Update: Check out Business Journal and Journal Sentinel coverage of the issue.
Nearly a year after it was first proposed, and several months after it appeared all but dead, the Walmart deal is moving ahead – with the city pledging to spend up to $1.8 million on site cleanup costs to help make it happen.
The City Council, after a lengthy closed session, voted 5-2 in open session Tuesday night to approve terms of a development agreement with Gatlin Development and Walmart.
It passed 5-2. Alderman Craig Maass and I voted no. Alderman Frank Van Dusen III abstained.
Why did I vote no? I felt it was the right thing to do – the only decision I could make if I truly believe in ensuring that citizens’ voices are heard on key issues, if and when possible.
I’ll explain more about my rationale later. First, some background.
The plan itself has not changed much since it was first proposed in late 2010, when the council approved selling its portion of the property necessary for the project to Gatlin Development.
It calls for a 115,215 -square-foot retail store (and outlot) on approximately 10 acres of land in the 200 block of North Chicago Avenue — 3.6 acres of city-owned land on the east and another 5.8 acres west of 11th Avenue. About one third of the building would be devoted to full-service grocery, with the remainder planned for general merchandise and a pharmacy. The project will create between 150 to 200 jobs, with about 60 percent of them full-time.
This, of couse, is year-old information. What has become clearer in recent days, however, is the amount of money that Gatlin and Walmart are seeking to make the project a reality. Early on, Walmart was not seeking any city funds to make this happen. Now, that figure stands at up to $1.8 million.
Why the change? It has to do to with site cleanup costs, both of the city property abutting Chicago Avenue and the privately owned property to the west. Environmental testing has found both sites, especially the private property, to be in need of significant cleanup in order to make it suitable for building.
Consultants have put this cost at about $3.6 million.
- Walmart has committed to contribute $1.8 million of that.
- The city would spend $800,000 to clean up the portion of the property it owns between 11th and Chicago Avenues – money we would admittedly have to spend if Walmart wanted to build on the site or not.
- The city would also contribute up to another $1 million for cleanup of the remaining parcel. (I say “up to” because included in that figure is $500,000 that the city will pay only if necessary, as the last money into the deal.)
Walmart would fund other site upgrades, including installation of a traffic signal on Chicago Avenue, stormwater management and other road improvements.
The city cleanup costs would come through Tax Incremental Financing District #2, where the Walmart would be built.
As you recall, in a TIF district the city borrows money to fund infrastructure costs to improve an otherwise undesirable property. The loan is paid for by the property tax “increment” of the new development – the difference between the property taxes collected under the old use (in this case, vacant land) and new use (here, a perhaps $12 million Walmart, among other projects in TIF #2).
In fact, it was estimated Tuesday night that the Walmart development could “pay back” the city’s $1 million in “extra” cleanup investment by 2016, with the property going back on the tax roles then.
TIF financing is widely used across the state to help spur development – and it’s being used in bringing Walmarts to other communities (including West Milwaukee). I generally support it. But I know it can be controversial, as it uses city tax dollars to help fund private projects.
That gets to why I voted no.
The addition of the city-funded cleanup costs to the project has changed the debate, in my mind. The “Should Walmart build in South Milwaukee?” question of the past year is now “Should the city contribute up to $1.8 million to help Walmart build in South Milwaukee?” These are two very different questions.
I think there was strong support locally for the former. As to the latter, I’m not so sure. That’s why I felt strongly that the community should be heard on it before the council gave its blessing to the development agreement.
I made a motion stating as much: to hold a public information meeting on the project next week with the idea that the council give its approval or denial at its next meeting on Sept. 20. This seemed to be a fair compromise, one that allows Walmart to continue on its accelerated schedule — one driven by an expiring purchase option on the private land west of the city parcel — while at the same time allowing for at least one round of public comment before council action on the new information contained in the proposed development agreement.
That motion failed, 5-3 (with me, Maass and Van Dusen III voting yes).
Then came the motion to approve the development agreement, and I stand behind my vote on it 100 percent.
Now, I may end up voting in favor of this project in the end – but only after residents share their thoughts at the various public hearings coming up in the next couple of months. Your voices first need to be heard on this. I owe my constituents that much.
(Of course, that starts with this blog. Post your comments below, and vote in the poll question on the right side of this page. Call or email me anytime. And I will keep you posted on the public hearing dates.)
South Milwaukee Blog 
Erik,
As much as I would love to see a Wal-Mart in South Milwaukee, I find it hard to believe they cannot afford all costs involved.
Erik,
I’m curious how you voted on previous TIF districts.
I have actually never voted on an issue like this before — nor the creation of a TIF district. I generally support them. I think they are a good tool to use for redeveloping properties that otherwise would have little if any chance to get new life. But they should also be used judiciously — not for every development nor development site that comes around. That said, my no vote here was in no way a commentary on TIFs or even this particular TIF. It was about my concerns that we put the cart before horse on this issue, with the council voting to approve a development agreement with no formal public comment on what we were voting on.
Two things stick out here. First, If I’m reading this correctly, a good chunk of the money SM is being asked to contribute is to clean up. What is the nature of the problem? Did some one contaminate the land illegally? Was this area zoned as a dump and now being rezoned so the city need to contribute? Who “declared” that it it was an environmental hazard? Is this another case where the federal or state swooped in after the fact and declared that something that was legal is now going cost the local owners (without payment for “taking” a portion of the land) or the local government?
Second, you mentioned that Walmart would pay for a traffic signal on Chicago. Where did that come from? Do you mean to say that Hwy 32 is going to have another stop light 2 short blocks away from the College Ave. stop light? That sounds like a less-than-brilliant idea for through traffic in SM. In fact it sort of looks like the less-than-brilliant idea of having a stop light 2 blocks in the other direction at K-Mart. I thought the primary purpose of buying the site east of the tracks and north of that road parallel to Chicago was so Walmart could build a smaller than normal store that fits into the area and handles its own traffic (via that other street).
SM Guy: Good questions. The city has known for some time that its portion of the land is contaminated due to its previous uses — and that some level of cleanup would be necessary to make it usable again. The extent of cleanup needed for the parcel to the west has come to light more in the past year after further testing. Consultants (experts on this stuff) performed the testing, so I have no reason not to trust the findings. As to your other question, I have not seen the final traffic study, but the plan is indeed to add a traffic light near Chicago and Badger. 11th Avenue between Davis and Carroll would be vacated to make way for the project — essentially becoming part of the parking lot for the store.
traffic studies= a good thing
probably should have had a traffic study when they narrowed 15th Ave at College from 3 to 2 lanes.
Not to change the subject, but this is a good example of why I have favored keeping the Hoan Bridge. Surface streets might attract development, but then somebody wants to change the surface streets to negatively impact throughput. In this case, we’re not talking about two major thoroughfares meeting and requiring traffic controls (such as 32 and BB), we are talking about stopping traffic (again) on the main road through SM solely because of a parking lot – just like at K-mart and Grant Park Plaza.
Living in the neighborhood between Chicago and Lake, the traffic issues are a huge concern. Right now during rush hours, there are so many cars that it takes far too long to be able to make a left turn onto Chicago from Park, Sycamore, etc. And if a light is installed around Badger, from what I’ve seen Chicago could be backed up to College during heavier traffic even without a Walmart.
That westerly parcel was contaminated by a tannery that was on site and went out of business. Unfortunately way back then there was no monitoring of what companies were draining or dumping on their property. There also was contamination from a gasoline station located across the street from the Pizza Hut (directly south) that was remediated. An example of this is the barrel site located on 5th ave. that was declared a superfund site that was cleaned up by the federal government.
Instead of a traffic light, install a roundabout.
Being said, all companies are looking for expenses being subsidized. Cabela’s will only build a store if they receive local funding such as a TIF district offers.
The real question here is..”Do you want a Wal Mart built in SM???” If not, then do not give them money to remediate the property and let it sit vacant for the next 10 years and they will find another location. Having worked for a large local big box retailer in their Real Estate/Construction Dept., we would always look for local or state incentives if we selected a parcel and built a store or a DC. In fact, there was a location in Georgia where the local and State incentives paid the company $30 million to build the DC in their town, which was the cost to build the facility in exchange for a 15 year commitment to stay in the area and also hire local employees.
Thank you, Erik.
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On balance, this seems like a pretty darn good deal.
1. Out of the $1.8 million cost to clean up these properties (which apparently is a worst case scenario), the city owned land will cost $800,000 of that which will need to be paid no matter who purchases the land. No buyer will pay to have that cleaned up. Putting aside the questionable decision for the city to purchase this contaminated land and take it off the tax rolls for the past few years, the decision was made. We now have an opportunity to put this property back on the tax rolls at a substantial increase in value once the store is built. If this is not done, how much longer will this land sit vacant with the city not being able to collect taxes on it? Further to that, the longer the land sits vacant, the cost for cleanup will continue to increase. Additionally, Walmart’s willingness to fund other infrastructure improvements is somthing another developer may not be willing to do knowing the land is part of a TIF district.
2. The “should a Walmart be built in South Milwaukee?” is not a valid question. The correct question is “should a big-box retailer be built in South Milwaukee?”. If the decision is not to build a Walmart then the same response should be given to a Target, Sears, Best Buy, IKEA, Kohl’s or Shop-Ko if one of them wanted to open a store in South Milwaukee. The city should not be dictating which competitors should be allowed to open a store and which ones should not. If the city doesn’t want Walmart then it should not allow any big-box retailer to build within the city limits (which would be an extremely bad decision).
3. Beware of the Walmart haters who don’t even live in the city but will surely show up to the upcoming hearings to bash Walmart. Non-residents should not be allowed to be heard. I’ll state now that I live in the city but do not live in your disctrict. I strongly support this plan as this investment should pay for itself in a few years. Is this not exactly what a TIF district is for?
I came to this from your post about the public hearings. I have to reiterate my feelings – where were the public hearings about building a big-box store there to begin with?? I do live in this district, and I don’t know anyone who’s been aware of any meetings to discuss this development. It seems as though any meetings now are just for show, which is really insulting.
I agree that the issue is not Wal-mart per se, but the size of the store. The typical big-box store of ~100,000 square feet generates 20,000-30,000 car trips every day. Can you really picture that many cars converging on that intersection every day?? I live near there, and I genuinely can’t see it. Not with the schools, churches, and residential neighborhoods nearby. Is traffic access expected to stay on College and Packard? Chicago avenue South from there is only one lane in each direction because it is residential. Is this going to change? What about traffic down Rawson: also single lane, through the Caterpillar plant, and past another school. It pains me to think of what a big-box retailer will do to take business from what’s left of our downtown. What happened to the small-box/residential mixed use plan that’s been the only one available to see at the CDA website? That’s a much healthier option for the neighborhood.
And is anyone even listening at this point, or have all the decisions been made?
Sorry Chris H., I’d have to disagree on point #2. I am very opposed to having a Walmart in SM and would be less opposed to nearly any other big-box retailer. Walmart in particular has a very bad history of using and abusing it’s position as the world’s largest retailer. The same could likely be said of any other big-box, but Walmart takes things to extremes that no other retailer can or wants to. From low wages, poor benefits, and poor working conditions to lack of support for local charities, running into the ground of other local businesses, and more, Walmart takes the cake.
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Geoff-
I agree. I worry about business being taken away from what local shops we DO still have here. I would definitely rather see more local entrepreneurs make it here in South Milwaukee, and give back to the community than some chain where our money will never come back. Isnt there anyway to make land/vacant buildings appealing to more local smaller businesses?