FIRST PLACE TAKES ANOTHER HIT

CITY USED COMPLETED PROJECT NUMBERS TO SET DISTRICT'S START VALUE

Special to the Readers of Milwaukeeworld

By Michael Horne

There is more bad news for First Place on the River, the Scott Fergus development that went into receivership in January and led to the developer's $80 million bankruptcy filing. [See comprehensive Milwaukeeworld report here.]
An article by Rich Kirchen in the Business Journal Serving Greater Milwaukee on August 15th, 2008, said another $18.2 million would be needed to complete the building, on top of the $6.6 already spent since the receivership on the 152 unit condominium. Kirchen said 35 units have closed in the project at 106 W. Seeboth Pl., with 32 of them closing since the receivership action.
The development received over $4 million funding for a riverwalk and street improvements at the site.
The Periodic Report required of all Tax Incremental Financing Districts gave First Place a base value of $56.1 million as of 2007, when TID 68 [Fifth Ward - First Place] was created. This was an error on somebody's part, since the Term Sheet for the project prepared by S.B. Friedman of Chicago estimated the base value would only be $28 million, due to its partially completed nature at the time. ($56 million was to be the finished project number.) Friedman also warned that the building must be "fully sold by September 2008" for its financial projections to work. September is coming up, and the place isn't even completed, not to mention fully sold!
So the Department of City Development had to go to the Redevelopment Authority of the City of Milwaukee today, Thursday, August 21st, 2008 with Amendment #1 to the tax district, explaining that "this error has resulted in the 2007 base value being significantly greater than the corrected 2008 value of $32 million, consequently creating no increment for the TID to amortize its debt."
Curiously, however, the periodic report for the district's condition as of 12/31/07, noted the project went into receivership in February 2008, but added "48 occupancy units [permits?] were issued," which does not square with the numbers in the Kirchen article. (But who knows? In May, 2007, Fergus told Tom Daykin of the Milwaukee Journal Sentinel that he had already sold 89 units.) The periodic report also calls the project a "115 unit condominium project," and is apparently a sloppy bit of work all around.