Dallas-based Gatehouse Capital has pulled the plug on the high-profile proposed Milwaukee Hotel Palomar and Residences development planned for the Park East corridor in downtown Milwaukee.
The $150 million, 22-story development planned for the northwest corner of West Juneau Avenue and Old World Third Street was to include 63 luxury condominiums, a 175-room boutique hotel, a restaurant owned by Food Network star Michael Symon, a nighclub, a spa and fitness center, retail space and a parking structure.
In a prepared statement, Gatehouse chief executive officer Marty Collins said that one problem for the project was that, "as the residential and credit markets worsened to historical levels, Gatehouse Capital attempted to obtain a higher level of assistance from the City of Milwaukee, which unfortunately failed to materialize … the project is simply impractical in this new business climate without a much larger assistance package."
Collins said Gatehouse made a significant investment in the project.
"We were invited to this opportunity in early 2006 by local co-developers who were the majority financial partners," Collins said. "In 2007 to keep the project moving, Gatehouse Capital restructured that relationship and provided significant funding, advanced the drawings and construction plans, completed and opened the sales center, and identified several other nationally recognized operating partners for the restaurant and spa while continuing to sell the residences. As the residential and credit markets worsened to historical levels, Gatehouse Capital attempted to obtain a higher level of assistance from the City of Milwaukee, which unfortunately failed to materialize. This was a landmark project in an emerging section of the city with great promise to which we were very much attached. I would like to thank the Milwaukee community for the support it has shown during the planning and pre-development of this project over these last several years. We had a world-class team of professionals that were committed to building the finest project in Milwaukee. But even with the highest level of support and community backing, the deteriorating macro conditions of today’s market could not be overcome. In the final analysis, the project is simply impractical in this new business climate without a much larger assistance package. We wish the community every success in the re-development of this emerging section of downtown."
Signs of trouble for the project first appeared last fall when Collins announced that the start of construction for the project had been pushed back as a result of the recession and the credit crunch.
The demise of the Palomar project is a major blow to efforts to attract development to the Park East corridor. A freeway spur through the corridor was removed in hopes of opening up a large swath of land for development on the northern edge of downtown. Most of the land that was underneath the freeway spur is owned by Milwaukee County. So far the county has been unsuccessful in its attempts to attract any development to its Park East property.
The County Board adopted the Park East Redevelopment Compact (PERC) for reviewing developments on the county-owned land in the Park East corridor. The PERC requires developers to pay union-scale wages for construction projects on the county land. In addition, the PERC indicates that developers that hire local employees, provide job training or create green space would by more likely to be selected. However, developers criticized the PERC, saying it would discourage development. The Milwaukee Common Council rejected a proposal similar to the PERC.
Some other development has occurred in recent years on land around the Park East corridor that is privately owned or was owned by the city including the new Manpower Inc. corporate headquarters, the Pabst brewery redevelopment, Mandel Group Inc.'s North End development, a Staybridge Suites hotel and an Aloft hotel.

President George W. Bush is asking Congress to approve the second half of a $700 billion rescue package for the U.S. financial system.
Bush requested the funding on behalf of President-elect Barack Obama, who seeks the money now because he wants to avoid being caught without emergency funds if the banking system should further erode after he takes office Jan. 20.
Obama said he was disappointed that outgoing Treasury Secretary Henry Paulson has not focused part of the first $350 billion of the bailout fund, known as the Troubled Asset Relief Program (TARP), on helping troubled homeowners.
Obama also criticized the lack of oversight of how the TARP funds have been used. Instead of modifying mortgages, the Treasury Department has used a significant portion of the first $350 billion in the bailout fund to buy significant stocks in banks.
Meanwhile, Federal Reserve Chairman Ben Bernanke said today that there can be no "lasting" recovery without more government action and additional money to strengthen the financial system.
The timing and strength of economic recovery "are highly uncertain," Bernanke said in a speech today at the London School of Economics.
Bernanke said Obama's proposed stimulus package would likely help the economy but won't be enough to save the economy on its own.
"In my view ... fiscal actions are unlikely to promote a lasting recovery unless they are accompanied by strong measures to further stabilize and strengthen the financial system," Bernanke said, according to a report in MarketWatch.com.
The stock market was mostly flat in early morning trading today. The largest local gainers were Koss Corp. (up $1.33 to $10.89) and A.O. Smith Corp. (up 88 cents to $31.11). The largest local decliners this morning were Wisconsin Energy Corp. (down 41 cents to $42.61) and Strattec Security Corp. (down 45 cents to $16.44).

Three more manufacturing plants in Wisconsin will close, eliminating nearly 500 more jobs.
Alcoa Wheel Products has informed the Wisconsin Department of Workforce Development (DWD) that it will close its plant in Beloit, eliminating 293 jobs in March. Many of the affected employees are members of the United Auto Workers, Local 95.
The plant's parent company, Pittsburgh, Pa.-based Alcoa Inc., announced it lost $1.2 billion in the fourth quarter and will cut its global workforce by 4 percent, or 13,500 jobs.
"These are extraordinary times, requiring speed and decisiveness to address the current economic downturn, and flexibility and foresight to be prepared for future uncertainties in our markets," said Klaus Kleinfeld, president and chief executive officer of Alcoa Inc. "We are taking a wide-ranging set of aggressive, but prudent, measures to ensure that Alcoa maintains its competitive lead in today's challenging markets while also emerging even stronger when the economy recovers."
Meanwhile, Hutchinson Technology Inc. (HTI) filed notice that it will close its photo etching plant in Eau Claire, eliminating 100 jobs in March. The company is based in Hutchinson, Minn.
The DWD Dislocated Worker Unit is working with its local partners to coordinate services to affected Hutchinson employees.
In Plover, near Stevens Point, Basic American Foods Inc. announced it will close its plant, eliminating 106 jobs, in September.
Read more in BizTimes Milwaukee's daily roundup of headlines from newspapers across the state at www.biztimes.com.

The National Federation of Independent Business (NFIB) Small Business Optimism Index fell 2.6 points in December to 85.2, the second-lowest reading in the 35-year history of the survey.
Business owners were hoping consumers would ride to the rescue, but that did not happen, according to NFIB chief economist William Dunkelberg.
"Unless there is a solid turnaround in January, we are in for a longer-than-usual recession," Dunkelberg said.
Average employment per firm declined 0.86 workers (seasonally adjusted), the largest monthly decline in survey history. Eight percent of the owners increased employment by an average of 3.2 workers per firm, but 26 percent reduced employment an average of 4.2 workers per firm (seasonally adjusted).
Plans to make capital expenditures over the next few months fell four points to 17 percent, lower only in the 1974-75 period. 
"In this uncertain environment, owners are postponing any capital projects that are not essential to the operation of the firm - or that they can't afford or can't finance." Dunkelberg said.
Few owners are raising prices. The net percent of owners reporting higher average selling prices dropped six points to a net-negative 6 percent in December.
Profit gains deteriorated another four points to a negative 42 percent, a record low.

Productive Knowledge Inc., a public relations and marketing strategies firm that leverages the Internet, has moved its offices to Stonewood Village on Capitol Drive in Brookfield.
The 4-year-old company was founded in Wauwatosa.
"We're serving business owners who want to reach their audiences in the most efficient way possible, and who understand that online strategies are a key way to realize those efficiencies," said David Niles, vice president of Productive Knowledge.
The business also provides traditional marketing and PR services with a wide range of expertise built over 30 years of communications experience.
The company has gained expertise in the green, sustainable world through extensive work, research and speaking engagements in the green building products industry over the past three years.
"Stonewood Village gives us a location central to our clients in southeastern Wisconsin and northern Illinois," said Jim Weiss, president of the firm. "And the office will give us room for our anticipated growth this year. We're seeing a strong increase in requests for Internet-based marketing and PR as more companies realize the efficiencies and power of those approaches, especially in this challenging economy."
The new offices are at 17700 W. Capitol Drive. Additional information is available at www.productiveknowledge.com.

Waukesha-based Environmental Systems Inc. (ESI) has acquired ECC Controls Inc. of Milwaukee in a strategic growth move that expands ESI's technology offerings and its Midwest presence.
ECC's employees and operations have been integrated into ESI. The ECC Milwaukee office has moved to the ESI facility in Waukesha, located at W223 N603 Saratoga Drive.
ESI provides a range of technology and services in the areas of building automation, systems integration, networking and IT infrastructure, security, life safety, building operations and software applications in Wisconsin, Illinois and Michigan.
ECC provides temperature controls, building automation, energy management and security systems in Wisconsin and Upper Michigan.
"The acquisition of ECC Controls results in a powerful strategic synergy between the two companies," said Paul Oswald, president of ESI. "ECC Controls is a respected supplier in the building automation and management field. ECC brings a premier technology brand, T.A.C Andover, to ESI, which adds to ESI's existing role as a T.A.C  I/A  partner. In addition, ECC provides an expanded customer base and an important regional location in Eau Claire, Wis., that will allow us to serve our customers in Western Wisconsin. ”
ESI has facilities in Waukesha, Chicago, Ill., and Houghton, Mich.

Assurant Health plan members can now receive in-network benefits at more than 800 retail health clinics throughout the United States.
Milwaukee-based Assurant Health announced today that its health plan members can now receive in-network benefits at all Take Care Clinics, located at 322 Walgreens drugstores in 35 markets and 18 states, including Wisconsin.
Take Care Clinics are walk-in, professional health care centers open seven days a week with extended evening and weekend hours. Take Care Clinics are staffed by board-certified family nurse practitioners and physician assistants who diagnose and treat patients 18 months and older for common, non-emergency illnesses such as strep throat, ear and sinus infections and poison ivy.
Nurse practitioners and physician assistants are licensed to write prescriptions that can be filled at the patient's pharmacy of choice.
This new Assurant Health service is available through its agreement with Take Care Health Systems, the largest provider of convenient care clinics and worksite health and wellness centers in the country and a wholly owned subsidiary of Walgreens.
Take Care operates five clinics in the Milwaukee area. For more information, visit www.takecarehealth.com.
Assurant Health has been in business since 1892 and is the brand name for products underwritten and issued by Time Insurance Company, John Alden Life Insurance Company and Union Security Insurance Company.

The Wisconsin Credit Union League recently opened the Credit Union House, a 2,500-square foot-office and meeting facility at 1 E. Main St. in Madison. The office, located on the Capitol Square, will give the league's 250 members a place to host meetings with legislators and other state officials, said Chad Helminak, a league spokesman. To read more, visit the latest edition of the BizTimes Money bulletin.

Instead of buying bank stocks, the federal government should be providing economic stimulus to the American middle class and small businesses, according to BizTimes Milwaukee executive Steve Jagler. Read more in his special Milwaukee Biz Blog posted at OnMilwaukee.com, a media partner of BizTimes Milwaukee.

Two bold new plans intended to help Wisconsin weather the recession and restore its economy were unveiled today.
Citing a unique opportunity for reform in the face of difficult economic circumstances, Wisconsin Democratic Gov. Jim Doyle and Minnesota Republican Gov. Tim Pawlenty today announced a nation-leading, bipartisan effort to identify potential shared services between their states.
At ceremonies in Madison and St. Paul and today, Doyle and Pawlenty signed executive orders directing their state agency commissioners and secretaries to identify possible cooperative service agreements between the state agencies of both Wisconsin and Minnesota'. 
Both states are facing multi-billion dollar budget shortfalls and similar challenges in meeting demands for state services with limited revenues. 
"The people of our states are used to seeing neighbors cooperate to get through challenging times," Doyle said. "This is a common sense way to cut government spending while protecting essential services during a tough economic time for our country."
"We're not proposing to merge the Vikings and the Packers, but we are going to seek out every area where we can save money and improve services by working together across state lines," Pawlenty said. "This is an historic agreement between our two states that can serve as a model for the rest of the country."
The governors said services to be explored for sharing between the two states will include: procurement (i.e. road salt, heavy equipment, institutional food and software); facilities and vehicles (i.e. specialized vehicles, patrol boats, aircraft and warehouse space); and cooperative functions (i.e. call centers, collection operations, licensing functions and prison industries).
Wisconsin and Minnesota's commissioners and secretaries will report back to their governors by Feb. 27. Each report must identify the specific activities, programs and services currently provided by their state's agency that could be met through a cooperative service arrangement with the other state. To view a copy of the executive orders, visit www.wisgov.state.wi.us/journal_media_detail.asp?locid=19&prid=3893.

Meanwhile, in a separate announcement in Madison, a broad new coalition of leaders in government, labor and environmental organizations unveiled a "Blueprint for Wisconsin's Green Economy."
The Blueprint provides a vision and principles for how the federal economic recovery money could be used, and more than $2 billion in examples of immediate, job-creating projects that could increase the state's energy independence, build public transit systems, provide clean water and rebuild crumbling urban infrastructure.
The coalition said the proposals could create an estimated 30,000 jobs in Wisconsin.
"Every week we hear about a plant closing somewhere in Wisconsin that puts thousands of skilled workers on the street," said Chuck Geiger of the Blue Green Alliance. "We need to provide these people with good, family supporting, green jobs as well as a pathway to get there.  Every displaced worker says to themselves 'now what?' We need to answer that question."
"The Blueprint provides an answer by showing how investing economic recovery money in this way can both remedy the immediate economic crisis, and build the basis for a high wage, environmentally sustainable, 21st century Wisconsin economy," said Melissa Scanlan, founder and senior counsel of Midwest Environmental Advocates. 
"We're at a critical point where we can jumpstart our economy with targeted investments that build Wisconsin's 21st century green economy. Investing in public transit will not only create thousands of jobs, but will promote smart development and reduced climate change emissions," said Madison Mayor Dave Cieslewicz.
"The Amalgamated Transit Union-Local 998 eagerly supports the Blueprint because by investing in mass transit we can put people to work on vital infrastructure that connects people to jobs," said Richard Riley, president of the union.
"We can put people to work in a very short time frame if we're able to get additional funding for major clean water and flood management projects," said Kevin Shafer, executive director of the Milwaukee Metropolitan Sewerage District. "Our investments have an immediate impact on the economy and benefit the waterways of this region for decades."
Cheryl Nenn of Milwaukee's Riverkeeper said, "With new green jobs we can clean our rivers and Great Lakes, protect the drinking water supply, restore wildlife habitat, and improve our quality of life."
"With Wisconsin hemorrhaging family supporting manufacturing jobs over the past decade, it makes sense to invest economic recovery money in a way that can both remedy the immediate economic crisis and start to build the basis for a new high wage economy," said Robert Kraig, program director for Citizen Action of Wisconsin.
To see the full Blueprint for Wisconsin's Green Economy, visit www.midwestadvocates.org.