ter­ested peo­ple in in­vest­ing in this,” he said.

But three knowl­edge­able ob­servers fa­mil­iar with the ef­forts to start com­muter rail in Mil­wau­kee ex­pressed skep­ti­cism about the pos­si­bil­ity of putting to­gether a deal that would re­quire not only rais­ing a large amount of pri­vate money, but also gain­ing the co­op­er­a­tion of sev­eral area com­mu­ni­ties and the two rail­road com­pa­nies — Union Pa­cific and Cana­dian Pa­cific Rail­way — that own the track.

The Tran­sit In­no­va­tions project ac­tu­ally dates back to at least early 2015, when the Mil­wau­kee Pas­sen­ger Rail Com­pany, a group headed by Du­gan’s part­ner, Brian Klies­met, un­veiled a sim­i­lar plan. That push failed to gain trac­tion, but it did spawn Tran­sit In­no­va­tions’ cur­rent com­peti­tor.

Michael Gar­ven, who in 2015 was pres­i­dent of Mil­wau­kee Pas­sen­ger Rail,

now is vice pres­i­dent of Wis­con­sin Tran­sit & Realty.

Gar­ven said he split from Mil­wau­kee Pas­sen­ger Rail about two years ago. He de­clined to speak in de­tail about the ef­forts of his group, but said they are more ad­vanced than those of the ri­val firm.

“No pun in­tended, we’re fur­ther down the tracks than they are,” Gar­ven said.

In at least one re­spect, there may be ev­i­dence to sup­port that.

In an in­vestor pre­sen­ta­tion by Tran­sit In­no­va­tions, a page ti­tled “So­lu­tion / Strat­egy” de­scribes the ven­ture in sev­eral bul­let points, in­clud­ing one that says, “Ad­vanced ne­go­ti­a­tions with Cana­dian Pa­cific and Union Pa­cific rail car­ri­ers to lease their tracks.”

In an in­ter­view Thurs­day, how­ever, Du­gan said his firm has told the rail­roads about the project but has first con­cen­trated on such things as mar­shal­ing gov­ern­ment sup­port and rais­ing money. Now, he said, Tran­sit In­no­va­tions will sit down with the rail­roads and ne­go­ti­ate lease rights.

“So we’re far ad­vanced down the road is the best way to put that,” he said.

Cana­dian Pa­cific didn’t re­spond to an in­quiry. A spokes­woman for Union Pa­cific, mean­while, said that rail­road has not met with Tran­sit In­no­va­tions but has been work­ing with Wis­con­sin Tran­sit & Realty Group.

“We re­cently signed an agree­ment with WTRG that pro­vides a process to es­ti­mate the in­fra­struc­ture costs re­quired to im­ple­ment their plan,” spokes­woman Kris­ten South said by email.

Tran­sit In­no­va­tions’ plans sur­faced in midNovem­ber, when the com­pany’s New York in­vest­ment bank, Cas­tle Place­ment LLC, is­sued a lit­tle-no­ticed an­nounce­ment that it had been hired to help raise some $1.456 bil­lion for the project.

About 70 per­cent of the money would go to de­velop real es­tate around the 23 rail sta­tions en­vi­sioned.

Plans in the in­vestor pre­sen­ta­tion show the rail net­work as serv­ing down­town Mil­wau­kee, Mitchell In­ter­na­tional Air­port, the Menomonee Val­ley, Wauwatosa, West Al­lis, Brook­field, New Berlin, Elm Grove, Wauke­sha and the Cen­tury City project at the for­mer

Plans in the in­vestor pre­sen­ta­tion show the rail net­work as serv­ing down­town Mil­wau­kee, Mitchell In­ter­na­tional Air­port, the Menomonee Val­ley, Wauwatosa, West Al­lis, Brook­field, New Berlin, Elm Grove, Wauke­sha and the Cen­tury City project at the for­mer Tower Au­to­mo­tive site on Mil­wau­kee’s north side.

Tower Au­to­mo­tive site on Mil­wau­kee’s north side.

Com­pany iden­ti­fied

Du­gan said the com­pany is in talks with Bom­bardier Trans­porta­tion about op­er­at­ing the sys­tem. Bom­bardier Trans­porta­tion, which em­ploys nearly 40,000 peo­ple and op­er­ates in more than 60 coun­tries, is part of Mon­treal-based Bom­bardier Inc., which de­scribes it­self as the world’s lead­ing man­u­fac­turer of air­planes and trains.

Asked about the Tran­sit In­no­va­tions ef­fort, a Bom­bardier spokes­woman said by email that the Cana­dian com­pany has “been in dis­cus­sions with some or­ga­ni­za­tions to pos­si­bly take part in the devel­op­ment of pas­sen­ger rail so­lu­tions in the Mil­wau­kee area.”

Gar­ven also said he has been talk­ing with Bom­bardier.

“I met with Bom­bardier, the di­rec­tor, just this Mon­day, and I talked with him to­day too,” Gar­ven said.

Gar­ven, ac­cord­ing to his LinkedIn page, is a for­mer sales and mar­ket­ing di­rec­tor for BRG Pre­ci­sion, a man­u­fac­turer of cus­tom time-zone dis­plays. Du­gan’s LinkedIn page de­scribes him as pres­i­dent of a pri­vate fund­ing firm called WEB In­ter­na­tional LLC and of WESA Inc.

Klies­met has been a real es­tate de­vel­oper in the Mil­wau­kee area. He de­clared bankruptcy in 2013. Ef­forts to reach him Thurs­day were un­suc­cess­ful.

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