The Milwaukee Common Council this morning approved a controversial $9.3 million in city loans for The Moderne development, a planned 30-story building that will be built on a vacant lot at the southwest corner of Juneau Avenue and Old World Third Street in the downtown Milwaukee Park East corridor.
The building will have 203 apartments, 14 condominiums and first floor retail space. The Moderne is being developed by a group of investors led by developer Rick Barrett. The general contractor for the project is J.H. Findorff & Son Inc.
The project should break ground in December and will take two years to build, Barrett said.
Critics of the project said the loan created a financial risk to the city's taxpayers that the private sector was unwilling to assume. Critics also said the project will create more competition in a downtown housing market that is already soft.
The $9.3 million in loans from the city provide the final piece to the financial puzzle for the project. The city loans are necessary because the financial industry meltdown during the recession has made it extremely difficult for developers to obtain financing from the private sector for a major development, Barrett said.
"We're excited for our city, excited for the Park East and excited for the people we are going to put back to work," Barrett said after the council vote. "I can't tell you how honored I am that the (Common) Council saw what I saw. We're very happy."
Aldermen expressed reservations about providing a loan for a market-rate housing development, which is a significant shift in city policy. However, most said that there is a need to support the project because of the bad financial markets hindering development and to create jobs and increase the city's tax base.
To obtain support from aldermen for the project, The Moderne developers agreed to increase their emerging business enterprise (EBE) goal from 18 percent to 25 percent and to increase their resident preference program (RPP) goal from 22 percent to 30 percent, meaning more contractors will be minority-owned Milwaukee firms and more workers will be "under-employed or unemployed" construction workers who live in the city.
"When one considers the benefit vs. the cost, the city taxes that will be generated from the project and the jobs that will be created on what right now is a vacant lot, I think it weighs heavily on the side of supporting it," Alderman Michael Murphy said.
The $55.24 million project has a $41.4 million loan from the AFL-CIO Investment Trust, which will be serviced by Capmark Financial Group and is guaranteed by the U.S. Department of Housing and Urban Development (HUD)'s 221(d)4 program.
The Moderne developers also addressed concerns raised last week by aldermen about personal guarantees of the city loans and default provisions for the loans. Personal guarantees for the loans will be secured by a first lien on assets with a combined fair market value of no less than $3.35 million.

Health care costs in southeastern Wisconsin continue to be 9 percent higher than the average costs throughout the Midwest, according to the Greater Milwaukee Business Foundation on Health Inc.'s third study of the costs, efficiency and quality of health care in the greater Milwaukee area
According to Ron Dix, the foundation's executive director, southeastern Wisconsin's 9-percent higher gap actually is an improvement from similar studies done in 2000 and 2003.
In 2000, the southeastern Wisconsin's health care costs were 55 percent higher than comparable Midwest states, and in 2003, southeastern Wisconsin's costs were 39 percent higher, Dix said.
"Although the results of this study are more positive than the previous two, the demographics of our employees, higher provider payment levels and richer benefit plan designs in southeast Wisconsin are the primary reasons our costs are higher than in other Midwest states," Dix said. "These findings clearly underline the complexity of the problem and that there are no single solutions."
Consulting firms Mercer and Milliman are the two main authors of the study, which is based on the analysis of 2006 and 2007 combined employer and employee health care premium costs of commercial health plan members under the age of 65.
The study includes Milwaukee, Waukesha, Racine, Ozaukee, Kenosha, Walworth and Washington counties, and represents more than $1.7 billion in health care costs from approximately 450,000 members and dependents for each year.
The figures include the costs for medical, prescription drug, mental health, vision, hearing, etc., but not dental, and correspond to comparable figures from Illinois, Indiana, Ohio, Michigan, Minnesota, Iowa, North Dakota, South Dakota, Missouri, Kansas and Nebraska.
Factors listed in the study as contributors to the higher average local costs included the area's higher average age of participants, a slightly richer plan design than comparative plans in other states and provider payments are approximately 9 percent higher than the Midwest average.
"The foundation board and area employers are buoyed by the efforts of area providers in working with us to lower health care costs. We look forward to a time when we are among the areas with the lowest premium costs in the Midwest and the nation," Dix said.
The Foundation also announced its plans to conduct an additional study using data from 2009, and hopes to make those results available near the end of 2010 or early 2011.
To view a full copy of the foundation's latest report, visit http://www.gmbfh.org/news.php.

With a little more than four weeks left in its annual campaign, United Way of Greater Milwaukee officials today announced it has raised $24.4 million, or 54.2 percent, toward its $45 million goal.
Overall, United Way's 2009 Community Campaign is slightly ahead of 2008 pace. However, United Way officials say fundraising activity posted from last week was more than $500,000 below than the same week in 2008 - amid last year's unprecedented slow down.
The bright said for the United Way is that 127 out of 214 workplace-giving campaigns have closed reported increases. That equals 59% of campaigns completed.
However, United Way reports a lag in workplace campaign kickoffs this year. While 102 companies will launch campaigns this week, bringing the 2009 total active campaigns to 663, overall the annual drive is running about 50 workplace campaigns behind last year.
United Way officials say they are also seeing a lag in commitments for corporate gifts.
"We have seen great early returns in the workplace campaigns that have reported totals," said Stephen Roell, chairman and chief executive officer of Johnson Controls Inc. and 2009 United Way Community Campaign co-chair. "But what's concerning us is that corporate giving is running slower than last year. While many large corporations and foundations have contributed generously to the 100th Anniversary Fund, others just haven't committed gifts yet. The economy may be to blame in some cases; however there are organizations that we need to step up and hopefully they plan to, but we just haven't heard from them. And the clock is ticking. We really need them to give now."
The need for United Way services has never been greater. United Way's partner agencies report increases in the number of people seeking help – many of them first-time clients, the length of service required and the number of children receiving urgent resources. Agency directors say they depend on United Way to rally people to give generously because many of them are overburdened from the increased demand for services.
"When asked, people are giving generously. They really seem to feel strongly that United Way is the solution to many of the problems families are facing," said Sue Dragisic, chief executive officer of United Way of Greater Milwaukee. "When I am out in the community people ask me how United Way's campaign is doing. They really look to United Way as a barometer of hope."
United Way's 2009 Community Campaign runs through Dec. 10. United Way will invest the funds raised in the most critical needs of the community, including strengthening families and children, meeting basic needs, promoting self-sufficiency and breaking the cycle of poverty. United Way remained a stable base of funding for more than 160 programs in 2009 because of the funds raised in 2008.
For more information or to donate, visit www.reasonstogive.org.

Milwaukee-based ZBB Energy Corp. announced today that Paul Koeppe has agreed to serve as interim chief executive officer of the company after an internal investigation by the firm's audit committee resulted in the resignation of former CEO Robert Parry from the board of directors.
The company and Parry reached an agreement to address a "problem" regarding the company's tax classification of Parry's employment status and related withholding obligations in a manner that minimizes ZBB Energy's financial exposure.
Koeppe, who currently serves as an independent member of the board of directors, previously served as CEO and founder of Superconductivity Inc., a manufacturer of superconducting magnetic energy storage systems from 1988 to 1997, when it was acquired by American Superconductor, an electricity solutions company.
"We are taking all necessary actions to resolve the matter and to strengthen the company's internal controls on a going-forward basis," said ZBB chairman Bill Mundell. "We do not believe that the potential obligations identified in the internal investigation will have a material impact on the company's financial statements. We are also pleased that Paul Koeppe has agreed to undertake the role of chief executive officer on an interim basis and we are confident that Paul's leadership will help the company move forward and play a major role in addressing global energy issues."
ZBB also announced that its 2009 annual shareholders meeting has been rescheduled for Monday, Nov. 16.

Businesses that use large volumes of water have the potential to realize thousands of dollars in annual savings through a new water-savings program launched by Lagina Plumbing of Milwaukee.
The commercial plumbing company's new Water Preserve Program, created in cooperation with Kohler, is working with large-volume water users to identify opportunities for reduced use of water and related energy, and then to make plumbing system changes that could establish and maintain those savings.
"Those savings can be in the thousands of dollars per quarter," said Jim Lagina, president of Lagina Plumbing. "So along with respect for natural resources, there's a real financial incentive to practice water conservation."
The Lagina Plumbing management staff worked with the water conservation experts at Kohler to develop the Water Preserve Program, which can be engaged by a wide variety of business that use large volumes of water.
"Kohler, which was just selected by The Environmental Protection Agency's WaterSense program as its Manufacturing Partner of the Year for 2009, is a national leader in water conservation and the means to accomplish that," Lagina said. "That's two years in a row that Kohler has earned that award.  We're honored to partner with the company on this effort and in their drive to encourage wise use of water."
Jessic Franz, who joined Lagina Plumbing earlier this year, serves as the main consultant for the Water Preserve Program.
Lagina Plumbing has worked with a number of area building owners and contractors on water conservation efforts that are part of the Leadership in Energy and Environmental Design (LEED) guidelines of the U.S. Green Building Council, and has a LEED accredited professional on staff, Jason Maller.

Menomonee Falls-based Kohl's Corp. announced today it once again holds the top spot in retail on the U.S. Environmental Protection Agency's quarterly rankings of top green power purchasers in EPA's Green Power Partnership.
Kohl's, which was recently named the greenest retailer in America, according to Newsweek magazine's Green Rankings, also ranks third overall and third among Fortune 500 companies in the Partnership, which includes some of America's largest green power purchasers.
Since the last quarterly rankings were announced in July, Kohl's has increased its green power purchase by more than 42 percent. Throughout 2009, Kohl's has purchased more than 851 million kilowatt-hours (kWh) in renewable energy credits. This purchase is enough to meet 71 percent of the company's purchased electricity use, which means that more than 70 percent of Kohl's energy comes from renewable resources.
According to U.S. EPA, Kohl's green power purchase of more than 850 million kWh is equivalent to avoiding carbon dioxide emissions of nearly 112,000 passenger vehicles per year, or is the equivalent amount of electricity needed to power nearly 85,000 average American homes annually.
"Green power purchases are one of the easiest and more important ways we can implement renewable energy sources as we work to reduce our carbon footprint," said Ken Bonning, Kohl's executive vice president of store planning and logistics. "We continue to increase our purchases that are applied companywide, and we hope to reach 100 percent green power in the coming year. This is just one more way we continue to operate as an environmentally responsible company."
"EPA commends our leading Partners for their continued commitment to protecting the environment by using green power," said Ann Bailey, acting director of the Climate Protection Partnerships Division at EPA. "By supporting green power, Kohl's Department Stores is reducing its greenhouse gas emissions, supporting clean energy technologies, and contributing to a clean energy future."

The stock market was sluggish in mid-morning trading today.
The largest local advancers this morning in the BizTimes Stock Index were Snap-on Inc. (up $1.68 to $37.79), Bucyrus International Inc. (up $1.51 to $47.56), Joy Global Inc. (up $1.33 to $53.11) and Rockwell Automation Inc. (up $1.22 to $41.51).
The largest local decliners this morning were Kohl's Corp. (down $1.65 to $56.08) and Koss Corp. (down 77 cents to $11.05).

Despite a robust fourth quarter flush with military orders, weakness in Oshkosh Corp.'s access and commercial vehicle segment cut deeply into the bottom line, leading to $1.1 billion net income loss in fiscal 2009, the company reported today. Read more in BizTimes Milwaukee's daily roundup of headlines from newspapers across the state at www.biztimes.com/#news.

The U.S. economy is headed on a long and slow path to economic recovery, James Glassman, managing director and senior economist with JP Morgan Chase, said in a recent presentation to the Kenosha Area Business Alliance at the Club at Strawberry Creek. Read more in the new edition of the BizTimes Money bulletin.

In today's markets, do not under-spend on the appearance of your product, the way it is presented and who is presenting it. Get the look and the voice right. In today's more challenging markets, you need to help your customers overcome resistance to buy. Read more in today's Milwaukee Biz Blog by Kay Plantes.