Additional city loan for north side hotel advances
It still needs OK from Council
A boutique hotel planned for Milwaukee’s north side would receive additional city financing under a proposal that received an initial approval Thursday.
The city loan for the Ikon Hotel, already set at $4 million, would increase to $9 million under the new plan endorsed by the Redevelopment Authority board.
That proposal also needs approval from the Common Council. That review is to occur in September.
Developer Kalan Haywood plans to convert a former Sears store, at 2100 W. North Ave., into an 80-room hotel. It would include a restaurant and bar in the lobby, a rooftop lounge, and coworking and retail space on the threestory building’s street level.
Haywood also plans to build an adjacent conference center with 24,600 square feet of banquet and meeting space.
The hotel and conference center, to be known collectively as One MKE Plaza, would cost $36.2 million to develop.
The project is to be completed by the end of 2022.
In May, the council voted 12-3 to approve the $4 million loan, with opponents citing a report from city Comptroller Martin Matson.
That report said Ikon would increase Milwaukee’s property tax base. But it also cited a “significant risk” that the city wouldn’t recover its investment.
Matson reached that conclusion in part because his office hadn’t yet received Ikon’s projected income.
He also said Haywood hadn’t yet lined up the project’s private financing.
Without complete financing, the project could be modified, delayed or canceled — putting the city loan at risk, Matson’s report said.
Haywood has since provided a market study to Mayor Tom Barrett’s Department of City Development that includes income projections.
Based on that information, the department is estimating a $10.6 million assessed value for Ikon.
Also, that first city loan is helping secure other financing sources, Haywood said.
They include an expected $12 million from private investors drawn by the development’s location in an Opportunity Zone — providing big federal tax breaks.
Other financing includes $7 million in federal and state historic preservation tax credits, $3 million in Property Assessed Clean Energy financing and a $2 million private loan, according to the Department of City Development.
Hayward’s investors group, HG Sears LLC, would repay the $9 million city loan over 20 years, according to the proposal. Payments wouldn’t begin until the loan’s third year.
If Hayward’s group cannot make the payments, Ikon’s property tax revenue would repay the loan, said Dan Casanova, Department of City Development economic development specialist.
Haywood is starting to use the $4 million city loan to do interior demolition work.
The additional $5 million wouldn’t be available until the project’s other financing sources have been tapped, Casanova said.
While the Redevelopment Authority vote was unanimous, some board members raised questions about the risks to the city in making the loans.
City Development Commission Rocky Marcoux acknowledge the risks, but also said the long-underused building has been a major barrier to additional development in the neighborhood.
The location at North and Fond du Lac avenues is a gateway to both the north side and downtown, he said.
Tom Daykin can be emailed at tdaykin@jrn.com and followed on Instagram, Twitter and Facebook.