Developers of the planned Milwaukee hotel will get more time to pay off city loans to help finance the project under the new proposal.
Kalan Haywood Sr. faces a September 1 deadline to use to advance plans to transform historic former Sears store at 2100 W. North Ave. into 80-room Ikon Hotel and conference center We are facing a deadline to start repaying the $3.79 million that was deducted.
Heywood’s investment group, HG Sears LLC, has until September 2023 to begin making those payments based on a proposal to be considered Thursday by the City’s Board of Redevelopment.
The proposal also requires approval from the Common Council and Mayor Cavalier Johnson, but it came after an Urban Development Authority official said in July that HG Sears was facing loan defaults.
This raised the possibility that the city could file a foreclosure lawsuit.
This could mean public ownership of the proposed project site until another developer buys it.
Instead, giving Heywood another year to start paying off the loan would give it more time to raise additional capital to move forward with the hotel development.
Haywood was not immediately available for comment on Ikon’s prospects for additional funding.
“The future of this site is critical to this part of Milwaukee and the city as a whole. .
“With that in mind, we are proposing a change in terms that will give the current developer another year to solidify a revised and viable plan. We look forward to returning it to productive use.”
Loan approved in 2019
The loan was paid off over 15 years and was approved by the Common Council and then Mayor Tom Barrett in 2019.
Loan proceeds helped pay for property purchases, interior demolition, asbestos removal, building costs, utilities, insurance, and property taxes.
But in 2021, Heywood said other renovations were delayed due to the impact of the COVID-19 pandemic on the hotel industry.
As such, city officials last year extended the deadline to start disbursing the loan from September 2021 to September 2022.
However, DCD development project manager Lori Lutzka said in July that Heywood had not secured additional funding, such as private loans or cash from investors, since then to “move the project forward.” rice field.
The council and Barrett also approved a second $5 million loan for the Ikon project. Council members say the potential benefits outweigh the risks. Heywood cannot use the loan until other sources of funding for the project are utilized.
Additional funding sources will include the expected $13.5 million from private investors drawn by the development’s location within the Opportunity Zone.
Other funding includes $7 million in federal and state historic preservation tax credits, $3 million in real estate assessed clean energy funding, $2 million in private loans, and $1.83 million in Haywood deferred developer fees. It is included.
Heywood investigated but not charged after sexual assault allegations
Heywood was under investigation for sexual assault, which closed in January after prosecutors decided not to indict him because they believed the jury didn’t have enough evidence to prove the case. did.
The Wisconsin Department of Justice filed a lawsuit stating that the complaining woman’s rights as a crime victim had been repeatedly violated and that she no longer had confidence in the Justice Department to properly investigate the case. I have taken over the investigation from the Milwaukee Police Department.
Heywood denied the allegations and was never arrested.
Deputy District Attorney Matthew Torbenson said in January that he believed the woman’s account of what happened, but investigators had not obtained the other corroborating evidence he believed he needed. said.
He didn’t say the investigation was compromised by early decisions by the Milwaukee Police Department, which was then headed by Commissioner Alfonso Morales.
After the Milwaukee Journal Sentinel reported the case, an independent investigation was ordered and found detectives told to interview Heywood over objections from the prosecutor and the chief police investigator.