MILWAUKEE — The City of Milwaukee will not take over the former Northridge Mall after a judge rejected the city's request on Friday.
It comes as the owners of the dilapidated property appeal a 2019 city order to tear the building down. The mall has stood vacant since 2003.
Last month, Milwaukee developer Phoenix Investors offered to purchase the property from the owners, U.S. Black Spruce Enterprise Group Inc., and convert it into industrial space. The offer expires in May. According to our partners at the Milwaukee Business Journal, city attorneys oppose the sale to be renovated rather than razed.
BizJournal reports that plans to sell or be razed depend on if the city's demolition order survives U.S. Black Spruce's appeal, which would overturn Milwaukee County Circuit Court Judge William Sosnay’s October approval of the demolition order.
During Friday's hearing, U.S. Black Spruce principal Li Yang said the Chinese investment group acquired the mall for $6 million in 2008 for ethanol production. BizJournal reports another principal of the group, president Jun Lian, owns ethanol companies in Asia and had the intent of converting the abandoned mall to industrial space to process corn grown in the Midwest for his ethanol businesses.
Judge Sosnay on Thursday approved a $261,532 judgment to be paid to the city. According to BizJournal, the judgment is due to the daily fines against U.S. Black Spruce as well as the city's cost of providing police and fire protection for the property.
The next hearing is scheduled for June 20.
Milwaukee real estate firm Phoenix Investors agrees to buy property
The owners of Milwaukee's dilapidated and long-vacant Northridge Mall decided to sell the property to a Milwaukee real estate development firm.
According to our partners at the Milwaukee Business Journal, U.S. Black Spruce Enterprises agreed to sell the mall near North 76th Street and West Brown Deer Road to Phoenix Investors LLC.
The move was not expected. The decision, announced during a hearing on Friday, comes a day before a scheduled hearing when city of Milwaukee officials were going to ask a judge to let the city take ownership of most of the mall.
The city of Milwaukee has been trying to get the mall demolished and build something new in its place. It ordered Black Spuce to tear the mall down first in 2019. The company has not complied with the order.
An attorney for Black Spruce and Phoenix Investors said during Friday's hearing the companies have been in talks about a sale of the mall on and off for a few years.
The attorney, Mark Foley, said Phoenix Investors would take responsibility for Northridge Mall. That includes taking responsibility for the city's raze order for the mall, according to Judge William Sosnay during Friday's hearing.
Milwaukee real estate developer Frank Crivello leads Phoenix Investors. Their expertise lies in buying empty industrial properties abandoned by corporate clients and refurbishing them for new clients, according to the Milwaukee Business Journal.
Developer details proposed plans
Phoenix Investors' director of acquisition and leasing Patrick Dedering spoke to our partners at the Milwaukee Business Journal in an exclusive interview.
Dedering says Phoenix Investors intends to renovate the existing structure for industrial or light-industrial use.
“It depends upon what the outcome of the leasing ends up being post-renovation, but we would expect that there’s strong potential for hundreds of jobs to be created,” Dedering told BizJournal.
The sale isn't closed until after Phoenix Investors completes its due diligence process, according to BizJournal. They also have to come to an agreement with the city for the property to be razed and the potential purchase of the Boston Store, which the city owns. The city began seeking bids this week to demolish it.
“The discussion of a greater development plan with the city is really the priority that we need to get comfortable with in order to move forward with the acquisition,” Dedering said.
Phoenix Investors has 45 days to complete its due diligence. The next court hearing is on April 14. Meanwhile, Dedering shared Phoenix Investors agreed to take responsibility to secure Northridge Mall within the next week. According to BizJournal, priorities include securing the perimeter fence, adding an onsite security guard, and putting in 24/7 video monitoring.
Phoenix Investors intends to privately finance renovations and not ask the city for public assistance for the cost of redevelopment, Dedering told BizJournal.
“With the proposed renovation, there’d be a significant impact to the overall property assessment once completed (and) stabilized,” Dedering said. "I think we're the right company with the right track record."
Phoenix would preserve Northridge Mall's existing exterior walls and roof and replace interior components.
The clash over Northridge Mall
The city of Milwaukee is attempting to take ownership of Northridge Mall in an effort to demolish it faster.
Previously city attorneys filed a motion with Milwaukee County Judge William Sosnay, asking him to transfer ownership from Black Spruce Enterprise Group, which bought the mall in 2008.
"This is about an attempt to speed this up, to have them [the city] have ownership, and then to knock it down. Because that's what everybody wants, in terms of the city," said the Milwaukee Business Journal's Mark Kass. "This is all about kind of finally moving this thing ahead."
If the city owns Northridge, it can begin raising the money to tear it down. Demolition is estimated at $15 million.
"This is about an attempt to speed this up, to have them [the city] have ownership, and then to knock it down. Because that's what everybody wants, in terms of the city," said the Milwaukee Business Journal's Mark Kass. "This is all about kind of finally moving this thing ahead."
If the city owns Northridge, it can begin raising the money to tear it down. Demolition is estimated at $15 million.
Judge Sosnay said the directors of Black Spruce, who live in Canada and China, will be sanctioned if they don't show.
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