Machinery Row

The Machinery Row development site along the Root River is shown in a 2016 photo. City staff is recommending demolishing the site's buildings, thus forfeiting $9 million in historic tax credits.

JAKE GREEN, JOURNAL TIMES FILE PHOTO

RACINE — The buildings of the massive development project known as Machinery Row likely will be demolished, after the last effort to save the project in its current form with Gorman & Co. didn’t come to fruition.

At a Wednesday joint meeting of the City Council’s Committee of the Whole and Redevelopment Authority, City Development Director Amy Connolly announced that Gorman, the project’s latest developer, was no longer involved. Gorman “indicated they no longer desire to proceed,” Connolly said, following a study of one of the project’s two core buildings, 900 Water St. Both are former J.I. Case Co. buildings that date back to the early 1900s.

“The structural analysis suggests that there have been changes to this building, caused by either soil failure due to overloading the building with materials on the inside or settlement that may have occurred due to impacts of the soil,” Connolly said.

Given the concerns over the building’s structural integrity, Connolly said that the city hopes to demolish the buildings associated with the project.

“They are likely to be in a condition that even $9 million in tax credits can’t resolve,” Connolly said.

Those historic tax credits are set to expire in July 2018 and were not extended by the State Legislature during its budget process. The credits were originally granted in 2015, but the financial issues of Iowa-based FDP MR LLC, the property’s owner, have put the development on hold.

Demolishing the buildings on the site will lead to the automatic forfeiture of the tax credits, Connolly said.

She added that city staff hopes to conduct a new market study on the project and wants to acquire at least one new development partner for the site in 2018. The city also wants to terminate its relationship with FDP and acquire the parts of the site that company owns.

“We are very sure that this is going to be a national-level development site,” Connolly said. “We could certainly put together a development package that would be very attractive to developers, particularly with this riverfront access.”

In summer 2014, to great fanfare Davenport, Iowa-based Financial District Properties (FDP) announced its intention to redevelop the old Case buildings into loft apartments and commercial spaces.

By the end of that year FDP obtained $9 million in state historic tax credits, one of the essential funding layers to make the project possible.

Over later months and years FDP Managing Owner Rodney Blackwell changed his mind many times about how to redevelop the buildings.

He also ran into large problems with inherited tenants who were storing massive quantities of merchandise in 900 Water St., the larger of the two buildings.

At one point the northernmost section of that building was torn down. In the end, Blackwell essentially walked away from the project, leaving it to the city to develop.

In Gorman, the city had partnered with a developer that had previously done three Downtown Racine projects.

Meeting mostly closed

Wednesday’s meeting opened with a roughly 20-minute presentation begun by City Administrator Jim Palenick and finished by Connolly. In his opening remarks, Palenick said he hoped to keep the closed session section of the meeting short and exclusive to discussion of city legal strategy.

“We want to seek to limit that time in closed session to as little as possible, because ultimately we want to do our question-and-answer to the fullest extent possible in an entirely public fashion,” Palenick said.

But aldermen and members of the RDA didn’t ask many questions in open session; the time between returning from closed session and adjourning the meeting was less than five minutes. The closed session lasted roughly an hour, and city staff and leaders are not legally allowed to discuss what took place.

The only questions asked in open session vaguely referred to what was discussed in closed session and helped set a 60-day timeline for staff to come back with “information on financial and legal obligations of the proposed action.” It’s unclear what action has been proposed.

“I thought that they would have plenty of questions about the historic preservation and why it didn’t work, or the tax credits, or what kind of prospects (there are) for development in the future, or any number of things,” Palenick said. “We expected there would be a lot of that, and apparently there wasn’t any.”

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