RACINE — A development of about 190 market-rate apartments and a five-story hotel — an investment of more than $40 million — is proposed for a key Downtown redevelopment site.
At his office Tuesday morning, Mayor Cory Mason announced a partnership with Hovde Properties of Madison to build on the former We Energies property at 233 Lake Ave., the southeast corner of Lake Avenue and Gaslight Drive.
The project includes two multistory apartment buildings, a hotel, a green central courtyard and an enclosed parking structure with a total value exceeding $40 million when completed.
Mason said of the plan: “It provides two things that we need more of: market-rate housing and hotel space, so it seems a good fit for the site.”
The 3.5-acre property was previously proposed as the site for a $46 million arena/event center with attached hotel, but Mason vetoed the plan upon taking office in late 2017, as he had promised during his campaign.
Hovde Properties does both commercial and housing development. Hovde is set to ask the Redevelopment Authority of Racine, which owns the property, for an exclusive purchase option for the Lake Avenue property and an access agreement that would run through April 2020.
Depending on the results of the development evaluation, construction could begin as soon as spring of 2020 with the first phase of housing scheduled to be delivered by the summer of 2021.
“With developments like this, Racine will be the community of choice for people to work, live and play in southeastern Wisconsin,” Mason stated.
About 190 apartments
As currently envisioned, the housing would take the form of two multistory apartment buildings. The larger structure would be an L-shape building with its point to the northeast, running along both Gaslight Drive to the north and Gaslight Circle to the east. The smaller of the two would occupy the south side of the site.
During Mason’s press conference at his office Tuesday, Randy Guenther, chief operating officer and chief financial officer of Hovde Properties, said the combined number of apartments would be about 190.
Each apartment building would be four to five stories tall, he said — not counting the square, one-story parking structure at street level that both apartment buildings and the hotel would be built above.
The apartment buildings would have a mix of studio, one-bedroom and two bedroom units, as well as a dedicated amenity building, workout facility, club room and outdoor activity centers. The multifamily buildings would be owned and managed by Hovde Properties with onsite management.
The hotel is expected to be developed in partnership with Hovde Properties by a separate owner/operator. It is projected to accommodate about 100 guest rooms as well as, potentially, a restaurant.
In response to a question about the possibility of rooftop dining, Guenther replied: “We definitely have had those discussions; we think that would be a great amenity, specifically for the hotel. We are in discussions with several groups, and a restaurant concept and potentially a rooftop-type area is definitely a consideration. We think that would be great, too.”
The hotel brand has not been determined, but it would be a typical limited-service hotel such as a Hampton Inn or Hilton Garden Inn, City Administrator Jim Palenick said.
Guenther said Hovde is in discussions with different potential hotel operators.
Mason said Eric Hovde and his people seem excited about where the property lies, between two Foxconn properties, and how they might include “smart city” ideas in this development.
During the 19th century, the site was a manufactured-gas plant, where coal and other ingredients were heated in large brick ovens to make a gas fuel that was used to light homes, businesses and street lamps.
Because of that past, the site was polluted, and later thoroughly cleaned by We Energies. The utility then sold the land to the RDA in 2013 for $150,000. The site still contains groundwater monitoring wells that a developer must take into account.
“Because of that system that’s still in place, the site is a lot more difficult to develop than it would normally be,” City Development Director Amy Connolly said.
Hovde Properties would pay $40,000 for the purchase option and begin a study of the site’s physical characteristics and other issues. The announcement said Hovde expects to spend approximately $200,000 in due diligence explorations on the site.
No purchase price for the land has yet been negotiated, Connolly said.
Hovde Properties is a third-generation private, family-owned company founded in 1933 which develops, owns and manages properties for long-term investment. Eric Hovde’s brother Steve Hovde is chairman and CEO of Hovde Group which includes Hovde Properties.
Hovde Properties is evaluating 233 Lake Ave. in conjunction with CG Schmidt as the general contractor, Kahler Slater as the architect and GRAEF as the project engineer.