Tom Daykin

Milwaukee Journal Sentinel

Milwaukee's long-delayed Couture apartment high-rise is getting some good news.

The project has cleared a major hurdle in obtaining a key federal loan guarantee to finance its construction.

Developer Rick Barrett has been asked by the U.S. Department of Housing and Urban Development to submit an application for what the department calls a "firm commitment" to issue a loan guarantee.

This doesn't mean HUD has made a final decision on issuing the loan guarantee, a source said.

"At this point, it's still preliminary," the source said.

But HUD's preliminary decision means the Couture has largely cleared an extensive underwriting process that lasted several months.

If the application for a firm commitment properly addresses HUD's conditions, the agency's final approval would be issued in approximately 60 days, said Gina Rodriguez, HUD's Chicago-based regional public affairs/Congressional affairs liaison.

“This is a major milestone for The Couture that enables us to move forward with the final stage of financing,” said Barrett, who operates Barrett Lo Visionary Development LLC.

“We are thrilled to be working with HUD on this catalytic development that will transform this vacant site into a vibrant public space that improves access to the lakefront, creates thousands of new jobs and adds a signature building to Milwaukee’s skyline,” Barrett said in his statement.

Barrett told the Journal Sentinel he didn't know when construction might begin.

The news comes two days after Barrett missed a city deadline to obtain financing for the 44-story, 322-unit Couture. It is to be built overlooking the lakefront at North Lincoln Memorial Drive and East Michigan Street.

The main financing is an $80 million private loan guaranteed by HUD, according to a Department of City Development report.

Developers pay fees to obtain those guarantees, which have been used to finance other apartment buildings in Milwaukee and other communities.

Barrett Lo Visionary Development also expected to raise $5 million from the firm and its partners, as well as $20 million from other investors, according to that report.

Plan includes The Hop

The $122 million development tab includes $17.5 million in city funds for the Couture's transit concourse and other public improvements. Those city funds would come from property taxes generated by the Couture and the neighboring 833 East office building.

That transit concourse will include a stop for Milwaukee's new streetcar service, The Hop, which debuted Friday.

RELATED:Everything you need to know about the new Milwaukee streetcar, at least for now

The Hop runs from the Milwaukee Intermodal Station, 433 W. St. Paul Ave., through the Historic Third Ward and downtown's east side to Burns Commons at North Prospect and East Ogden avenues.

It will include a lakefront loop that is to begin operating by the end of 2020.

That loop will run on tracks already built on East Michigan and East Clybourn streets. The Couture's transit concourse will link those tracks.

Barrett had initially hoped to begin construction by the end of 2017 at the Couture site, a former Milwaukee County Transit Service bus facility that his firm bought that year and demolished.

But delays in obtaining the HUD loan guarantee led city Development Commissioner Rocky Marcoux to issue a default notice after Barrett didn't meet a March 1 construction deadline.

Marcoux then set an Oct. 31 deadline for Barrett to obtain financing, and begin construction within 30 days of securing the loan.

Barrett acknowledged that he wouldn't make that deadline after the Journal Sentinel on Oct. 16 reported about the March default notice.

RELATED:Couture's delays led to default notice as Milwaukee officials wait for construction start

But he and local officials all said they were confident that the Couture would obtain financing.

Mayor Tom Barrett and County Executive Chris Abele were among those celebrating HUD's decision Friday.

“This is good news for several reasons,” Tom Barrett said in a statement.

“The Couture will add vibrancy to downtown and the lakefront; it will create construction jobs for city residents and work for disadvantaged businesses; and it will add a unique transportation amenity," the mayor's statement said.

“What we’re really building is a national model for transit-focused development that connects our community in an innovative way, adding another icon to the skyline, and finally bridging downtown to the lakefront in a way that will bring more activity and value to boot," Abele said.

A complicated transaction

Information the Journal Sentinel obtained through Wisconsin's open records law showed that local officials had concerns about the effects of the Couture's delay on The Hop.

RELATED:Couture plans October start. But Milwaukee has backup plan for streetcar loop if high-rise isn't built.

The Couture's transit concourse solves problems for both Rick Barrett and local officials.

Barrett needed to buy the Couture site at a deep discount from Milwaukee County to help make the project feasible.

But the county was on the hook to pay $6.7 million to the Federal Transit Administration if it didn't sell the property at market value. That's because the agency helped finance the bus facility with a 1988 grant.

By adding a transit concourse to the Couture, the county got the Federal Transit Administration to waive that $6.7 million payment — its share of the development site's sale proceeds at market value.

Barrett bought the 2.2-acre county site for $500,000.

The FTA could seek all or part of the $6.7 million if the Couture transit concourse isn't operating by a Dec. 31, 2020, deadline.

Tom Daykin can be emailed at tdaykin@jrn.com and followed on Instagram, Twitter and Facebook.