The Milwaukee Zoning, Neighborhoods and Development Committee today authorized additional study of a request for tax incremental financing (TIF) for a proposed hotel project in the Park East Freeway corridor, even though the developers of a competing hotel project nearby object to the idea.

Fort Myers, Fla.-based Development Opportunity Corp., which is building a 14-story building, at the southeast corner of Water Street and Juneau Avenue near the Park East Freeway corridor in downtown Milwaukee, sent a letter to city officials Monday, objecting to the TIF request by Chicago-based RSC & Associates.

RSC wants to develop two county-owned vacant parcels in the Park East corridor. For the first phase of its $78 million development, the company plans to build 126 high-end apartments, a 148-room boutique hotel and 80,000 square feet of office, retail, restaurant and entertainment space on the lot bordered by North Milwaukee, North Jefferson and East Lyon streets and East Ogden Avenue. For the second phase of its development, RSC plans to develop the adjacent lot bordered by Water and Milwaukee streets, Ogden Avenue and Broadway. The details of that phase would be based on market conditions.

RSC has requested $9.5 million in TIF from the city, mostly to pay for a parking structure in the development. However, Milwaukee Department of City Development officials have opposed the request, saying they do not want to subsidize development that will compete with existing hotels and retailers downtown, especially since there are several other proposed downtown hotel developments.

But without TIF assistance, RSC chief executive officer Rich Curto said his firm will have to re-evaluate its Park East project and would likely do a smaller development, or would drop its plans altogether for the site. A smaller development would provide far fewer benefits for the city, he said, because it would create fewer jobs and generate lower property tax revenue. In addition, Curto said that his firm is trying to attract an anchor tenant to the project that would provide a major new entertainment destination for downtown. But without the TIF assistance, the project will be unable to bring in that anchor tenant, he said.

In contrast, Development Opportunity Corp.'s letter says that TIF support for a competing hotel development would be unfair.

"As you are aware, we applied for assistance by way of a TIF in May of 2006 and we were summarily rejected the following month," Development Opportunity Corp.'s letter says. "Regardless of said rejection, we are highly confident in our project and have proceeded with the development. We would be extremely disappointed if our confidence in the city were undermined by subsidizing our competitors. We urge that the free market would support hotel development within the city, as indicated by our project. In the alternative, if any other TIFs are granted, we would request that the city review and reassess our initial application."

Development Opportunity Corp. was seeking $2 million to $3 million in TIF, according to Joel Brennan, assistant executive director for the city's Redevelopment Authority.

Despite the position taken by the Department of City Development on the RSC project, Ald. Michael D'Amato thinks the TIF request should be given serious consideration.

This morning, the city's Zoning, Neighborhoods and Development Committee approved a proposal from D'Amato to direct city officials to prepare documents to amend the Park East TIF district for RSC's request and to have a consultant, paid by the developer, conduct a more detailed analysis of RSC's project and TIF request.

Ultimately elected officials, not Department of City Development staff, should decide if the TIF should be granted to RSC, D'Amato said.

An initial review of the RSC project done for the city by Chicago-based S.B. Friedman & Co., a real estate advising and development consulting firm, indicates that, "overall, it appears that the developer's reported financing gap for the proposed project is driven primarily by the mix of uses in the development program, as opposed to any underlying infrastructure or site deficiencies. A program emphasizing for-sale residential product types such as condominiums and townhomes, potentially with ancillary retail, would likely be feasible on the project site without public financial assistance."