The Wauwatosa Common Council voted Nov. 18 in favor of a list of terms for offering nearly $2 million in city financial assistance to a developer who plans to turn the Sonesta hotel into affordable apartments.
The details were outlined in a "term sheet" that had been recommended by the Finance Committee in a closed session last week. A week later, the terms were endorsed by the full Common Council in open session. The document was later posted to the city's meeting website.
The term sheet outlines steps the city plans to take to create a new tax incremental financing district to finance the $1.85 million in assistance to Samapa Development Company, which wants to turn Sonesta's 198 hotel rooms into 146 apartments, mostly studios and one-bedrooms.
TIF, a redevelopment tool available to Wisconsin municipalities, allows Wauwatosa to pay off loans for eligible projects and costs within the district using the additional tax revenue created by new development there.
City officials have determined that the project at 10499 Innovation Drive, under the name Waterfair Apartments, comes with "extraordinary project costs," a designation that could make it eligible to receive reimbursements from the city through a newly created TIF district. The city would finance those payments to Samapa by borrowing money through the TIF, with a estimated total cost to the city of $3.2 million including interest. Such loans through TIF districts generally do not result in any burden to taxpayers, as long as the new revenues generated over the life of the TIF are enough to pay down the loan, as has been typical in Wauwatosa's TIF districts.
The term sheet for the Wayfair Apartments project lists eight possible developer expenses that could qualify as reimbursable costs: adding electric meters to each of the 146 apartments, electrical rewiring, eighth-floor roof replacement, second-floor roof and awning replacement, interior demolition work, plumbing work, parking lot repair and replacement of HVAC systems.
The developer would agree not to challenge an initial assessed value on the redevelopment of $18.5 million. That would represent an increase of about 70% over the 7.5-acre property's most recent assessment of $10.9 million, making it likely that the new TIF would immediately begin generating additional money to pay down the city's borrowing.
Samapa Development Company, which previously developed the Watertown Apartments at 9150 Watertown Plank Rd., has said its expects the hotel conversion to appeal to employees and students at the nearby Medical College of Wisconsin, the broader Milwaukee Regional Medical Center and the Milwaukee County Research Park.
Under the conversion plan, the former hotel rooms would be turned into 330-square-foot “micro-studios” for $985 a month and 660-square-foot one-bedroom apartments for $1,300. Representatives told the Finance Committee on Nov. 11 that offering rents so low would not be possible without some city assistance, especially after taking into account the renovations that will be necessary to the 18-year-old building.
If the company remains on track to close on its purchase of the hotel property next month, it plans to expedite construction and repairs so it can begin welcoming tenants to the new apartments by summer or early fall 2026.
Demand for housing in Wauwatosa continues to be a top issue in the city, and municipal leaders have long identified providing more affording housing options as a top priority.
At the Common Council's Nov. 18 meeting, Andrew Meindl of District 1 said he supported efforts to add affordable housing in the city, and he thought a hotel conversion made sense. He raised concerns, however, about the creation of a new TIF District to help pay for it.
In response to a question from Meindl, Wauwatosa Finance Director John Ruggini specified that the TIF district would include the Sonesta property and others along Mayfair Road from Watertown Plank Road south to Wisconsin Avenue.
The TIF district would still need to go through a separate approvals process, including a public hearing, before becoming active, City Administrator James Archambo added.
With no further questions, the council voted in favor of the term sheet, 14-1, with Meindl voting no.
