Shorewood gives $100,000 grant to new restaurant

Two trustees are opposed to Shorewood's relatively generous use of facade funds

May 4, 2016

Shorewood — The Shorewood Village Board has granted $103,000 in facade improvement funds to the co-founders of Colectivo Coffee, who plan to renovate the former Verizon building at 4144 N. Oakland Ave. into a modern restaurant serving burgers and ice cream.

The three Colectivo co-founders will lease the building, which is owned by Wendy Wasserman and her brother-in-law, Russell Wasserman. The property is valued at $321,600, but with the renovations would rise by $400,000 to $721,600.

The business owners intend to make an $800,000 cash investment in the building. They are planning to install glass garage doors, a year-round patio and additions to the north and west sides of the building that would increase the size of the building from 1,200 square feet to 2,170 square feet.

The village's facade improvement grant program pays for up to half of facade improvement costs, with a maximum village contribution of $25,000. Grant requests higher than $25,000 require approval from the community development authority and village board.

Trustee Davida Amenta asked that the board reduce its $103,000 contribution to $25,000, but her motion failed on a 5-2 vote. Amenta and Rozek were the only trustees to support that motion, and they were also the only trustees to vote against the approved motion granting $103,000 to the restaurant, which does not yet have a name.

Generous assistance

Amenta and Rozek have taken issue with the village's $25,000 cap on facade grants, which is relatively generous compared to the $7,500 cap in Whitefish Bay or the $5,000 cap in Milwaukee and Wauwatosa.

"Facade grants are supposed to be a small gift of public funds to help improve the storefront image of the commercial district," Rozek said. "Our maximum is way too high at $25,000, and then in this case we exceeded it to $103,000."

Shorewood's facade program has provided 75 grants totaling $1.4 million in the last 12 years. Eight have exceeded $25,000, and four have exceeded $100,000.

"Shorewood went in this direction for a reason," said Jim Plaisted, the director of the Shorewood Business Improvement District. "I think that's one of the things that has separated Shorewood from other communities in the last five years."

The most generous grant of $240,000 is for the large office building anchored by North Shore Bank at 3970 N. Oakland Ave.

The other three grants closer to $100,000 went to the building occupied by Chocolate Factory in the 4300 block of Oakland Avenue, the building occupied by Sherwin Williams at 3510 N. Oakland Ave. and the building occupied by The City Market in the 2500 block of Capitol Drive.

No financials needed

Rozek said the project never should have been considered for facade grants, because the project is 51 percent new construction.

She said a more appropriate avenue of assistance would have been the small business loan program or possibly a redevelopment grant — both of which require the applicant to open their bank books and demonstrate a need for public assistance.

Facade grants do not require the applicant to demonstrate financial need.

"We gap-financed this business using facade grants, which is not the goal of the facade program," Rozek said.

"We should only be investing or assisting in the growth of the market if there is a need, and to determine that need you have to look at their financials."

Plaisted said he and other village officials never asked the business owners for a pro forma financial statement, because it is not required under the facade program. The business owners did provide a list of $208,000 worth of exterior improvements, which met the criteria for the facade program.

"These guys are taking on this single-story dysfunctional building that is never going to be redeveloped due to its footprint, and they have come up with this vision to remake it in a striking fashion," Plaisted said. "Why wouldn't we want to participate and help them?"

Finite funds available

Shorewood trustees were previously able to replenish its facade grant funds, but now they are dealing with a finite amount of funds for the next 11 years.

Village officials will lose the ability to directly pay for facade grants through its first tax incremental district in 2017, so the village board decided three months ago to transfer $330,000 from TID #1 to the CDA to be used for facade grants. The board also earmarked $100,000 for a special facade project.

Now that Shorewood is dealing with a finite amount of funds, Rozek was concerned that a $103,000 grant for the new burger restaurant might limit funding availability for other businesses in Shorewood.

"We are going from an unlimited source of funding to a limited source of funding," she said. "We're going to see a lot of activity in the upcoming years, and I'm fearful we are going to run out of funds."

When contemplating the facade transfer, Plaisted said he and the village staff took a look at all the projects that had been completed, and then identified buildings that could potentially apply for facade funding. They only identified two buildings that might seek large facade grants, he said.

"The need is not going to be as substantial in this next 10-year window," he said.

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