Madison may use new fund to buy Union Corners

Mar 4, 2010 — The Wisconsin State Journal

Dean Mosiman

Mar. 4, 2010 (McClatchy-Tribune Regional News delivered by Newstex) -- Madison is exploring the first use of a new $5 million fund -- to acquire the blighted Union Corners development site on the East Side.

The 11.5 acres at the corner of East Washington Avenue and Milwaukee Street, one of the central city's largest vacant parcels, are assessed at $4.55 million.

"There have been some discussions" with the parcel's owners, Mayor Dave Cieslewicz said of using the money for the site. "These discussions have not come to any conclusion."

He didn't elaborate.

City officials have also identified other properties in the East Washington Avenue corridor and the 27-acre Royster Clark property as possible targets to use the new land banking fund, created in the 2010 budget with city tax dollars.

The fund isn't big enough to pursue all opportunities and it's unclear how the city would handle multiple demands.

"I think we have to be very careful," Cieslewicz said. "We do not want to be in the business of real estate speculation. We want to be very strategic and surgical about it."

City Council President Pro Tem Mark Clear, who pushed to include the money in the budget, said, "It's enough to probably look at one site. The idea was for it to be a fairly limited program."

The city established the fund to buy developable pieces of land, demolish buildings or address environmental issues, and then sell or lease the property for private development at a favorable cost to stimulate investment in an area. In the past, when the city wanted to buy land it didn't have a dedicated pool of money to do so.

The Economic Development Committee recently finished guidelines for using the money. They call for buying land at below market prices and if redevelopment will inspire other projects.

Now officials are considering creating a revolving fund using sales revenues from properties it has purchased or adding more tax money in the future.

Matt Mikolajewski, manager of the Office of Business Resources, said the fund could help spur development in the East Washington Avenue corridor, which is suffering from blight and vacancies but seen as a place with great potential for job growth.

"When you get a corridor like East Washington Avenue, there's always going to be risks for early investors," Mikolajewski said. "Some proactive city involvement may be critical to getting some early projects started."

So far, the Union Corners site, which has an approved development plan by the city but remained vacant since a mixed-use project by McGrath Associates stalled in 2007, has got the most attention.

Cieslewicz and other city officials are concerned that McGrath or its lender may break up the site and sell off parts in pieces. So city officials are considering buying it to prevent the break up with the intention of later selling it.

Lance McGrath of McGrath Associates declined comment on the status of the property.

McGrath first proposed a commercial and housing project in 2004 and won broad support from city officials and residents for its plans, which would essentially create a new neighborhood on the site. A $60 million first phase had 140 condos and commercial space, and McGrath secured $4.9 million in tax incremental financing support. But the condo market softened and construction was stopped in June 2007. The TIF money is no longer available.

The site is mostly cleared except for a few small buildings and a large billboard owned by Adams Outdoor Advertising. The city has finished public improvements including a traffic circle, street extension and bike paths.

Newstex ID: KRTB-0219-42595584