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City Center issue again rumbles in controversy

Lower-income complex could emerge from old condo plan

Jan. 28, 2011

New Berlin — New Berlin officials are threading their way carefully through a field of legal and political landmines over a 102-unit condominium project that could become lower-income rental apartments in the City Center.

A lower-income housing proposal for the City Center was proposed last year by the same developer. It brought out a firestorm of protests from residents who said the development does not fit with the upscale City Center vision.

The explosion of sound heard last week was the loud applause the Common Council received when it seemingly voted down the latest development agreement for another controversial proposal, this time involving the property that had been known as Deer Creek Parkway Condominiums and is now City Center Condominiums.

Building on an issue

But the decision was not as it seemed.

The aldermen's vote doesn't automatically mean the City Center condos won't be built in the area off National Avenue near Wilbur Street. Alderman David Ament pointed out that the developer, Minneapolis-based MSP Real Estate, can still get a building permit because the condo plans were approved in 2004.

But developers need a development agreement like the one the council turned down to build roads, sewers and other infrastructure for their projects. One legal question is whether MSP can build on the land using the original agreement approved with the previous developer.

Plans then and now

The original Deer Creek Parkway Condominium project involving four buildings won all city approvals six years ago. Only one of the four buildings was built, however, and it now contains 13 owner-occupied condos. Two condos are vacant.

MSP is proposing to build the other three previously planned Deer Creek buildings and is believed to have plans to make them lower-income housing. It has been granted $1.9 million in Wisconsin Housing and Economic Development Authority tax credits for the project.

If MSP uses the tax credits, the 102 condominiums would be rented to families that meet federal income guidelines. Those guidelines are the same as for last year's failed lower-income housing: a maximum family income of $29,880 for a one-bedroom apartment and $34,140 for a two-bedroom. The units would have to be rented for at least 15 years.

Calamity for current tenants?

But the owners of the 13 upscale condominiums that were built in the first phase of the original Deer Creek Parkway Condo project view apartments as a disaster.

They say they would not be able to sell their condos if the new units were built as rentals. That's because banks do not give condo loans in developments that are more than 50 percent rentals, the current owners said, which would make it difficult to sell their owner-occupied units. The value of their condos would be lost, they maintain.

Allowing the apartments "would instantly, and literally, destroy the value that I and my building neighbors have in our homes," condo-owner Gerry Galewski said.

On the other hand, while the door would seemingly close to condo owners selling to families searching for living space they would own, it wouldn't necessarily shut investment property owners, who could still obtain commercial loans for rental properties.

More to talk about

The Common Council will meet in closed session Wednesday to discuss the situation.

The view, as of the end of the council's Jan. 25 meeting, was that the old development agreement from 2005 is sufficient to allow construction of the necessary infrastructure for the rental-oriented condo buildings and a new agreement was not needed.

But attorney Jonathan Levine said the city should not view that old agreement as viable because it was made with a different developer.

MSP, the new developer, "are not a party to that agreement" and is merely trying to kept the legal shell of the old Deer Creek name, Levine said.

Neither MSP president Milo Pinkerton nor the MSP attorney returned phone calls.

At the very least, owners of the 13 condos are relieved that the council denied the new development agreement because that action, they believe, may have bought them some time to enact another strategy.

They are trying to get their building severed from the rest of the project remaining to be built. They hope being separate from the apartments would enable buyers to get loans to buy their condos.

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