June 3, 2010

Proposed West Racine grocery store, gas station is dead

The JT's Paul Sloth is reporting tonight that Tom Tousis's plans to build a grocery store, restaurant and gas station in West Racine is dead.

Tousis and the city split ways after the city concluded Tousis's project was not worth enough money to pay off loans the city took out to demolish buildings on the site at the corner of Washington Avenue and West Boulevard. But a number of factors complicated the roughly $3 million development, which was one of the largest new construction commercial projects on the table in the city in the past year. 

Initially, Tousis faced opposition from West Racine business owners who were opposed to a gas station on the site. Opponents were concerned the gas pumps were a bad fit for an area that prides itself on small businesses and being walkable. 

A number of supporters mobilized in favor of Tousis's project, including local labor unions looking for a sizable project to create new jobs. Tousis had vowed to use local union workers for the job. 

Tousis's plans hit a snag when his team discovered a sewer pipe running through the property. The discovery forced them to downsize a $5 million project to between $3 million and $4 million (there was disagreement on the number), a reduction that ultimately doomed the project. It may also jeopardize future plans for the site. Along with the sewer pipe there's evidence the property could be contaminated from past use, including a mechanic's shop and as a dump for foundry slag. Both factors, as well as some complicated utility easements, will make new construction on the site challenging. 

(As an aside, the Department of Natural Resources awarded the city a $40,075 grant in 2007 to remediate a small brownfield site, the former Wisconsin Muffler Property at 3124 W. Washington Ave., across the street from the land Tousis wanted to build on. Gov. Jim Doyle announced the grant in a press release sent statewide. But in 2008 the city returned the grant and told the DNR they didn't want to use the money, according to a DNR official. 

"It doesn't sound like they did any of the cleanup work they were proposing or did anything to create the green space," said the official, who reviewed the state's official records on the brownfield grant.)

The city and Tousis are now playing out the end game of roughly a year's worth of back-and-forths over the West Racine project. The city's Redevelopment Authority actually granted Tousis an option on the site, and Tousis paid the city $5,000 for the option. 

The RDA then decided it needed to reconsider the timeline for the project, which set off the final round of negotiations that led to the proposal's collapse. The RDA is now expected to vote next week to cancel the option and refund Tousis's $5,000. The proposal only needs RDA approval, according to a memo from Brian O'Connell. 

As for the city, it's begun to look at new projects. One idea is to work with the Wisconsin Housing and Economic Development Authority to build a housing development for the deaf and blind. While WHEDA has turned down Racine projects in recent years, the West Racine project could move forward because it has a unique purpose, according to an insider. But even with the unique focus it will be difficult for the city to obtain the loans. 

Here's the resolution the RDA is expected to vote on next week:
WHEREAS, on December 14, 2009, by resolution 09-30, the Redevelopment Authority granted an option to Tom Tousis (d.b.a. Better Day Petroleum Company) to redevelop the Authority’s properties in the 3101-3121 block of Washington Avenue; and 
WHEREAS, Mr. Tousis has requested that the deadlines in the option be amended to provide additional time to complete project design, obtain regulatory approvals, and arrange financing; and 
WHEREAS, representatives of the Authority and Mr. Tousis have been unable to reach a mutually acceptable agreement on terms and conditions for the extension. 
RESOLVED, that the option granted to Tom Tousis (d.b.a. Better Day Petroleum Company) to redevelop the Authority’s properties in the 3101-3121 block of Washington Avenue is not extended; and 
FURTHER RESOLVED, that in recognition of the good faith efforts by both parties and their mutual desire not to incur additional costs related to the development proposal, the Executive Director is authorized and directed to refund to Mr. Tousis his option fee of $5,000.00. 
Fiscal Note: Funds are available for the refund of the option fee.
And here's the memo City Development Director Brian O'Connell sent to the RDA about the resolution:
DATE: June 3, 2010 
TO: Commissioners, Redevelopment Authority 
FROM: Brian O’Connell, Director 
SUBJECT: Agenda item 10-4655: Request by Karen Sorenson on behalf of Tom Tousis requesting an extension of deadlines for West Racine redevelopment project. 
This item was deferred from the Authority’s meeting of April 7, 2010. 
During the its review of the request, staff became aware that the likely assessed value of Mr. Tousis’ development would be less than the value on which the Tax Increment District (TID No. 11) project plan for the redevelopment area was based. The Authority deferred action on the request to provide an opportunity for Mr. Tousis and his representatives and city representatives to explore alternatives for increasing the assessed value on the property. 
City and Mr. Tousis’ representatives met twice during the following weeks and exchanged information between the meetings. Despite good faith efforts by both parties and a serious review of alternatives, we were unable to reach a mutually acceptable solution. Therefore, I am recommending that the Authority not grant the requested extension. 
In recognition of the good faith efforts by both parties and the mutual desire not to incur additional costs related to the proposal, I am also recommending that Mr. Tousis’ option fee of $5,000 be refunded to him. 
I have prepared a resolution for the Authority that will accomplish these recommendations. (See attachment.) 
If you have any questions about this item prior to your meeting on June 10th, feel free to call me at 636 – 9478.