RACINE — Fewer than two weeks before the end of the “due diligence” process between the city and Gorman & Co. on the Machinery Row project, Mayor John Dickert is deeply concerned about the project’s future.
“Right now, we’re kind of fighting for our lives with this project,” Dickert said.
Machinery Row is the name of a riverfront redevelopment plan, announced in mid-2014, that called for renovating two massive former J.I. Case Co. buildings from the early 1900s, at 820 and 900 Water St. On Dec. 16, the city declared previous developer Rodney Blackwell and FDP MR LLC. in default on a $4.5 million loan.
In February, city Development Director Amy Connolly introduced Ted Matkom, the Wisconsin market president for Gorman & Co., to aldermen and announced that Gorman is hoping to step in as the project’s new developer. But since then, a crucial part of the project’s funding — $9 million in historic tax credits granted to the city in April 2014 with the condition of the work getting done — has possibly gone up in smoke.
“When we gave those tax credits for Machinery Row, we maxed the state allowable amount just for that project, which means that nobody got any money for that entire year,” said State Rep. Tom Weatherston, R-Caledonia. “We gave it all to Racine and then the whole project fell apart.”
Dickert said the city is asking for a six-month extension for the credits, which would keep them allocated through the end of 2018. But he said Republicans in the state Legislature are not only uninterested in granting the extension, but want to take away the credits entirely.
“We’re seeing opposition from the Republican Party to extending the credits, even with a developer like a Ted Matkom and Gorman, which to us is very surprising,” he said. “I mean, if you came in and said, ‘this is Bob from South Carolina,’ I could see it. But this is Gorman.”
Gorman, based in Oregon, Wis., has completed three developments in Racine, the Belle Harbor Loft Apartments, 134 Main St., The Harbor at State and Main, and the Mitchell Wagon Factory Lofts, 815 8th St. It also has projects throughout the state.
While Weatherston didn’t know specifically what opposition Dickert was referring to, he said he finds it difficult to imagine that local representatives could convince the Legislature to approve the extension. He also said he doesn’t foresee the credits lasting through the end of the budget process this June.
“Right now they have them until the budget process is done, but then you’ll likely see a redistribution of those credits unless the City of Racine makes a very good case between now and then,” he said.
Matkom said that Gorman is examining its financing sources with regards to Machinery Row. He called the tax credits “a major source” and said they were “still up in the air” because of the budget process.
He also removed any doubt that Gorman will try to take on the project.
“We are committed to the project no matter what at this stage,” Matkom said.
Dickert said Gorman has been lobbying in Madison to try to keep the credits alive.
“They like the project,” Dickert said. “They think it can happen. We think it can happen. But they can’t go anywhere without the $9 million. That blows the whole thing up.”
Weatherston didn’t like the project’s long-term prospects.
“I wouldn’t be surprised if they lost all those credits,” he said. "In my personal opinion, the project is collapsed. I haven’t heard a really good plan from (Dickert) or anyone else on how to revive that plan.”