Rick Romell and Raquel Rutledge

Milwaukee Journal Sentinel



A company organized in Wisconsin a little more than a year ago is seeking to raise more than $1.4 billion from private investors for what might seem like an unlikely project: a commuter rail system in the Milwaukee area studded with high-density real estate development.

But a competing effort spearheaded by a rival group says it is further along in a separate quest to place passenger trains on the freight lines that crisscross the area.

Pitted against each other in the railroad battle are two little-known firms: Transit Innovations LLC and Wisconsin Transit & Realty Group.

Transit Innovations is seeking the $1.4 billion. The company, formed in October 2017, has hired a New York investment banking firm to help raise capital for a Milwaukee rail and real-estate project dubbed “E-Way.”

The company's plans envision running commuter trains along 55 miles of existing freight tracks in Milwaukee and Waukesha counties, and building an estimated 7,000 units of new multi-family housing and other real estate, such as retail and offices.

“We have untapped demand for people to go from Point A to Point B," said Greg Dugan, Transit Innovations' president. “But we have no way of getting there except for traditional means. This system basically fills a gap.”

Dugan would not say how much money, if any, has been raised for the project.

"We have some very, very, very interested people in investing in this," he said.

But three knowledgeable observers familiar with the efforts to start commuter rail in Milwaukee expressed skepticism about the possibility of putting together a deal that would require not only raising a large amount of private money, but also gaining the cooperation of several area communities and the two railroad companies — Union Pacific and Canadian Pacific Railway — that own the track.

The Transit Innovations project actually dates back to at least early 2015, when the Milwaukee Passenger Rail Company, a group headed by Dugan's partner, Brian Kliesmet, unveiled a similar plan. That push failed to gain traction, but it did spawn Transit Innovations' current competitor.

Michael Garven, who in 2015 was president of Milwaukee Passenger Rail, now is vice president of Wisconsin Transit & Realty.

Garven said he split from Milwaukee Passenger Rail about two years ago. He declined to speak in detail about the efforts of his group, but said they are more advanced than those of the rival firm.

"No pun intended, we're further down the tracks than they are," Garven said.

In at least one respect, there may be evidence to support that.

In an investor presentation by Transit Innovations, a page titled "Solution / Strategy" describes the venture in several bullet points, including one that says, "Advanced negotiations with Canadian Pacific and Union Pacific rail carriers to lease their tracks."

In an interview Thursday, however, Dugan said his firm has told the railroads about the project but has first concentrated on such things as marshaling government support and raising money. Now, he said, Transit Innovations will sit down with the railroads and negotiate lease rights.

"So we're far advanced down the road is the best way to put that," he said.

A spokeswoman from Canadian Pacific said the company has not talked with Transit Innovations but "has had discussions with Wisconsin Transit & Realty Group."

Same for Union Pacific. That company has not met with Transit Innovations, either, but has been working with Wisconsin Transit & Realty Group, a spokeswoman told the Journal Sentinel.

"We recently signed an agreement with WTRG that provides a process to estimate the infrastructure costs required to implement their plan," Union Pacific spokeswoman Kristen South said by email.

Transit Innovations' plans surfaced in mid-November, when the company's New York investment bank, Castle Placement LLC, issued a little-noticed announcement that it had been hired to help raise some $1.456 billion for the project.

About 70 percent of the money would go to develop real estate around the 23 rail stations envisioned. Plans in the investor presentation show the rail network as serving downtown Milwaukee, Mitchell International Airport, the Menomonee Valley, Wauwatosa, West Allis, Brookfield, New Berlin, Elm Grove, Waukesha and the Century City project at the former Tower Automotive site on Milwaukee’s north side.

Operating company identified

The project's investor presentation on the Castle Placement website carries the headline "Transit Innovations, LLC In Partnership with Bombardier Transportation."

Bombardier Transportation is large and well known. Employing nearly 40,000 people and operating in more than 60 countries, it is part of Montreal-based Bombardier Inc., a $16 billion company that describes itself as the world’s leading manufacturer of airplanes and trains.

Dugan said that while his company is in talks with Bombardier about operating the rail system, and Bombardier is "very, very interested," no agreements have been signed.

Asked about the Transit Innovations effort, a Bombardier spokeswoman didn't specifically name the Wisconsin firm but said by email that Bombardier has “been in discussions with some organizations to possibly take part in the development of passenger rail solutions in the Milwaukee area.”

As it happens, Garven said he too has been talking with Bombardier.

"I met with Bombardier, the director, just this Monday, and I talked with him today too," Garven said.

Garven, according to his LinkedIn page, is a former sales and marketing director for BRG Precision, a manufacturer of custom time-zone displays. Dugan's LinkedIn page describes him as president of a private funding firm called WEB International LLC and of WESA Inc.

Kliesmet has been a real estate developer in the Milwaukee area. He declared bankruptcy in 2013. Efforts to reach him Thursday were unsuccessful.