May 26, 2010

City takes another run at developing Walker site

Walker site, take two. 

The city is preparing to make another run at building on 10 acres of land just north of the Root River along Lake Michigan that is the former home of Walker Manufacturing. The new proposal is scaled down from the pre-bubble ambition of Pointe Blue, a $200 million development that fell apart in 2007, but still aims to build 370 residential units over the next decade. 

Unlike Pointe Blue, the $74.1 million proposal probably won't be built by a single developer, City Development Director Brian O'Connell said. Instead, it will likely resemble the successful Gaslight Pointe development, which resulted in a handful of successful high-end residential developments along the lake front. 

The city is hoping for the same for the Walker site. But before it can begin courting developers, it has some work to do cleaning up the property. 

The former manufacturing site is polluted and needs to be remediate before new construction begins. The site also needs roads and utilities to attract builders. The city plans to lean on successful past developments to pay for the needed improvements, which are expected to cost $15,551,000. 

On Wednesday, city development officials laid out a proposal to extend the life of the tax increment district used to pay for Gaslight Pointe to pay for work on the Walker site. TIDs allow the city to use property taxes from a specified area to pay off loans taken out to spur new development. They usually last 30 years. 

The Gaslight Pointe TID was set to expire in June - meaning property taxes in the TID would be distributed to all local governments, not just the city - but the state Legislature passed a law allowing the city keep the TID open for another 10 years. Since all of the loans taken out to build Reefpoint Marina are paid off the TID is making money. The city plans to use that money to pay for the needed improvements on the Walker site, which is also a TID. 

They're hoping lake front development begets lake front development.

"We're creating opportunity to move forward," O'Connell said. 

Two city committees heard about the plans on Wednesday. The Standing Joint Review Board - composed of representatives from Racine Unified, Gateway, Racine County, the city and the public - met to consider changes needed to begin work on the Walker site. The board is charged with reviewing the city's TIDs.

While supportive, the board held off a vote Wednesday until the City Council makes a decision. The council's Plan Commission also met Wednesday to consider the proposal, but held off on a vote to give commission members a chance to read through the agreement. 

City officials also noted any development ideas now are merely conceptual. While housing worked on Gaslight Pointe, the Walker site is open to any style of development as long as it generates enough property tax value to pay off its loans and return the highest possible value to taxpayers.

During a public hearing on the city's proposed changes to the Walker site, city resident Tim Zikwoski suggested the city pursue a hotel, convention center and water park for the site, which is located near North Beach, the marina and Downtown. "We need something to draw people into Racine," he said. "... this is a real diamond in the rough. Hotel developers wouldn't pass it up."

City Development Director Brian O'Connell said housing, particularly on the lake front, fit the city's long-term plans for upscale development that pays a high-level of property taxes. While the current housing market is flooded with homes for sale, new construction on the lake would offer a different type of housing that would be appealing on the market.

O'Connell added that new construction would occur in stages to allow the market to fill demand. A development may come in and build 30 units and as they sell another developer may go ahead and build another 40 units. Over an extended period of time the area will fill up with new construction.

It's a different approach than developer Scott Fergus had proposed for Pointe Blue. Under that proposal, Fergus would have cleaned the site, built the utilities and built an entire residential and commercial development at once. It would have been a massive project for the city - arguably the largest in Racine history - but the housing market collapsed, Fergus lost his financing and Pointe Blue never became anything more than a sign posted on the site.

Bill Pugh, who lived in the Coast Guard house near the Walker site for 16 years, called the old development "Pointe Blah." While that deal fell through, he said, the city needs to do something in the area.

"Anything you can do to improve the neighborhood down there will help everyone," he said.

A few other notes on the city's plans for the Walker site:

* The Walker site is technically called TID 14. The city has spent $83,000 in the district, so far.

* Plans for TID 14 include $10 million in developer incentives designed to attract projects. The money is about half the $20 million in incentives budgeted under Pointe Blue. The incentives would be paid for by development on the site. Plans calls for developers to invest $64 million in the site to receive the $10 million in incentives.

* Without the incentives, the city will spend about $5.55 million preparing the site for development. Most of these costs will be covered by money from the Gaslight Pointe TID, which, under state law, can pay for improvements on the Walker site for five years.

* Plan Commission members plan to meet on Tuesday before the City Council meeting to discuss the proposal. They called the special meeting to give members a chance to review 30-page plan, which they received shortly before Wednesday night's meeting.

* Former state representative and County Board member Jim Rooney, who lives near the site, cautioned the Plan Commission against too much density. "We need to preserve and protect our waterfront," he said.