I was very happy to find out that my mentor and I both work in the same historic building, but also very surprised that we had never run into each other before given our proximity.  Jim and I had our first meeting over an informal lunch at the Waterfront Deli.  It was a real pleasure learning about Jim’s vast professional and personal experiences.  I was very surprised to learn the breadth of the real estate that Jim’s bank, the Private Bank, works on.  Based on the institution’s name, I’d thought that Jim managed projects for high net worth individuals.  I was pleasantly surprised to learn that his bank actually does a large number of commercial deals, and was interested to hear about some of Jim’s past successes and how they helped to grow the Private Bank to the national player that it is today.  I look forward to using Jim as a resource in the future, to bounce ideas off him and get a banker’s perspective on the deals I myself am working on.  It goes without saying that  I am looking forward to the rest of the mentorship and beyond, including our next planned meeting that will coincide with the NAIOP boat cruise.

Note: If anyone is interested in participating in the Mentoring Program in the future, please contact Chris Korjenek at chris@naiop-wi.org.  This is an annual program.  We will seek applications in November.

Nick Cain, Focus on Energy

I am an Energy Advisor working on a variety of energy efficiency programs throughout the Midwest and reside in Shorewood, WI.  The company I work for, Franklin Energy represents Focus on Energy for the state of Wisconsin.  Franklin is an energy efficiency consulting firm that specializes in the implementation of energy efficiency and renewable energy programs for utility companies throughout the United States. Specifically, the majority of my time is spent conducting audits and analysis of large commercial & industrial sites (HVAC, Refrigeration, Lighting, Controls, Compressed Air, Chillers, Hot Water Systems, etc).

My interest in joining NAIOP is to help become a resource to each of the members to answer any questions they may have on how they can take advantage of these programs being offered in Wisconsin and elsewhere.

Which project do you love the most or are most proud of?

The most rewarding part of my career is centered on the satisfaction of those that I work with and for.  My motivation and enthusiasm toward the industry drives me each and every day.  Every project honestly creates a true feeling of accomplishment.

What is your favorite food?

Lasagna

Do you have a favorite quote?

“Well done is better than well said.” – Ben Franklin

What are you currently listening to for music?

Today’s Country

Tell us something we don’t know about you.

I also work as a licensed auctioneer in my spare time.

Any hobbies outside of work?

Avid outdoorsman, exercise, triathlons, travel, investments, and love to always be learning.

Iphone? Blackberry? Android? (or preferred method of communication?)

iPhone

You can contact Nick at 262-240-0672 ext 4132 or ncain@franklinenergy.com

KC Conway Presentation

J Cope Presentation

M Lemke Presentation

Briefly tell us what you do.
The Peter Scherrer Group is not a big firm, so we all have a number of roles.  My primary role is to handle the real estate acquisitions and development projects for our company and our clients and oversee the asset management of various investments. At times, I also serve in our construction management division, overseeing commercial projects. Finally, I manage the office personnel and most of the day to day operations of the company.

Why did you want to join the NAIOP Board of Directors?

I’ve been a member of NAIOP and served on committees since 2008.  It’s been a fantastic experience. The networking, events, and legislative involvement of NAIOP are so beneficial. I think the more active you are in the organization, the more rewarding it is.   So when the opportunity presented itself to get involved at a greater level, I was excited to pursue it.

What do you hope to get from your experience?  What do you hope to give?

I’m looking forward to getting to know the other board members, and learning about their experiences and perspectives on the industry and NAIOP as an organization.  I hope to contribute the same and be an active and valuable member of the board.

Tell us something that most people don’t know about you?

One of my favorite things is finding new, more efficient approaches to how we run our projects and our business.  Since my dad and I started this business just four years ago, having the freedom to deviate from traditional practices is one of the things I enjoy most.   I like to think that we’ve shaped a highly flexible and efficient business model that’s easily adaptable to changes in the market.

What are you reading? 

I’m reading Born to Run by Christopher McDougall as I’m getting mentally geared up to train for the Chicago Marathon. And, Rick Steves’s book on Italy because I am planning a trip there this fall.

Doug Geurts, Johnson Controls, Mentor

I enjoyed spending time with Sean.  We discussed a number of topics with regard to personal and professional experiences.  I was able to relate his current experiences to my past and current experiences and have an open and honest discussion with him about his future aspirations.  We touched on a broad base of discussion points and were both able to take away a number of lessons learned from the conversation.  All in all, I thought it was a great conversation for our first meeting.  I look forward to future meetings with Sean and am enjoying my first experience with the NAIOP Monitoring Program.

Sean Malaney, US Bank, Mentee

Doug and I had our first meeting a few weeks back over an informal lunch.  It was an excellent introductory meeting in which we discussed a variety of topics, including both professional and personal experiences.  From a professional perspective Doug has worked on a variety of real estate projects.  He walked me through a particular construction project start to finish, one that presented him multiple roadblocks along the way.  It was interesting hearing all the challenges he faced and how they dealt with them, things we don’t always hear about on the lending side.  Doug has been a great sounding board on a personal basis as well.  Currently renovating my home has presented additional challenges outside the office.  Doug has provided great advice as well as insight on how he has created a work/life balance.  I am looking forward to the rest of the mentorship and beyond.

By Tom Larson 

To provide local communities with additional tools to promote local economic development, NAIOP-WI is pursuing two separate pieces of legislation dealing with special assessment b-bonds and tax increment financing.

Special assessment b-bonds.  The first piece of legislation would make changes to the way special assessment b-bonds can be paid off.  Special assessment b-bonds are used to finance local economic development projects.  However, they are rarely used because current law requires each installment payment to reduce the principal owed by an equal amount.  As a result, special assessment installment payments are generally higher in the early years of a project and lower during the later years.  Because the early years of an economic development project generally produce the lowest cash flow due to higher start up and marketing costs, higher payments at the beginning of a project are not financially feasible for most projects.

NAIOP-WI is working with the League of Wisconsin Municipalities and other economic development groups to change the way special assessment payments can be made.  Specifically, we are seeking changes to allow local communities more flexibility to use either “tailored” principal payments for special assessments or equal total payments (principal and interest) to pay off the special assessment.  (Note – this would be similar to the way home mortgage payments are structured whereby the mortgage payment amount is equal during the loan period with the mortgage payments consisting of greater interest and lower principal at the beginning of the loan term and lower interest and higher principal at the end of the loan term.)

By providing local communities with greater flexibility to structure special assessment payments, special assessment b-bonds would be a more effective tool for financing economic development.

Redevelopment TIF/Base Value Reduction – The second piece of legislation would provide local units of government the authority to lower the base value of an existing TIF district when a property within the district has been vacant for an extended period of time, is damaged by natural disaster, or where the property’s redevelopment progress has been stalled by difficult economic and market conditions.

When an industrial or commercial property experiences long-term vacancy, sustains damage from a natural disaster, or has been demolished (in part or in whole), the base value of the property remains the same, even though the actual value may seriously decline.  In these cases, the discrepancy between the TIF base value and the actual market value hurts the economic viability of the TIF district and the financial health of the community, and presents a serious impediment to both redevelopment and new economic development within the TIF.

Allowing changes to the TIF’s base value will accelerate the generation of new taxable value,  facilitate redevelopment efforts, and generate a stream of positive tax benefits to impacted taxing jurisdictions more quickly.  To ensure that these changes would occur only under the special circumstances identified above, any changes to the base value would require approval by the Department of Revenue, the local unit of government, and the Joint Review Board which is made up of representatives of all the affected taxing jurisdictions.

Legislature Suspend Electrical Contractor License Rules

On March 13, 2013, Governor Walker signed into law 2013 Wis. Act 4, which will delay the effective date of new electrical contractor licensing rules by 12 months.  The new could have created maintenance headaches for commercial building owners as they would have required all property management companies to be licensed as an electrical contractor to repair, replace or maintain most electrical existing items including ballasts, outlets and switches.  Because most property management companies are not licensed as electrical contractors, commercial property owners would have had to hire separate electrical contractors to perform routine electrical maintenance activities, which would have likely added costs and delays to these activities.

During the next several months, organizations representing property management companies and commercial building owners will be working with lawmakers to address these concerns before the rules go into effect. The goal is to specifically exempt maintenance and repair of existing outlets, switches and lighting from the list of activities which would require and electrical contractor license.

NAIOP-WI’s Public Affairs Committee has not yet taken a position on this proposal, but will likely be discussing it at it’s next meeting.

Stephanie R. Allewalt Hacker, GRAEF

Senior Planner at GRAEF: GRAEF provides a diverse and advanced set of design services not only to the greater Milwaukee region, but also to public and private sector clients nationally.  The planning, urban design, and landscape architecture group is a progressive studio comprised of a steadfast, forward-thinking team. 

Which project do you love the most or are most proud of?

One of the most rewarding processes I have managed involved working directly with members of a Wisconsin Town government on land use planning, documentation, public participation, and testimony to reach the Town’s successful incorporation as a Village.

What is the last book that you read/movie that you watched?

Book: “Getting Past No” by William Ury & Movie: Lincoln

What is your favorite food?

The Sunrise muffin from Stone Creek (made by City Market) and the Super Energy Bar at Cedarburg Coffee Roastery are among the favorites.

Favorite superhero or other fictional character?

Dr. Ellie Arroway from the movie Contact: her character is relentless in the realm of scientific research, and she’s willing to put herself on the line in the name of academic advancement.

Tell us something we don’t know about you.

I believe strongly that you can learn at least one new perspective from anyone.  No matter what a person’s age, life experience, profession, or personality, each of us can learn from one another.  As such, I expect people to push their egos aside when in conversation and just get down to business.  Ask one another good questions.  Converse for the sake of learning, not talking.  Make one another laugh.  Know that the best relationships come from genuine dialogue.

Any other hobbies outside of work?

My husband, Mike Hacker, and I own an old cream city brick Italianate in downtown Milwaukee that celebrated its 140^th birthday in 2012.  We both enjoy the process of rehab and redefining existing spaces.

Iphone? Blackberry? Android?  What’s your preferred method of communication?

The iPhone and 1^st generation iPad are household staples.

Stephanie can be reached at stephanie.allewalt@graef-usa.com

Fortunately, our state’s budget situation is better than it was two years ago, when we faced a $3.6 billion budget deficit, property taxes had gone up 27% over the last decade, and the unemployment rate was at 7.8%. Today, Wisconsin has a $419 million budget surplus, property taxes have gone down each of the last 2 years saving the average homeowner a few hundred dollars each year, and the unemployment rate is down to 6.6%.

Over the next several months, the state budget will be reviewed, debated and likely amended by the legislature and it’s budget reviewing committee, the joint finance committee. Prior to the state-mandated, July 1st budget deadline, the state budget must be approved the joint finance committee and both houses of the legislature. When one political party controls both houses (like Republicans do today), the process is usually less contentious because the two houses generally share the same philosophy on taxing and spending issues. However, in Wisconsin politics, nothing can be taken for granted.

Some of the specific provisions in the proposed state budget that impact the commercial real estate development industry include the following:

Property taxes – Retains current law, which places a zero percent property tax cap on local levies, but would allow increases based upon net new construction and gives local governments the power to carry forward up to 0.5% of unused levy authority to the next year. In addition, local governments may exceed the levy limits if approved through local referendum.

County property tax rate limits – Repeals the county operating tax mill rate limit, which has been in effect since 1992. This will mean that counties, municipalities, and technical colleges will be subject to the same property tax controls.

Individual Income Tax Reductions – Decreases individual income tax rates for the first three income tax brackets. For couples who are married, filing jointly, the income tax rates will be reduced in the following manner:

 1. For couples making less than $14.3K, the income tax rate will be reduced from 4.6% to 4.5%,
2. For couples making between $14.3K and $28.6K, the income tax rate will be reduced from 6.15% to 5.94%
3. For couples making between $28.6K and $214.9K, the income tax rate will be reduced from 6.5% to 6.36%

 Broadband – Allocates $4.7 million for a broadband grant program to increase broadband access and capacity, and expand high speed Internet service access to underserved areas identified by the department and Public Service Commission.

Economic Development – Some of the economic development initiatives aimed at helping existing businesses grow and encouraging the creation of new businesses include:

 1. Seed Accelerator and Capital Catalyst Programs: Investing nearly $6 million in FY 14 and $11M in FY 15 in Seed Accelerator and Capital Catalyst Programs at the Wisconsin Economic Development Corporation. These programs support high-potential entrepreneurs and businesses as they start and grow.

2. Wisconsin Economic Development Corporation Marketing Program: Providing $10.9 million over the biennium to support WEDC’s marketing program promoting Wisconsin as a great place to do business. WEDC marketing focuses on attracting businesses, promoting investment opportunities in Wisconsin, and changing the negative perceptions that may still exist about doing business in Wisconsin.

3. Economic Development Tax Credit: Providing an additional $75 million in available credits for the Economic Development Tax Credit program. This tax credit is aimed at encouraging businesses to make capital investments, expand and retain jobs, invest in job training, and locate or retain their corporate headquarters in Wisconsin.

4. Angel Investment Tax Credit: Lifting the cap on this tax credit program focused on encouraging private investment in start-up companies. The budget removes the maximum cap, which is currently set at $47.5 million, but retains the annual limit, effectively allowing this program to continue into the future.

Transportation – Increases funding for transportation-related projects by $824 million. Several of the specific transportation projects funded in the Governor’s budget are:

1. Zoo Interchange: Allocate $550 million toward the Zoo Interchange Project, which is the busiest interchange in the state. Primary construction will begin in 2015-2018 and will improve safety and reduce congestion.

2. Hoan Bridge: Utilize $236 million toward the Hoan Bridge and I-794 Freeway. This project will ensure convenient access to the Port of Milwaukee.

3. Routine Maintenance: Increase funding for routine maintenance agreements with counties by $55 million. Maintenance is vital to keeping our transportation system running smoothly and keeping long-term expenses down.

Sale of State-Owned Real Property – Modifies provisions related to the sale of state-owned real property to:

 1. Require agencies to submit an inventory of all real properties to the DOA.

2. Allow the Building Commission or the DOA, with approval of the Building Commission, to offer for sale or lease any state-owned real property unless prohibited by the Wisconsin Constitution, federal law or other specific statutes (The DOA would obtain appraisals for any properties that may be offered for sale and report this information to the Building Commission.);

3. Direct net proceeds from a sale to refund general obligation or revenue bonds;

4. Allow the DOA to attach conditions to a sale or contract that are in the best interest of the state;

5. Allow a co-owning nonstate entity the right of first refusal to purchase the property; and

6. Allow the DOA Secretary to adjust positions and operating budgets of affected agencies.

Transfer of Programs To Different Agencies – To achieve greater efficiencies within state agencies, the transfer and consolidation of the following programs are recommended:

 1. Commercial Construction Site Erosion – Transfer soil erosion control regulation for commercial sites from the DSPS to DNR.

2. Tank and Petroleum Testing — Transfer the Tank and Petroleum Testing program from the DSPS to DATCP, which would combine the program with the Weights and Measures program.

3. Consolidation of the PECFA Program — Transfer positions, expenditure authority and program responsibility for low- and medium-risk petroleum site cleanups from the DSPS to the DNR. The transfer will combine responsibility for all petroleum site cleanups in the DNR.

NAIOP-WI will continue to monitor the state budget process and the various provisions impacting the commercial real estate development industry. If you have questions, please feel free to contact Tom Larson (tlarson@wra.org) at (608) 240-8254.

NAIOP-WI Pursues Special Assessment B-Bond Legislation To Help Finance New Development Projects

One of the top legislative priorities of NAIOP-WI for the 2013-15 legislative session is the passage of legislation to make special assessment b-bonds a more attractive financing tool for economic development. Special Assessment B Bonds are bonds that can be issued by the municipality to finance public improvements for new economic development. The bonds are paid for through special assessments levied against the development or the individual lots or parcels created or sold within the development.

These bonds, however, are seldom used because current law requires the principal portion of each installment payment of the assessments to contain an equal principal payment amount, which puts the highest payments in the early years of the project and the lowest payment in the last years of the project. In the case of a new subdivision, the first yew years of the project are the most risky and many times may not allow adequate time for marketing and sales to develop, thereby putting more financial pressure on the proforma.

To make b bonds more attractive, NAIOP-WI is seeking to change the special assessment law to allow municipalities to use “tailored” principal payment structures for special assessments or, at minimum, level TOTAL principal and interest payments. This would be very similar to most residential mortgages where the property owner makes equal payments during the term of the mortgage, but the principal portion of the payment is lower at the beginning and greater at the end.

This change to the law would the payments associated with b bonds more manageable for new economic development projects without changing the ability of local communities to recover their costs to finance the related infrastructure.

As soon as the drafting of the legislation is complete, NAIOP-WI will be working closely with the League of Wisconsin Municipalities and other economic development groups to pass this legislation into law in the upcoming months.

Mentor: Kevin Kennedy, Director-Asset Management, Northwestern Mutual Real Estate Investments, LLC

Andrew and I have met once so far. Our initial meeting was very good from my perspective. Andrew is a very bright and inquisitive individual and it was interesting sharing even the basics of what each of us do. With both of us having Real Estate Investment backgrounds working for Institutions, it is always insightful to discuss where our approaches to real estate are the same and where we differ. For me, it is a great learning experience to discuss these topics and I look forward to our future meetings. NAIOP has opened a new door for information and knowledge sharing and from just one meeting I can tell it is a great opportunity.

Mentee: Andrew Schoene, Vice President-Commercial Real Estate, BMO Harris Bank

Kevin and I had our first meeting over lunch in the Northwestern Mutual cafeteria. This was my first time enjoying one of those famous Northwestern Mutual “free” lunches and it lived up to the hype. We each spent some time talking about our respective career paths along with a few of our personal interests and hobbies. Kevin has been in a number of different roles throughout his real estate career, and we share similar interests within the field. After lunch, we headed upstairs and Kevin gave me a tour of Northwestern Mutual’s real estate floor. He introduced me to several of his co-workers and we chatted with them about what they are seeing out in the market.

I am looking forward to utilizing Kevin as a mentor in the coming months. I think his perspective will be very valuable given his experience in a number of different roles throughout his career. I am excited for our relationship to continue to develop, and very grateful that Kevin is so willing to share his time and experience with me. I would also like to thank everyone at NAIOP who helps make this program possible.

Bryant, fresh from a meeting with Governor Walker earlier in the day, was a natural mini-bowler.  He was bowling a perfect game through the seventh frame until he grew distracted with conversations about carried interest, sequestration, and wetland mitigation.   One bowler that was not distracted was Tom Irgens, who bowled the high score of the night with a perfect 300 game.  Irgens claimed it was his first time mini-bowling, a claim that was questionable given the fact that he brought his own mini-bowling ball and the Koz’s employees all seemed to know him as “Turkey Tommy”.

In the end, the DL’s enjoyed a couple of games of mini-bowling, ate a lot of pizza and a little salad, and left with a better understanding of the benefits of NAIOP’s Political Action Committee.