City of Milwaukee nears settlement in condo conflict

City of Milwaukee nears settlement in condo conflict

Sean Ryan

The city of Milwaukee would give up on $300,000 in interest from the developers of Kilbourn Tower if the Common Council agrees to a settlement this month.

The interest would be from the $950,000 that Fiduciary Real Estate Development Inc., Milwaukee, promised to pay the city in 2003 when it gave the developer ownership of the property on which it built the Kilbourn Tower condominium high-rise. The 2003 agreement said Fiduciary would pay the city “immediately after the first mortgage lender has been paid.”

In May 2006, Fiduciary refinanced a $41 million loan from M&I Bank. The city claimed it should’ve been paid then, but the developers argued otherwise.

The settlement will end that dispute and Fiduciary’s claim that the city violated the agreement when it let Mandel Group Inc. build the University Club Tower condo building 26 feet to the south of Kilbourn Tower, said Brett Miller, vice president of Fiduciary.

Under the agreement, Fiduciary would pay the city $250,000 when the deal is signed and $700,000 by Dec. 28. The city would give back to Fiduciary its $70,000 deposit.

The city will drop any claim to the $283,000 to $316,000 in unpaid interest on the money because Fiduciary agreed to stop pursuing its claim regarding University Club, Miller said.

“It was actually the compromise from the city’s perspective in respect to what we had argued,” he said. “We’ve been quite satisfied. I think it’s seen as a win-win.”

The city attorney’s office had no comment on the agreement Monday.

Fiduciary in 2003 argued that when the city rezoned the site immediately south of Kilbourn Tower for the University Club project, the city violated Fiduciary’s development agreement connected to the land sale. Under the settlement, the city and Fiduciary would agree not to sue each other over anything in the development agreement.

Kilbourn Tower has 20 unsold units left out of its 74, which is pretty close to what Fiduciary projected even before University Club was built, said Dick Glaisner, partner in charge of Kilbourn Tower for Fiduciary. The units are priced between $690,000 and $2.5 million.

Having a second lakefront building offering expensive condo units added confidence in Milwaukee’s housing market, Glaisner said.

“We’re most likely four to five units behind when we thought we might’ve been before we knew a building was going up next to us,” Glaisner said. “The question is: Do we help each other or hurt each other? But at the end of the day, we most likely helped each other because it turned what some people thought was a wish into a reality.”

If city officials approve the settlement, the $700,000 that Milwaukee receives at the end of the year would go to the city-owned Neighborhood Improvement Development Corp. for affordable-housing projects. The Common Council in 2002 approved Alderman Paul Henningsen’s proposal to dedicate the money from the land sale to affordable-housing projects.

Copyright 2008 Dolan Media Newswires

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