Development struggle at Hide House

An old Bay View tannery is the site of a battle between those who want to build the future and those who want to live alongside the past.

In fall 2006, Hide House 2007, LLC-an entity that includes several partners of General Capital Group and Robert Joseph-bought the Hide House complex at 2625 S. Greeley St. In June 2009, the owners obtained a city-issued building permit to erect a 60-unit apartment building, to be called Hide House Lofts. These apartments would replace the northern section of the former Greenebaum Tannery complex, built in 1945 and today vacant and dilapidated.

But June 15, acting on a nomination for historic designation from 14th District Alderman Tony Zielinski, the city’s Historic Preservation Commission designated the entire complex as historic, preventing demolition in the short term and tying the hands of the developers.

General Capital said they’re appealing HPC’s designation to the Common Council, which may hear the appeal as early as this month. 

“We are in principle against any historic designation on the Hide House property because we feel that it unnecessarily limits our flexibility with what we can do with these buildings and this complex…” said Sig Strautmanis, Hide House 2007 partner. “I think that when you look at the facts of this matter, you can clearly see that there are other motivations for why the alderman [Zielinski] nominated this property for designation and they have nothing to do with the history of the complex-or the historic significance of the complex.”

Strautmanis said that other motivation is fear-that because Hide House Lofts would be financed by federal affordable housing tax credits, it will be a public housing project that will create problems for the neighborhood. Nothing could be farther from the truth, he says.

“As far as opposition goes, I understand it. And I think that-it’s my opinion that it’s more a fear of the unknown,” Strautmanis said. “People are really fearing a public housing project. And they’re fearing drugs and crime and all the negative associations of quote low-income end-quote government housing. That’s not what this project is. This is a privately-owned apartment building that happens to be financed with affordable housing tax credits, and in exchange we agree to maintain rent at affordable levels.”

Low-Income Hide House Lofts

According to the developers’ website, hidehouselofts.com, the 60-unit apartment building adjacent to the railroad tracks would have 51 underground parking spaces and 19 on the surface. One-, two-, and three-bedroom units would range from $350 to $1,000 a month.

Because it would be funded with federal affordable housing tax credits, there would be income-level restrictions for residents. Rents would not be subsidized. Developers are targeting creative-class tenants (artists and home-based business owners), who would be prescreened.

Annual occupant income would be restricted to be at or below $29,700 for one person, $33,960 for two, $38,880 for three, and $42,420 for four, according to the website.

The developers point out that this individual income maximum is actually above the median income-$26,439-of the neighborhood surrounding the Hide House, making the Hide House Lofts a potential gentrification force.

The property is zoned IM, Industrial Mixed, which permits a variety of uses including the proposed apartments. While the developers originally envisioned building condos, they’ve modified their plans.

“As long term investors in the property, General Capital views this first phase of new construction as a critical impetus for Hide House as the condominium market rebounds,” according to hidehouselofts.com.

The apartments are the next phase of the developers’ multiphase project, the first already underway in the southern and central buildings, which are being or have already been renovated for a variety tenants including artists and craftspeople, musicians, attorneys, small businesses, and a church. Future phases include new and converted condominiums.

The Wisconsin Housing and Economic Development Authority (WHEDA) has already allocated over $1 million in federal tax credits to the development. And the building would be a big capital infusion in Bay View’s modest, northwest neighborhood surrounding the Hide House complex.

“We’re talking about $11 million in new investment in an area that has not seen that level of investment in a very a long time. We’re talking about significant tax revenue without a penny of city of Milwaukee funds invested. We’re not requesting a penny of city money for this project. And from that perspective, it’s confusing why this wouldn’t be welcomed with open arms,” Strautmanis said.

The owners filed for a building permit May 5 and received it June 11.

But they didn’t get the local alderman’s blessing. May 15, Zielinski filed the papers to nominate the complex as historic, preventing the developers from steamrolling ahead without facing further public scrutiny.

Hidehouselofts.com went live in early June. On June 12, a banner with the web address was hung on the east façade of the building intended for demolition.

Opposition

In an email dated June 4 sent to 70 recipients, Zielinski encouraged his constituents to attend the Historic Preservation Commission meeting June 15 and testify. “This is the location where the proposed 60 unit low income-housing [sic] proposal will be located. The developer wants to demolish this historic and important building so he may proceed with his development…” Zielinski wrote. “You are only allowed to focus on the preservation of this historical building. It is very important that you attend. This valuable and significant property represents a considerable amount of Bay View history and this is your chance to voice your opinion on preserving it for the future.”

A June 5 version of the email was modified to say the developer wants to demolish “a PORTION” of the Hide House.

Thirty-six residents appeared for the historic designation June 15, though only about half testified before the commission. Strautmanis said many he spoke with after the meeting told him they were there to oppose his development proposal.

Carlen Hatala, Department of City Development historic preservation planner, presented a lengthy report on the Hide House before the HPC June 15. “The Hide House is an impressive industrial complex that is one of the last of its kind in Milwaukee,” Carlen Hatala concluded. “…And it’s one of our few intact reminders of Milwaukee’s worldwide prominence in the tanning industry.”

Hatala said DCD recommended a partial historic designation, encompassing the southern and central buildings, not the northern ones.

Fourth District Alderman Robert Bauman, who sits on HPC, criticized the DCD recommendation, implying that Hatala’s own opinion was overruled by DCD assistant commissioner Martha Brown.

“We have another case of Department of City Development hierarchy overruling Historic Preservation Commission staff. So part of the building [is] being designated, part is recommended not to be designated, which just happens to be the part that is sought to be demolished? Is that essentially correct?” Bauman asked Hatala.

Hatala said she was presenting DCD’s recommendation, that she had her own, and added that DCD has been working with the owner on the new development.

“So magically it just happens to be demarcated at the point, where the future development is proposed,” Bauman said at the meeting.

Also at the meeting, Brown countered that the request to locally designate a former industrial complex as historic would require an “extremely strong argument” given that “there’s not a lot of historical, architectural specialness about this property.”

“This commission has designated only one industrial complex in the city of Milwaukee as locally historic. And that is the Pabst Brewery,” Brown told HPC. “That-the Pabst Brewery has architectural value, it has a great deal of historical value in terms of industrial development and the individuals involved in it, it’s extremely prominent in its physical location. This complex, I think it’s fair, it does not rise nearly to that level.”

In the end, however, HPC opted to impose a historic designation on the entire complex, rejecting DCD’s recommendation for a partial designation that would have allowed the proposed Hide House Lofts development.

Strautmanis accused HPC of applying a “double standard” to his property, and said it was not anywhere in league with the Pabst Brewery complex in terms of historic or architectural value. He found it inconsistent for HPC to slap this designation on Hide House, considering that the Pfister & Vogel Tannery had been demolished and even another former Greenebaum family tannery (north side) was torn down to make way for the Bishop’s Creek housing development.

The developers had asked the Wisconsin Historical Society if the Hide House complex would merit their historic designation criteria, and their answer, in a letter dated June 9, was no.

Strautmanis said Milwaukee’s local historic designation should be decided on technical merits and has nothing to do with neighborhood support or opposition.

“I thought it was a little bizarre that it was decided by a show of hands and not debating the technical merits of the designation. I did not think that it would be decided by counting hands. If that were the case, I would have brought in 27 people.”

Alderman Zielinski said prior to the application for historic designation of the Hide House, the only other application he made for a structure in his district was for the Beulah Brinton House, 2590 S. Superior St., which he later withdrew. He said that when the intended purchaser, Bay View Historical Society, requested that he withdraw the application, he did because he felt confident the group would protect it. BVHS purchased the home in 2005.

Opposition Backstory

Strautmanis said Hide House principals contacted Zielinski’s office in late 2007 to share their development plans. He said they agreed to hold a neighborhood meeting in early 2008 to present the project to the neighborhood, but within 12 hours of agreeing to the meeting-on Christmas Eve 2007-Strautmanis claims Zielinski called the meeting off.

“He told us unequivocally that he could not support an affordable housing project and that he was not interested in affordable rent,” Strautmanis said. “He told us a rental building would bring problems and said they always do.” Strautmanis maintains that Zielinski said he’d only support owner-occupied housing.

This assertion is backed up by General Capital Group executive vice president Steve Schnoll who said that Zielinski told him, “This would never work in Bay View,” during a Nov. 29, 2007 tour, arranged by DCD, of the Hubbard Street Lofts, 1830 N. Hubbard St., a low-income housing development sited among an upscale condo area of Brewers Hill.

Zielinski said he couldn’t now remember why he needed to cancel the proposed 2008 meeting. “I wanted to reschedule for another date. They didn’t want to reschedule. I don’t remember all the details but that date didn’t work out,” said Zielinski, who added he thought it was disingenuous the developers wouldn’t meet with his constituents.

Schnoll and Strautmanis refute Zielinski’s assertion that he wanted to reschedule. They said Zielinski never contacted them about rescheduling the meeting.

Zielinski said he told Michael Weiss, one of General Capital Group’s partners, “If you’re not going to meet, I’m sending a letter in opposition to the tax credits.”

Zielinski did send a letter to WHEDA in opposition to their application for tax credits in 2008. When those tax credits didn’t go through, Zielinski thought the matter was over until he read about the 2009 tax credits in the paper. “I almost fell off my chair,” he said.

He said his opposition was based on the developers not meeting with his constituents.

“I don’t have any feeling about any project one way or the other. I follow the directive of the constituents. Each neighborhood is different. What may work in one may not work in another. You [developers] should not make money for yourself without concern for neighbors and how it’s going to impact them,” Zielinski told the Compass.

On June 17, 2009, two days after HPC designated the Hide House historic-which Zielinski described as a “major victory”-he sent an email to Weiss, proposing a July 15 public informational meeting.

“I extend a hand in cooperation to you,” Zielinski wrote. “In order to make sure the residents know exactly what you are proposing I am requesting a meeting where your staff can make a presentation to my constituents. Afterward, there can be Q and A etc. If you can convince my constituents that the ‘entire’ building should not be preserved then I will change my position. Whatever my constituents support then that is what I support. I, however, want to make sure they have all the information.”

Weiss responded, “For the time being, we’re going to pass. It will have to wait while the current process plays itself out. (As you’ll recall, we had a neighborhood meeting set in December 2007, but you cancelled it.) Historic designation is supposed to be an academic/technical matter, not an emotional/popularity contest. You filed the nomination, HPC acted, and now we’re appealing the decision. The process will take its course. When it’s over, we’ll see where we are, and go from there.”

Whose Vision Will Win?

Zielinski said he wants his constituents to approve the development.

“If I wouldn’t have notified the residents [near the Hide House], they would have woke up to a wrecking ball knocking things down next to their house!” he said.

Marilyn Walczak, who lives at 206 E. Smith St., said she first learned about the development from a brochure dropped off at her house, which she thought came from Alderman Zielinski.

Zielinski claimed he was not responsible for the brochure, nor did he know who was responsible.

Walczak said she no longer has a copy but recalled it stressed the low-income component. She recalled the term “low-income” appeared three times. As she read it, she thought, “I’m thinking he [Zielinski] doesn’t want that.” She commented that she thought Zielinski would be surprised by the reaction of her neighbors because she said she believes many of them would support low-income housing.

Walczak wants more information about the proposal, but “I thought that low-income housing for this neighborhood is a good idea, especially if it keeps it diverse.”

About 10 Bay View residents testified in favor of the historic designation at the HPC hearing and a common theme voiced by the Hide House neighbors was that the complex is a part of the neighborhood and that it should be preserved intact.

“I’ve lived in this neighborhood for 51 years and I would like to see it stay,” testified Susan Sowinski, 2567 S. Greeley St. “You know, if they could do something else with it. Turn it into an apartment building maybe, or whatever they’re planning before, but I really don’t want to see it tore down. I’m afraid of what it’s going to do to my property. What I gotta live next door to. And what’s in the future for me. You know, are they going to end up buying out the rest of the block?”

Terry Pogorzelski, 348 E. Dewey Pl., told the HPC commissioners, “I’ve lived in Bay View most of my life. I’ve owned a house there now for going on 20 years. Bay View is an older neighborhood, but it is a well-preserved neighborhood. It’s far from being a blighted neighborhood. You don’t see people tearing down their old houses, putting up new houses. They take care of their houses. I believe that the Hide House fits in very well with the neighborhood. It complements the neighborhood. I’m afraid if you tear down part of it, and put up a building, is that building going to be part of the neighborhood or is it going to stand out like a sore thumb? I would like to see the Hide House preserved as is because it fits in with the neighborhood.”

Susan Robitaille, 308 E. Rosedale Ave., testified, “I live a block away from the Hide House. I’ve owned my own house now for nine years now. Part of why I moved to Bay View is we call it historic Bay View. It’s got a really cool flavor of old, of old working class buildings. And the Hide House, I love living by it. It’s got a very quiet presence in our neighborhood. A quiet old presence that always gives you that feeling of being part of a history, of a heritage. And you know we’re raising a little boy. If he’s anything like me with my imagination trying to…what was it like in its heyday? What was-what went on there? What kind of work went on there? I’d be really sad to see it go. It would, in fact, destroy part of the element of why we live where we do. I’d like to see it stay.”

Alvin Anderson, who has lived at 177 E. Montana St. since 1973, told the Compass he didn’t know if the plan was to demolish all or just part of the Hide House but said it doesn’t make any difference. “I think it’s a piece of history for Bay View. If you lose it, you’ll never get it back. It’s the same thing as the Statue of Liberty. Do you want to take that down? If you lose part of it, you lose it all.”

But others see it differently.

Bay View resident Beth Dufek, 2617 S. Austin St., said she supports the development and partial demolition of the Hide House “mostly because I can see it from my backyard. It could use some activity and we could use some diversity in housing. I want to support it from a historic preservation standpoint.”

Dufek said her comments represent her personal opinion, not the opinion of LISC Milwaukee (Local Initiatives Support Corporation), where she is a program director. General Capital president Michael Weiss serves on LISC’s advisory committee.

Dufek said she is familiar with General Capital Group work because they were a finalist for LISC’s St. Catherine Residence project on Knapp St. “I know General Capital and they’re sensitive to historic preservation and green building,” she said.

Dufek added, “Hide House no longer functions as a tannery. To pay it respect would be to preserve it where it can be and to give it new life again where artists and residents can live and work in Bay View.”

Robin Kinney, Hide House tenant, and owner Bay View Book Arts Gallery, agrees that affordable housing could be a cultural and economic boon to the area.

“Bay View is one of the last neighborhoods in metro-Milwaukee where young, or beginning, entrepreneurs can affordably start a new business like Lulu, Hi Fi Café, and Sven’s have. There’s lots of reasonably priced storefronts and office space, a safe environment, and a customer base of people interested in supporting local businesses. Affordable, nearby living space will allow entrepreneurs to live in the neighborhood while they build their businesses,” Kinney said.

Strautmanis pointed out that whatever happens, the buildings will never again house a tannery. He said history isn’t static and that the parts of the complex he hopes to demolish are functionally obsolete.

“For this particular property to be feasible, we cannot take every square inch and try to reuse it. There is functional obsolescence. Functional obsolescence means that I can’t practically use certain parts of the building because there are crazy angles and crazy rooflines and little rooms that may have had a very specific use when the tannery was around but make no sense for us anymore…” Strautmanis said. “The spirit of the Hide House should be preserved. And we’ve been doing that, and will continue to do that. But to artificially try to stop the evolution of this complex at a point of time makes absolutely no sense to me. And ultimately will lead to the economic failure of the complex that could end up putting this on ice. Then you’ve got nothing. Then you’ve got a vacant building that will ultimately be boarded up and ultimately shuttered. And that to me sounds like a ridiculous alternative.”

Michael Timm contributed to this report.

Full disclosure: Bay View Compass is a Hide House tenant.

How Tax Credits Work

Developers apply for federal tax credits through WHEDA. Requested funds far exceed available credit, making the allocation process competitive. Each project is scored based on meeting WHEDA’s criteria. If a project receives an allocation, the developer receives tax credits that can then be sold on the open market. Each allocation is a 10-year commitment of tax credits, payable annually. Large institutions like banks usually buy these tax credits, paying between 60 and 75 cents on the dollar in exchange for the developer’s allocation of credit. Investors buy the developer’s full 10-year allocation up front, giving the developer equity to invest in project capital costs immediately. According to Strautmanis, the program effectively “buys down” the cost of the project, allowing developers to offer lower, affordable rents in exchange for participating in the program.

Costs of Rehabilitation

In terms of potential development on the north end of the complex, what’s the alternative to razing the buildings?

Strautmanis said the north end is in serious disrepair and is coupled with the problematic configuration of the buildings themselves. Among those problems, one building’s roof is threatening to collapse. Another building on the far north end of the complex has serious foundation and column issues in the basement due to years of several feet of standing water in the basement. The standing water caused the structural reinforcement inside the columns to rust and become a serious issue, he said.

An idiosyncrasy of the north end of the complex that would contribute to the cost of reusing the building, instead of razing it to clear for new construction, is that it is comprised of five separate buildings each with their own floor and ceiling heights. Parking, which would be underground in the new plan, would be limited under existing buildings. Only one existing building has a basement, Strautmanis said, which has only the capacity for “a handful of cars.”

“When we were working on our master plan, we investigated several alternatives to reuse the north end including flying a new building over the old, reusing part of certain buildings, etcetera. The combination of structural issues, the practical difficulty of reusing funky spaces and ultimately, the lack of any underground parking potential, led us to the tough decision to demolish this series of buildings to accommodate our new building,” Strautmanis said. “Reusing the existing buildings could cost in excess of $900,000 to $1 million more, if we need to replace the parking we have [planned] in the new construction building.”

That’s on top of what’s already been invested.

Strautmanis said General Capital has sunk about $275,000 into hard cost improvements; another $100,000 in architectural, brokerage, and testing costs; and nearly $200,000 in the Hide House Lofts project, including architectural, engineering, WHEDA costs, and market studies.

That does not include the purchase of the building (2625 S. Greeley St. is currently assessed at over $1.8 million). The former owners had also invested approximately $1.4 million in hard cost improvements and $200,000 in soft costs, Strautmanis said.