Wisconsin

Keg House Rehab Breathes Life into ‘Ghost Town’

In the early 2000s, the historic Pabst Brewery in Milwaukee, Wis. seemed destined to fall into disrepair. After closing in 1996, the brewery complex sat empty for years. The city wanted to put the 26-building complex to new use, but plan after plan failed. In 2005, a developer tried to turn the compound into a retail and entertainment district. In 2006, a local developer purchased the site, envisioning a mixed-use urban neighborhood. Two years later, development had yet to take place on the site. In 2008, Gorman & Company (GC) purchased a building from the master developer. By the end of the year, the developer had converted the former keg house into the Blue Ribbon Loft Apartments. In recognition of that catalytic development, the Novogradac Journal of Tax Credit Housing honored the development with its first annual Developments of Distinction Award for overcoming significant obstacles in its development.

“We thought this one project encapsulated all of the challenges and rewards of urban LIHTC development. An empty warehouse becomes a beautifully designed, outstanding loft-style apartment building. It is economic development and affordable housing that the entire development team and community can point to with pride,” said Mark McDaniel, president and CEO of Great Lakes Capital Fund (GLCF), of nominating Blue Ribbon Loft Apartments for the award. GLCF served as one of the low-income housing tax credit (LIHTC) and historic tax credit (HTC) syndicators for the property.

The Blue Ribbon Loft Apartments is the first building to be redeveloped on the 21-acre site. The former brewery complex features 26 buildings about two miles from downtown Milwaukee. Until 1996, the site was the home of the Pabst Brewery, once the largest brewery in America. From 1996 until 2008, the site stood vacant, becoming a source of blight for the surrounding area. Redevelopment of the site was difficult because of the isolated nature of the compound, which was not connected to the city’s street grid or in an established neighborhood. Local developer Joseph Zilber purchased the entire complex, renamed it The Brewery and developed a master plan for the site. Using $29 million in tax increment financing from the city of Milwaukee, Zilber began transforming The Brewery into a mixed –use urban neighborhood.

“It was a pioneering site. It was sort of a ghost town,” said Gary Gorman, president and CEO of GC.

In 2008, Zilber sold the former Keg House, a three-story, 140,000-square-foot brick building, to GC. GC renovated a vacant warehouse into a 95-unit mixed-income apartment building. The development has 69 units for families earning 50 percent to 60 percent of the area median income and 26 market rate units. The units feature 15-foot ceilings, exposed brick and steel columns and floor-to-ceiling windows. The building features many amenities, including a music studio, artists’ workspaces and galleries, a business center, fitness facility, indoor parking, conference rooms and a theater/presentation space.

“We tried to create a very unusual environment. We wanted to make it a hip, urban place to live and I think we accomplished that,” Gorman said.

The $15.8 million rehab included public and private funding sources. The Wisconsin Housing and Economic Development Authority (WHEDA) provided a $5.15 million first mortgage and an allocation of LIHTCs. GCLF and City Real Estate Investors, an affiliate of National City Bank, now part of PNC, provided $9.3 million in LIHTC and state and federal HTC equity. GLCF also provided a $6 million construction/equity advance loan.

“The project will have a huge long-term impact on the city of Milwaukee,” McDaniel said. “The site is close to downtown and was a 20-acre parcel that had seen several development plans not make it to the financing stage. This property helped start the development of the entire parcel.”

Crafting a Creative Community

Tenants began moving into the Blue Ribbon Loft Apartments in early 2009. Gorman says that the tenants are a mix of ages and income levels, most of them attracted by the artistic and historic nature of the property. Gorman said that about 10 percent of the residents actually make a living as artists. GC also included an internal “main street” corridor within the building lined with historic photographs.

The building is fully occupied. Residents Michelle Weston and Cassandra Kallin both cited the proximity to downtown as reasons for moving into the Blue Ribbon Lofts. Kallin, a 19-year-old college student and waitress, also liked the amenities and artistic nature of the building.

“Even in a down economy, there are people looking for a place to go. If you build something that’s interesting and different, people will take a chance on the neighborhood,” Gorman said. He said this is particularly true of rental property because it is not as much of a commitment.

Yet, renovating the Blue Ribbon Loft Apartments was a commitment for Gorman and all of the other players. The team faced numerous challenges to get the development off the ground.

“The city stepped up with millions of dollars to pay for the remediation and public infrastructure necessary to connect the factory site back into the city. The master developer had to convince the city and the public on the site plan and use,” McDaniel said. “WHEDA had to have the vision to finance a property that on one had been able to develop since the factory closed and Gorman had to be in the trenches every day getting everyone to buy into their vision and then executing on that vision.”

And the Blue Ribbon Loft Apartments has served as a catalyst for The Brewery. Several new businesses have moved into the area since the Blue Ribbon Lofts started construction. Four other buildings on the property are being developed as office space. An architecture firm and a college have also opened in neighboring buildings.

“[It’s rewarding] seeing the empty warehouse come back to life and all of the follow-up development activity that is occurring at the site. The site is very visible from the expressway and we drove by it many times when it was empty. The development is a very public sign of the great redevelopment activity that is occurring all over Milwaukee,” McDaniel said.