SB Friedman has provided extensive development advisory services for the City of Milwaukee and its Redevelopment Authority related to proposed tax increment financing (TIF) projects. Our experience includes:
Former Pabst Brewery Site Deal Review, Negotiation Support and Economic Feasibility Study
SB Friedman conducted an extensive financial feasibility review of the proposed Pabst Brewery redevelopment project on behalf of the City of Milwaukee. The project site spans 6-½ city blocks and includes a number of historic structures. The proposed redevelopment calls for extensive remediation and preservation of historic assets, and includes almost 600,000 square feet of office uses, about 175,000 square feet of neighborhood retail, about 500 units of for-sale and mixed-income rental housing, 120 hotel rooms, and about 3,600 stalls of structured parking.
The site developer, Zilber Limited, is employing a phased approach that calls for initial environmental remediation, interior demolition and public infrastructure improvements, followed by the sale of individual buildings and sites to qualified developers. SB Friedman assisted the City in developing an innovative, flexible TIF agreement with the developer that allows for phased assistance based on project progress and ongoing calculations of developer TIF need and supportable City investment.
SB Friedman's reporting to the City included a review of office, retail, and residential market conditions, a detailed review of the developer’s projected cash flows and project costs, and phased projections of incremental property taxes likely to result from the project. Due to the flexible nature of the proposed project, SB Friedman performed detailed reviews of likely residential, office, and retail absorption rates to provide a basis for assumptions on the phase-in of incremental property tax revenues supporting City bonds. We assisted the City of Milwaukee with the negotiation process, and led the initial drafting of the term sheet governing the proposed TIF contribution.
Results: The proposed assistance was approved by the Joint Review Board, Redevelopment Authority, and Milwaukee Common Council. The project is currently underway with early phases completed.
Manpower, Inc. World Headquarters Economic Feasibility Study
In late 2005/early 2006, SB Friedman conducted a financial review of a proposed project to accommodate a 280,000-square-foot world headquarters for Manpower Inc., a global staffing company, within Downtown Milwaukee’s Schlitz Park development. The project is anticipated to add more than 1,000 jobs to Downtown Milwaukee, and to contribute to the revitalization of the Park East and Beer Line areas of the city. The project also includes a Historic Tax Credit-financed renovation of an adjacent power plant building.
SB Friedman reviewed the proposed project and its need for TIF assistance and projected incremental property tax revenues likely to arise from the project. The firm also assisted the City extensively in negotiating the terms of TIF assistance to the project and developing a deal structure that limited City financial risk. The agreed-upon TIF contribution from the City is substantially less than the amount originally requested by the developer.
The agreed-upon financing structure includes construction of a parking garage, which will ultimately be owned by the City, as well as a developer guarantee to reinforce the payoff of tax increment district borrowing. City assistance is a combination of grant and loan financing, with debt repayment tailored to match projected project cash flows.
Results: The Milwaukee Common Council approved financial assistance to the project in February 2006. The project is now complete and occupied.
Deal Review and Loan Structuring – Moderne Project
SB Friedman recently completed a review and structuring of a TIF-funded loan from the City of Milwaukee to complete the Moderne rental apartment project in the Park East district, located along proposed fixed-rail transit right-of-way in Downtown Milwaukee.
The City of Milwaukee engaged SB Friedman to analyze the Developer’s request for a TIF-funded loan to supplement a HUD 221(d)4 senior debt guarantee. This innovative structure allows the project to access sufficient debt in challenging credit markets, while providing the City with several recourse measures and credit protections. SB Friedman assisted the City in reviewing project financing gaps, TIF feasibility, and structuring the loan package. The resulting City loans total $9.3 million, and are split into a senior “completion loan” and a junior “mezzanine loan.”
Results: The City of Milwaukee Common Council approved the loan in November 2009 and the Project is currently under construction.