Property taxes from a new downtown office building will be diverted to help pay off city financing on a pair of ill-fated attempts to create light industrial business parks within Milwaukee’s central city.
The property taxes from the office building, built in 2003 at 875 E. Wisconsin Ave., will be used to help pay off the city’s debts from the North Avenue Commerce Center, on the north side of W. North Ave., between N. 24th and N. 27th streets, and the Florida Yards Industrial Park, at E. Florida and S. Barclay streets.
North Avenue Commerce Center was built by an investors group led by developers William Orenstein and Mark Irgens.
The city has provided $3.2 million for the project, including rent subsidies.
City officials said those subsidies were needed to attract private capital to the development, which then-Mayor John Norquist said in 1994 would create family-supporting jobs in the central city.
But the center, consisting of two multi-tenant buildings, with 57,600 square feet and 55,200 square feet, struggled to land light industrial tenants.
State law allows tax incremental financing districts to take up to 26 years to pay off their debts.
But, under current estimates, the North Avenue Commerce Center’s debt will not be paid off by 2020, when the 26-year deadline arrives.
By that time, the city’s debt on the project will be $4.98 million, an amount that includes interest payments, according to the Department of City Development.
The development’s property taxes will pay an estimated $4.14 million of that amount.
Around $600,000 of that shortfall has already been provided through property tax payments diverted from the tax incremental financing district created to help develop the Milwaukee Center.
The Milwaukee Center is a project that includes the Milwaukee Center Office Tower, 111 E. Kilbourn Ave., and the adjacent InterContinental Milwaukee Hotel.
The remaining $240,000 needed to pay off the commerce center’s debt will come from diverting property taxes from the tax incremental financing district created to help develop the 875 E. Wisconsin Ave. office building.
Also, some of that office building’s property taxes will be used to pay off a shortfall at Florida Yards, an industrial park developed by the city at a cost of $7.1 million, an amount that includes a $1.4 million federal grant.
Milwaukee has 48 tax incremental financing districts.
Nearly all those districts are generating enough property taxes to pay off their debts without having to receive property tax revenue from other projects, according to figures compiled by the Department of City Development, and the city comptroller’s office.