The proposed Union Corners redevelopment project from McGrath Associates is officially dead, with lender M&I Bank taking title to the site at the corner of East Washington Avenue and Milwaukee Street.
The move on Monday was not totally unexpected but is closure for what had been one of the most widely anticipated redevelopment projects in city history.
Unveiled in 2004 at the height of the real estate frenzy, Union Corners was pitched as a $100 million "urban village" meant to energize the long-blighted East Washington corridor. Developer Todd McGrath and brother Lance had envisioned a mix of housing, shopping, offices and green space just three miles from the Capitol Square.
But the proposal fell victim to a bursting housing bubble and economic downturn that brought large-scale, private-sector development to a virtual standstill.
"Todd was moving along well with a very exciting proposal but his timing was bad," says Mayor Dave Cieslewicz. "By the time he was ready to go, he ran into the teeth of the recession."
The city had considered using part of a $5 million land-bank fund to acquire the 11.5 development site, which formerly housed a grocery and has since been cleared. But Cieslewicz says the city could not reach a deal with the bank. "We couldn't arrive at a price," he said.
Neither the mayor nor M&I would reveal the asking price for the site.
"We will evaluate all of our alternatives; however, no decision has been made regarding the property," says Sara Schmitz, spokeswoman for Milwaukee-based Marshall & Ilsley Corporation.
The city was ready to help McGrath with nearly $5 million in tax increment funding. The city has already invested in public improvements there including a traffic circle, street extension and bike paths.
McGrath Associates could not be reached for comment Tuesday but the firm has continued to stay active. It's currently pursuing a 21-unit apartment on the 500 block of East Main Street. McGrath's credits include Capitol Point, Fourth Ward Lofts and Nolen Shores, all successful condominium projects.
CVS Pharmacy had once shown interest in the Union Corners site but is currently building its first Madison store at the former Badger Bus depot site at Bedford and East Main streets.
Neighbors have continued to follow the project closely and are concerned the parcel could be broken into several smaller lots for sale. M&I is one of many banks in need of cash rather than sitting on real estate.
"The neighborhood would like to see the entire parcel redeveloped in one piece," says Peng Her, executive director of the East Isthmus Neighborhoods Planning Council.
East-side Ald. Marsha Rummel says she is hopeful another developer will step forward. The Ho Chunk Nation has shown an interest in the property although not for a casino.
"If the bank wants to break the parcel into smaller pieces and sell them off, a series of rezonings would be required," she says. "I would look carefully at the proposed use and compare to what was in the adopted PUD. It really depends on what is being proposed."
Initial plans for Union Corners called for 450 housing units and 100,000 square feet of commercial space in buildings from two to six stories, with parking for nearly 1,000 vehicles. The layout included a full-service grocery, pharmacy, hardware store and restaurant.
The proposal included a creative reuse of the former French Battery (Rayovac) Factory off Winnebago Street.
"We are still hopeful a substantial part of Todd's vision can be realized," says the mayor.