Top Stories Milwaukee

The UW-Milwaukee Real Estate Foundation has had a big impact both on the university and the local real estate scene, overseeing the building of several major projects, with more yet to come. Its structure gives it the freedom to bypass the normal state requirement for public bids and has also generated payments to insiders with connections to the foundation, although officials emphatically deny there are any conflicts of interest.

The UWM Foundation was created as a separate non-profit (though connected to the university) in 1974 and the UWM Real Estate Foundation was created in 2005 as a separate arm of the UWM Foundation, making it twice removed from the university.

cambridge commons (photos by michael horne)

When the Real Estate Foundation was founded, during the first year of the administration of Chancellor Carlos Santiago, it was a first for the UW System but was modeled on similar foundations at public universities nationwide. This was a rare example of Milwaukee getting an advantage on its older, more financially entrenched rival in Madison, the only other Ph.D. granting campus in the system. (Since then, only the UW-Platteville, the state’s fastest-growing campus, has created a similar foundation, which it established in December 2010.)

By 2009, the foundation’s portfolio was estimated to have a value of $65.4 million, according to the Business Journal. Two of its key projects have been dormitories: the Riverview Residence Hall, 2340 N. Commerce St., a 499-bed, $28.5 million facility; and Cambridge Commons, 1436 E. North Ave., a $50 million, 700-bed dormitory.

With the recent acquisition of an 88-acre parcel in the City of Wauwatosa for a planned “Innovation Research Park” and proposed developments in Milwaukee that include a School of Public Health and a Water Institute, the foundation will certainly be issuing hundreds of millions of dollars more in bonds over the next few years.

The foundation’s independence from the university has enabled it to build quickly, without going through the “cumbersome and costly processes” of a public bid, as Sherwood Wilson, a UWM chancellor of administrative affairs, once noted.

Prior to the creation of the foundation, UWM had to wait in line with all other campuses for state approval of its building plans. The process was slow, and UWM officials point to the case of the fourth Sandburg Tower dormitory, which took ten years from conception to completion in 2001. This delay, they note, cost the university greatly in increased construction expenses and lost revenue from housing fees and tuition.

Under Santiago, the university strove to increase the number of on-campus students and decrease the percentage of commuter students, who typically take longer to graduate and lower the success rate for universities nationally. The new dormitories also represented a new revenue stream at a time when state aid to the UW System continues to shrink.

The foundation’s leaders

The real estate foundation’s five-member board of directors serves without pay and is appointed by the board of the UWM Foundation.  It is currently headed by Bruce T. Block, who also serves on the UWM Foundation Board, and who is chair of the Real Estate Practice Group of Reinhart Boerner Van Deuren, Milwaukee’s third largest law firm. UWM’s real estate foundation paid Block’s firm $315,000 in 2006 and $232,581 in 2008 for professional services related to the formation of the foundation and construction of the Riverview dormitory.

Also on the real estate foundation board is Mark Brickman, who served as its first chairman when he was the Milwaukee president of CBRE, a worldwide real estate brokerage and management company.  CBRE has the contract to lease the commercial real estate held by the foundation, including office space leased to the foundation at Cambridge Commons, its second dormitory.

david gilbert

CBRE has also developed numerous university “Innovation Parks” in other states, including Ohio, North Carolina and Pennsylvania, which may be the model for UWM’s proposed park in Wauwatosa. CBRE may also have invented the model which led to the spate of real estate foundations formed across the country since 2000.

Brickman, who has since retired from CBRE, is now listed as a consultant to Mandel Group, the real estate firm which received $212,373 from the foundation in 2008 for its work. In addition to serving as developer at Cambridge Commons, a contract it won after successfully responding to a request for proposals that was independently reviewed, Mandel was the owner of the site selected and received $1.2 million for the property.

Mandel’s title to the property, the former Wisconsin Ice & Coal (“Hometown”) property on E. North Avenue at the river, possibly gave it a competitive advantage since the other developers did not own their proposed sites.

In February, it was announced that the real estate foundation had succeeded in purchasing 88 acres of the Milwaukee County Grounds for $13.3 million for campus development of its Innovation Park. Included in the parcel – which is nearly the size of UWM’s  East Side campus – were a number of historic buildings designed by the Eschweiler firm. The foundation board announced that these buildings would be sold to Mandel to be developed as “upscale” housing, without issuing a request for proposals for purchase.

The president of the real estate foundation is David H. Gilbert, who came to Milwaukee in 2004 with newly named Chancellor Carlos Santiago. When Santiago announced his departure in August 2010, there was some speculation – fueled by Santiago himself – that Gilbert would follow him. However, Gilbert remains at the university at this time, holding the title of Senior Advisor to the Chancellor.

In an emailed response, Gilbert said his board is not involved in self-dealing.  As for Mark Brickman, the former CBRE and current Mandel associate: “Mr. Brickman was not affiliated with the Mandel Group when the contract for Cambridge Commons Student Residence Hall was negotiated.  When Mr. Brickman developed a business relationship with the Mandel Group, he immediately notified the UWM Real Estate Foundation Board of Directors and voluntarily recused himself from any discussions regarding that firm.  This position was reviewed by the Real Estate Foundation Board and deemed to be appropriate.”

Likewise, Gilbert says there is no impropriety in the relationship of the Reinhart law firm:

“The UWM Foundation has negotiated arrangements with several law firms in Milwaukee for services.  Each of these arrangements, including the arrangement with Reinhart, provides deeply discounted, high quality services for the Foundation. This arrangement was reviewed by the entire Board and deemed to be appropriate.”

However, no other law firms were listed on the annual tax forms of the real estate foundation, though an additional legal fee of $48,951 (with no firm named) was listed on the 2008 annual federal tax form.

Regarding the foundation’s future bonding proposals, Gilbert said it had “no plans” to ask the City of Wauwatosa for bonding authority for its projects at Innovation Park.

Post Footer automatically generated by Add Post Footer Plugin for wordpress.