Tale of Two Business Districts: Bay, Shorewood Differ on Public Funding

Shorewood has spent a lot of money for its growth on Oakland Avenue, while Whitefish Bay chooses a more conservative approach that only recently seems to be paying off.

(This article, originally published on Feb. 5, 2013, was co-written by Whitefish Bay Patch Editor Jeff Rumage and Shorewood Patch Editor Jeff Rumage.)

When El Guapo’s closed its doors in late 2010, it seemed to spell trouble for East Silver Spring Drive.

With the loss of Silver Spring’s only sit-down restaurant, Whitefish Bay continued to feel the effects of a lingering recession, as old standbys like Les Moise, Elements East and Zita left town. In a two-year period, Silver Spring continued to see turnover — with nine businesses leaving and another 14 opening their doors.

However, in the past month, Whitefish Bay seems to be on the verge of a revival with news of two new food options — a tapas bar and The Bay restaurant in the old El Guapo’s space. In addition, Erik’s Bike Shop plans to fill the huge storefront vacated by Les Moise last year.

While awaiting the spring bloom of new businesses, Whitefish Bay residents can’t help but look enviously over the Shorewood border and see the explosion of business development that has occurred on North Oakland Avenue over the past two years.

Over that time span, Shorewood has added nearly 30 new businesses like Three Lions Pub, Miss Cupcake and NaNa Asian Fusion, while losing just two. It’s no coincidence two new apartment and retail developments are sprouting up on Oakland Avenue just years after the Cornerstone opened its doors. 

A juxtaposition of the business districts tells the tale about differing business recruitment philosophies in the neighboring villages. 

Whitefish Bay’s conservative approach

While Shorewood has been very aggressive in spending money to recruit new businesses — about $550,000, not including loans or grants authorized for remodeling or renovation projects or larger developments — Whitefish Bay has decided to be more conservative with its expenses and more modest in its growth.

While there are certainly cultural and geographical differences between the villages, John Stuhlmacher, chairman of the Whitefish Bay Business Improvement District, said the two communities’ philosophical difference in business development is just as stark.

"I think you have to let the free market work," Stuhlmacher said of Silver Spring Drive. "Shorewood spends a lot more money to do a lot more projects. Could Whitefish Bay do that? Yes, it could, but we're not really doing that right now. I don't think that's necessarily the best way."

Whitefish Bay is at a crossroads in deciding whether it wants to lure businesses with grants, or take a more free-market approach. Starting with a pot of $200,000 in 2009, Whitefish Bay’s retail incentive grant program recently ran dry with two big grants to Erik’s Bike Shop and The Bay restaurant.

The Whitefish Bay Business Improvement Board on Friday voted to reauthorize another $100,000 in grants over the next five years. The Village Board will soon have the final say on the matter.

In Whitefish Bay, applicants are eligible to receive $20 per square foot, for a maximum payment of $50,000.

Simon Oliver, a men's clothing store, received $10,000 in October 2009, but went out of business in July 2012. The board allocated $25,000 to City Market in December 2009, and the cafe opened with extensive renovations in July 2011. Minoan Intimate Apparel received $10,000 in June 2010. Three Wishes received $12,500 in August 2010.

Late last year, Erik's Bike Shop received $42,500 to open in the former Les Moise storefront, with plans to open as soon as April. Two restaurateurs received $42,500 to open a restaurant called The Bay in the former El Guapo's space, which also plans to open in April.

Grants are 'a great incentive'

"I think it's a great incentive," said Paul Berlin, one of two business partners behind The Bay. "It assisted our business in allowing us to upgrade in the way that we want to run our business....it's allowing us to do additional things that may not have worked if we hadn't had this money." 

The village provides the total $200,000 in grant funds to draw from as needed. Fifty percent of the fund is paid through the Silver Spring tax incremental finance district, and the other 50 percent is funded through special assessments on BID members. 

To qualify for incentive grants, a business must be from outside the business district, must be a desired type of business use and has to prove that it would not locate on Silver Spring if not for the financial assistance. 

Stuhlmacher said the BID has been diligent in looking at past financial records and determining if the business is capable of sustaining itself long-term.

"The biggest question we ask ourselves is whether the business is sustainable once the free money runs out," he said. "It's not just about getting businesses to fill these spaces, it's about getting businesses that will last to fill theses spaces."

The landlords are probably the biggest piece of the business recruitment puzzle. Several potential businesses have cited high rents at the Fox Bay building, which recently lost Hounds Around Town to the allure of cheaper rent on the other side of the street. 

Some landlords have been willing to provide certain concessions on rent or utilities for new tenants. To qualify for a retail incentive grant, those concessions are mandatory.

“The BID’s philosophy is, this is a three-partner deal,” Stuhlmacher said. “We’re only one partner. The tenant and landlord are the others. We should not have a significant burden over any of the others.”

While the Whitefish Bay incentive grants have caught a few big fish, there is a debate on whether it is still a lure or just the necessary price of doing business. Shorewood and Glendale both have retail incentive grant programs, so some businesses have learned to expect a similar program when they come to Whitefish Bay.

"When it first came out, it was a good carrot," Stuhlmacher said. "Now there's a lot more people that do it, so it doesn't make us stand out as much as it used to."

Shorewood greases ‘the economic engine’

With the help of village assistance to the tune of $929,000 in public monies, the Cornerstone apartment and retail development opened in Shorewood in late December 2010. Within a few months, a new bar, Three Lions Pub, and tasting room, Big Bay Brewing Company, moved in across the street.

When you have a catalytic project like the Cornerstone open, it enables a municipality to back off a bit and let things happen, Village Manager Chris Swartz explained.

“Look what happened across the street…we didn’t expect that, it wasn’t planned,” Swartz said of Three Lions, Big Bay Brewing and NaNa Asian Fusion moving into Shorewood’s so-called Kensington Square. “You’ve oiled it and now people are going to want to invest there. We call it oiling the wheels of the economic engine.”

And though the development is still in construction, Swartz said Camp Bar has moved in across from the Lighthorse 4041 (Mandel Group project) — which received financial assistance from Shorewood via a $7.6 million grant and loan package — because the owner sees potential. Swartz said Shorewood has since backed off a bit from offering business grants and loans.

“We’re still doing some loans, but not as many as we once were, because people are now investing without that,” he said. “You’ll always going to need a little bit here and there.”

Shorewood’s different approach to luring businesses dates back to 1995, when village officials began to see a trend in declining value in commercial property, mainly empty storefronts and resale shops, said Swartz.

That’s when the village created a special taxing district to spur development and did some “pretty aggressive things,” Swartz added. Developments including the current Stone Creek, Metropolitan and Shorewest buildings sprouted up on Oakland Avenue.

Then in 2005, there was a change of leadership on the village’s Community Development Authority, in the village manager’s office and shifting of members on the Village Board. That’s when the approach to developing the business district was again re-evaluated.

It meant using new tools including façade improvements programs, expanding the taxing district, imposing design guidelines for buildings and starting a business loan program.

“The concept was creating public space…liven up the street, so when you walk to one end to the other, there’s somewhere to walk to and there aren’t big gaps, and we still have some gaps we are working to fill in.”

In 2009, Shorewood granted its first business loan to attorney Mark Sweet to renovate his new East Capitol Drive law office to the tune of $100,000. The village would later give nearly $200,000 to assist men’s clothing store Harley’s moving down North Oakland Avenue

When the Cornerstone development was being vetted, the village agreed to provide more than $400,000 in financial assistance to several businesses that would fill retail space including North Star American Bistro, Thief Wine, Boutique B’Lou and Alterra. Big Bay Brewing was loaned $25,000 when it moved into Shorewood. And  to help renovate its space while the Lighthorse 4041 is under construction. 

However, an unpaid loan has drummed up criticism of Shorewood’s loan program. Open Book opened in November 2010, but, after owners said it was clear it wasn’t going to pan out, closed after just five months.

Yes, Shorewood has loaned out hundreds of thousands of dollars to spur development, but businesses are now flocking to Shorewood.

"We still have a few vacancies in some important storefronts, but the market in Shorewood is red hot and people are interested," Shorewood BID Director Jim Plaisted said.

And in exchange for that investment, Swartz said Shorewood has "created a brand." He said the village’s key to revitalizing the business district goes beyond business development but also relies on a well-executed marketing and branding plan.

“We created a brand, and part of that brand was a vibrant downtown, so we’ve got to deliver on that,” Swartz said. “Just like you have to deliver a product in the private sector, we have to deliver a product so people want to live here.”

Benefits to both approaches

Even though the communities have different philosophies, the real estate community views both corridors as high-demand, attractive areas with equally strong demographics, said Peter Glaser, first vice president of CBRE's Milwaukee office who specializes in retail real estate.

Another similarity: both Silver Spring and Oakland Avenue have dense downtown districts that are receiving new residential developments. Shorewood has LightHorse 4041, Ravenna and The Cornerstone, and Whitefish Bay may soon see a on the north side of Silver Spring businesses. In general, Glaser said new residential developments draw more businesses to a commercial district.

A North Shore resident himself, Glaser has helped businesses locate in both Shorewood and Whitefish Bay, and he said both communities have a good reputation in the development communities.

"It’s positive that both communities have seen new businesses come in despite a down commercial real estate market," he said. "I think it’s a strength to the community leaders — both the municipal leaders and business leaders — in how pro-active they’ve been."

As for the power of public assistance, Glaser said businesses are always open to the help. While bigger companies like Dunkin' Donuts and Penzey's Spices chose not to pursue the money, Glaser said the smaller, independent boutique shops may see public financing as an edge in deciding between two similar communities. 

But while grants are always welcome, public financing may lose its potency as more banks start to make commercial real estate loans again.

"I think with the market we’ve gone through over the last three or four years, it's been important to have those incentives in place, but that's starting to change," Glaser said. 

Absolutelyfabulous February 05, 2013 at 01:20 PM
Actually, it would be a bit more interesting, illuminating if there was a breakdown of all the monies "gifted/granted/given away" in Shorewood along w/ the TIF's created and who was on the receiving end of each one, in terms of development, developer, landlord, businesses. Have all the monies been spread around equally to all the businesses that have opened/remodeled/sought liquor licences or just the few and favored? Actually, there seems to be some neglect in mentioning how the Ravenna development has progressed. The Village of Shorewood spent ~$1.2-1.4 million dollars acquiring the land that the development now occupies as well as demolishing the previous buildings and prepping the land for development. That's something Wired Properties seems to gloss over when informing people no assistance was given to them for this development. Also, since the Village of Shorewood had "preferred" Wired to other developers, no one will ever know if the Village could have recouped any of it's $$ spent on the site to begin with. BTW, What's going on w/ Pick N Save and the $10,000,000 TIF that has been recommended to be created for this impending redevelopment on Oakland Ave? How much $$$ additionally in grants will be bestowed upon Roundy's corp to redevelop their brand/grocery store and have any other Metro Markets been on the receiving end of $10,000,000 TIF/Grants? ie Mequon... Are businesses flocking to the south end of Oakland Ave? Is Mama Mia's space still vacant?
Absolutelyfabulous February 05, 2013 at 01:26 PM
BTW, The building that Harley's is in sold in 2006 for $3,485,000, then went under renovations that cost ~$1,200,000.00 In 2010 the assessment dropped to $2,800,000 and stayed that way for 2011. The property was "last sold" on 6/15/2012 for $1,500,000.00 http://rmgis.ruekert-mielke.com/shorewood/AssessmentDetails.asp Address is 3575 N Oakland. So, the Village of Shorewood kicks in almost $200,000 for Harley's alone + an additional $198,000 for the building's owner for their $1.2 million renovation and the building is now sold for $1,500,000. There could be a couple of different scenarios ie a partial or 1/2 interest of the building was sold or who knows. MY QUESTION is will this "sale price" result in a lower assessment of this property and thus lower taxes paid for a property that has received close to $400,000 in free monies from the Village of Shorewood? Here are the articles or partial that mention the building's remodel cost and the amount that the village kicked in, in addition to Harley's. http://awipekyhila.blogspot.com/2012/09/menswear-store-harleys-moving-to.html http://milwaukee-journal-sentinel.vlex.com/vid/shorewood-oks-grant-oakland-upgraded-74432154 So, the rationale for pumping so much money into this property ie increased property values lead to more taxes doesn't seem to even be happening for the property itself. What have I missed? http://shorewood.patch.com/articles/strong-small-businesses-make-communities-better
aaaaaa February 05, 2013 at 01:36 PM
Could we just STOP comparing ourselves to Shorewood? We are an entirely different community! I, for one, don't want to live in Shorewood. It abuts the city of Milwaukee and is way more urban. Shorewood has more of a Madison vibe to it and WFB feels way more suburban. Not to mention they do not have the competition of Bay Shore which is walkable from a lot of homes here. I think adding a chain stores could help generate business here on Silver Spring.
Bob McBride February 05, 2013 at 01:47 PM
The article was co-authored by Jeff and Adam and appears on both the Shorewood and WFB Patch pages.
Absolutelyfabulous February 05, 2013 at 02:24 PM
What would be more interesting/illuminating was if there were an actual breakdown of all the new businesses/developments in Shorewood for the past 5 years or so and see which projects/developers/business/landlords received TIF's/Grants/$10,000 Liquor License paid for etc.. The Village of Shorewood has pumped ~$400,000 in free monies into Harley's/the building (see other post if interested) and that part of Oakland is still pretty much of a dive w/ Mama Mia's still vacant. In fact, the owner told me he couldn't wait to get out of there when speaking w/ him a few years ago. Also, Wired Properties seems to gloss over the fact that they did receive assistance from the Village of Shorewood for their Ravenna project that totalled ~$1,200,000 for the Village's acquisition of the land/demo of business/prepping the lot for development. Would the Village have gotten a better deal/monies back if Wired were not the "preferred" developer thus basically shutting out everyone else? What's happening w/ the Pick N Save/Metro Market re-development? The Village of Shorewood has recommended that a $10,000,000 TIF be created for this project. Why does Roundy's need any assistance at all and did Mequon create any type of financing packages when Metro Market popped up in a newly built structure on Port Rd. after vacating the Pick N Save location a few blocks down? In Shorewood, Roundy's already owns the land they will build Metro on and they are in line for a $10,000,000 TIF???
The Donny Show February 05, 2013 at 03:04 PM
"However, an unpaid loan has drummed up criticism of Shorewood’s loan program" I think this is the proof we needed. OPEN BOOK NEEDS TO PAY BACK THE UNPAID LOAN. THIEVES!!!!
Cris Rogers February 05, 2013 at 11:59 PM
Too bad we can't evict landlords who charge exorbitant rent. As for the huge apartment complex planned in Bay, my question is: who will want to live there if we don't have an innovative downtown? Wise planning and venture capital trump empty storefronts resulting in a probable decline in property values.
Absolutelyfabulous February 06, 2013 at 02:38 AM
Who will want to live there? How about well to do people who want to live in a safe, upscale community w/ numerous churches and the behometh JCC and all that it has to offer. How about living in one of the nicest parts as well as safest (though w/ all the stories lately, one wonders) in the North Shore. How about living a hop, ski & a jump away from Bay Shore Towne Center w/out having it in your face and all things associated w/ it. How about living 2 blocks from Lake Michigan, Klode Park as well as Doctors Park and the Schlitz Audubon just a few miles North. How about living just a few short blocks from access the freeway which will take you on your way to just about anywhere you want. How about living 10 minutes from the heart of the City of Milwaukee and Downtown and all the cultural offerings that dishes up w/out the crime/rape etc..and some level of security/safety. How about living in a community where one feels safe to walk the streets most any time of day or evening. And so forth and so on. Silver Spring is not going result in the decline of any property values because there are so many other attributes tha WFB has to offer. Having storefronts that actually stick around for more than a couple of years and draw people is any business owners goal and if people are so unhappy w/ the rents being charged, then by all means find out who the individual landlords are, make them an offer to purchase and become a landlord yourself.
David Tatarowicz February 06, 2013 at 06:14 PM
@Cris If you owned a property and the value of it goes up and you have to pay more in property taxes --- would you raise the rents. If you owned a property that is "unique" and in short supply within the demographic that businesses are interested in, as each property in Shorewood and Whitefish Bay is --- would you want your piece of the pie? Landlords take all the risk --- and they often have to deal with Village Bureaucracies -- which in contradiction to the huge sums of money that the Shorewood Village Board likes to hand out -- is not really very business friendly. If you own a property now yourself -- residential or commercial -- would you want the Village to tell you how much you can charge to rent it out? Commercial landlords seem to get all the criticism, but if you look closely at the residential properties in Shorewood, that at first glance seem to be reasonably priced for rental, you will find that in most of them --- the infrastructure and mechanicals are sadly outdated -- and many tenants get stuck with huge utility bills -- which by the way contributes to the fast turnover of so many renters --- after the first winter, they decide they cannot afford it anymore.
Students First February 06, 2013 at 10:07 PM
Absolutelyfabulous: The questions you ask are rhetorical, correct? Because in Shorewood, you can't ask questions like this and expect answers based on logic. The Village Board (AKA-real estate development monopoly organization) don't base their incredible development skills on logic. They base them on the absolute belief that nothing in this world and more specifically, the Village of Shorewood will happen without their divine intervention. You see, individuals have no ability to know what is best for themselves, let alone a whole Village as incredibly sophisticated as Shorewood. The possibility that any individual or private company has the ability or foresight to think for themselves is pretty close to zero. That is why the Village Board and Manager have, out of the goodness of their own heart, done everything they have done. Unfortunately, you are not enlightened enough to see or appreciate how much better Shorewood is because of their actions and sacrifice. They don't like to brag, but they secretly are the most successful real estate developers in the world and they have done this for your benefit. Even though all of their monopoly-like development through TIFs have not lowered the overall tax bill for all of the property owners in Shorewood like development is supposed to do in a non-monopoly market, you may want keep questions like this to yourself and just be thankful they care as much as they do. Do you understand and feel better now?
JJ February 07, 2013 at 03:45 AM
David good points. However doesn't it make sense to lease your space at a rate that keeps paying tenants? There are currently 5 vacancies in the FoxBay Building. It seems to me there must be a real issue with rent in that building. I looked into the old El Gaupo space for a restaurant and quickly decided against it when I learned they wanted $6000/month, or $72,000/year. At that rate no restaurant is going to survive with the limited seat capacity. It is a free market and all those vacancies in the FoxBay building should be a sign to the owner that he is not in touch with reality.
Bob McBride February 07, 2013 at 03:01 PM
I'd be interested to know what the occupancy rate is for the office portion of the Fox Bay building. Unfortunately, given the size of the piece of property, that owner controls a fairly significant portion of the retail frontage on Silver Spring, and all of it for the block running between Santa Monica and Berkeley. ideally, the space on the other side of the street would have been converted into multiple retail spaces rather than being utilized in its entirety by a medical facility that could have been located off the Village's main retail strip.
David Tatarowicz February 07, 2013 at 07:55 PM
@JJ There are a lot of complexities involved with commercial property. One could be that the owner's lender may have a clause in which the owner cannot rent below a certain price point per sq ft. Also what is the ownership? Is it a REIT or a individual or a LLC --- are they in it for cash flow or long term appreciation? How does it affect their income taxes ... do they need write offs more than cash? All of these considerations affect what they are charging and what their priorities are. There is also the precedent consideration -- lowering rates now may bring in a tenant, but how does it bode for future tenants. WFB is a wealthy demographic and the potential tenants are going to be most concerned with sales per square foot --- if the sales are high enough, they will gladly pay that $6000 per month --- if sales aren't there -- not so much. Local zoning often constricts the options of tenants. When I had a property on Oakland Ave --- I had a potential tenant with a successful pizza business in Oak Creek . Per the Shhorewood zoning, a restaurant, it was -- but if it was delivery or take out he needed Planning Commission approval -- and they did not meet for 3 months !! The best fit for Oakland was take out or delivery with no long term parking, but that is exactly what was not allowed without special approval and the Village could care less about my property being empty. Too bad -- he had good pizza, but got tired of the bs.
Mike February 08, 2013 at 05:09 PM
WFB should not try to keep up with Shorewood. Shorewood is becoming too busy and annoying under the guise of "development". As someone who lives in the northern and bustling end of Shorewood, I can't tell you how annoying it has become. There's huge semis making deliveries all day, annoying bar patrons who you used to see on Water St. and Brady St. all night, more litter, more traffic. I for one can't wait to move out of Shorewood, and would strongly consider WFB except now they seem to want to follow in Shorewood's footsteps. Mequon is turning into Brookfield with all it's development and opening little stripmalls full of mediocre chains. All the northern suburbs think that doing all of this will bring people in, and it may in the short term, but after a (short) while, it gets old and people remember why they moved to the suburbs in the first place.
Absolutelyfabulous February 08, 2013 at 06:38 PM
Students- I'm shocked. Expect Answers to logical questions???? That's blasphemy. BTW...It's just so easy to play monopoly when it's other peoples monies which they do so well in Shorewood. How about the $36,000 that the previous operator of Hubbard Lodge owed the Village in back rent and only could pay $6,000, so the village wrote off the rest of the amount. How many years did this person not pay rent? http://www.jsonline.com/news/milwaukee/80489297.html http://shorewood.patch.com/articles/village-re-coups-28-000-spent-during-probe-into-fuel-leak-in-sewer-system
Students First February 12, 2013 at 06:51 AM
According to School Grades, it appears WFB taxpayers receive more value for their tax dollars, too.
Absolutelyfabulous February 17, 2013 at 02:06 PM
Dan Katz sure got one hell of a deal. Buys 3575 N Oakland Ave for $1,500,000 in 2012 that originally was purchased for $3,485,000 in 2006. Previous Owners put in ~$1,200,000 in renovations (or so they said) while receiving ~ $400,000 in free monies from the Village of Shorewood. So much for the Village pumping taxpayers monies into certain properties for the purpose of increasing property values and taxes paid to the Village of Shorewood. Taxes paid for the property @ 3575 Oakland for the years 2008-2012 2012 $39609.20 2011 $73303.63 2010 $71724.30 2009 $86875.68 2008 $83283.94 Maybe other property owners/taxpayers in Shorewood should take note. http://rmgis.ruekert-mielke.com/shorewood/AssessSearch.asp 275-1181-000 https://www.wdfi.org/apps/CorpSearch/Details.aspx?entityID=T056808&hash=1693170704&searchFunctionID=4d8cefa3-4f10-4f1c-9077-ae61996484d2&type=Simple&q=3575+oakland Registered Agent DANIEL J. KATZ 614 W. BROWN DEER RD., STE. 300 BAYSIDE , WI 53217


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