Governments and Developers Play “Hide the Hand” with Communities

Ikon Hotel

Milwaukee       The topic for the session with the Amani United leaders was community benefit agreements and that meant digging deeper to understand not only the coming Democratic National Convention and its impact, but more immediately something called the Ikon Hotel project at the border of Amani along with the development and financing plans of Kaylan Haywood, a local Milwaukee developer.  I had read the articles on the project, but in preparing the leaders that meant reading between the lines as well.  As the gonzo journalist, Hunter S. Thompson, famously used to say, “that’s when things got weird!”

            Leaders and members of Amani United had gone to the Planning Commission hearing.  Haywood then promised to negotiate a community benefits agreement, but the Amani United task was now to convert a promise into action and an agreement clearly spelled out between the parties.  Subsequently, at the City Council meeting and afterwards he had been dilatory in responding as leaders tried to nail down a time to meet.  As I helped prepare the leadership for the eventual negotiations with some confidence that he could run, but he couldn’t hide, and began to understand more about the project, I had more questions than answers for them in the briefing.

            Yes, the Council approved $4 million for the project, but they didn’t exactly give Haywood any money.  In fact, quite the opposite.  In Wisconsin, there is an interesting municipal instrument which the newspapers called a “development TIF,” but real estate lawyers more accurately called a “developer-funded tax increment financing.”  Like any TIF, the money is created by skimming off future tax revenues generated by the project to pay for the development, but in a developer-funded TIF it works differently.  In this case the developer will have to give the City of Milwaukee $4 million dollars up front, and the city will repay Haywood from a share of the tax revenues once the project is producing them.  It also became easier to understand why the head of the Wisconsin Economic Development Agency (WEDA) was so widely quoted in all of the articles supporting the project.  Haywood indicated that $1.5 million of the money would be earmarked to pay off the loan he had received to purchase the property only a year or so ago.  The lender had been WEDA, so of course they were big fans of this deal because they would be first in line, after Haywood used the city’s approval as collateral for a loan to pay the city upfront. 

            The rest of the financing the developer had reported was fluffy.  He mentioned historic tax credits too, but he has to find a broker or investor willing to buy the credits or give them to him.  He also mentioned the newest controversial development scam out there, Trump’s Opportunity Zones that emerged from his big tax cuts last year for the rich and corporations.  The zones were ostensibly to help spur tech development around the country and boosted by Napster and Facebook billionaire Sean Parker, but practically they have to benefit lower income census tracts that are approved by the governor for inclusion or projects that abut such tracts.  All of which gives Amani United critical leverage, and makes me and other observers to wonder if there is really any money at all behind the project.

            Ironically, part of the smokescreen from the developer and its political allies in various levels of government at the margins of the discussion with Amani United had been whether or not the Amani neighborhood was within some random, arbitrary mapping boundaries of one of the authorities.  It turns out that they are, but that was always an irrelevant straw-man.  Haywood himself has argued for the project based on his “marketing surveys” indicating benefits to the whole area.  Furthermore, he can’t touch the Opportunity Zone financing without benefits to the entire census track and abutting lower income areas, so who is kidding whom?

            Disturbingly, the development is caught talking out of both sides of its mouth.  It wants to ignore community concerns and commitments on benefits claiming anything is good for the northside and no worries.  On the other hand, it is touting the project based on its closeness to downtown, the new arena, access to the Democratic National Convention, and would be a tech center with housing and businesses, including a we-work type space.  The lipstick he’s putting on this pig means he is dressing it up for full-scale gentrification, community be damned!

            All of which simply means, he’s just a garden variety developer like the rest of his class and clan, painting castles in the sky to anyone willing to buy the dream, and hoping Amani United and everyone else will never force him to put his feet and the project solidly on the ground.