Story originally printed in the La Crosse Tribune or online at www.lacrossetribune.com

Published - Sunday, May 18, 2008

La Crosse's last best hope: Former oil tank farm a developer's dream

An aerial view of the former Mobil Oil site on Copeland Ave. The new Three Rivers Plaza with Festival Foods is in the upper right. Erik Daily

By SAMANTHA MARCUS / La Crosse Tribune

Land grabs and legal entanglements have choked off grand plans for the 60 acres of blighted waterfront just north of downtown La Crosse.

Redeveloping this derelict real estate has, for more than two decades, been an elusive dream.

And a lopsided sense of urgency pits city officials against business leaders, who say that each year the land remains vacant represents another wasted opportunity.

A former 26-acre oil tank farm is billed as the landlocked city’s last, best hope for large-scale development.

“Because of its size and location, it’s going to control the ... destiny of La Crosse,” said Bud Miyamoto, executive director of Downtown Mainstreet Inc.

“But here we are, still to this day, with a large area of economic blight in the heart of the city.”

The City Vision 2020 plan calls the Mobil Oil property an immediate priority, “a once-in-a-lifetime opportunity to create an entire new and comprehensively planned neighborhood within walking distance from downtown.”

For a virtual tour of the site, click here: http://www.lacrossenet.com/virtual/rivervalley/MobileOilSite/Mobile_Oil_Site_View_1.htm

The new Three Rivers Plaza on the opposite side of Copeland Avenue provides a glimpse of what might be possible on the waterfront land to the west — $100 million in business, residential, festival and park space.

The hurdles are acute — though not insurmountable — given the lingering contamination and acquisition pains.

The Patros steel estate defiantly holds onto the last privately owned parcels, and the city’s attention is turned to a rival site.

“The city wants to control everything it can get its hands on,” said Willy Patros. “But you cannot just come in and tell a man what he can do with his property.”

Seventy years ago, the city sold off the land to Wadhams Oil and Grease Co. with the condition it fill in the wetlands where the Mississippi, La Crosse and Black rivers meet.

It has taken a decade to move out ExxonMobil Oil Corp. and reclaim the land. Community leaders don’t want another 10 years to pass before the first shovel is in the ground.

After years of steady interest from developers, Miyamoto fears the site’s potential may fall victim to a sluggish economy and tightened bank loans.

“I’m worried that 10 years from now we’re going to be having this same conversation,” said Miyamoto.

Creating customers

Three Rivers developer Paul Borsheim said when his team picked a site for that project and recruited tenants, the timing for Mobil Oil redevelopment was a real consideration.

“When we were starting Three Rivers 2½ years ago, the intent from the city was that in about a year to two years things would start moving,” Borsheim said. “It was critical for some of the tenants that there would be more development in this area and not just on one side of the road.”

Borsheim’s North Side Development is pushing on with a 92-room extended stay hotel just north of Three Rivers. Two sites beyond that wait in the wings.

“These people made this investment believing something would happen across the street to enhance their investment,” Miyamoto said.

More people and rooftops create a market for the existing and future retail and service ventures.

It can’t happen soon enough, said Dave Skogen, owner of the Festival Foods store anchoring the mixed-use Three Rivers Plaza.

“When you talk about potential retail, it’s another reason to come to that area of La Crosse to shop. We become their grocery store,” he said. “But it’s more than just the potential business for us. It’s the cosmetic appearance of the gateway to La Crosse."

The former tank farm truly is a detraction and eyesore for the 30,000 to 35,000 people who traverse Copeland Avenue daily, Borsheim said.

‘What are we waiting for?’

There’s no question of need and no question of outside interest.

“Yet here is 2008, and nothing’s happened,” said Miyamoto. “What are we waiting for?”

An oversize City Vision 2020 map adorns a wall in Miyamoto’s downtown office, and a dozen colorful site plans are floating around the planning department at City Hall.

But as Miyamoto passionately promotes the former Mobil Oil site’s potential, City Planning Director Larry Kirch puts the final touches on a term agreement for the former Holiday Inn site on Barron Island.

The Redevelopment Authority has said the Park Plaza site is its first priority, Kirch said.

“It’s the gateway from Minnesota and a highly visible site right on the water,” he said. “We can’t do two $90 million projects at the same time. We need to pick one and go with it. I understand people are chomping at the bit to see something happen there, but Mobil Oil’s not going anywhere.”

But the on-again, off-again Barron Island waterfront development, flanked by La Crosse and La Crescent, Minn., doesn’t seem to have much life in it.

“That one seems to get hot and cold, so I guess I’m not sure why the city couldn’t work on both of these,” said Borsheim.

The planning department essentially is just four people, said Mayor Mark Johnsrud, noting the county is eager to recoup its out-of-pocket costs for buying and cleaning up Park Plaza.

“If we had the entire island under our control, we would be able to market it,” he said, but local developer Jay Hoeschler still owns a key strip of waterfront.

If that’s the case, the city’s energy is misplaced, said Miyamoto.

“Yeah, Park Plaza is a dynamite place, but you can’t tell me that can even compare to potential for economic impact of Mobil Oil,” he said.

The Patros property

“There’s a lot of pressure to do something, to move forward,” Kirch said. “But at the same time, I don’t think it should be piecemeal.”

The 26-acre former bulk oil terminal represents less than half the future project scope that encompasses a 8.3-acre former cement plant, 12 acres from Patros Steel Supply and 15 acres of city-owned wetlands.

La Crosse amicably acquired Western Wisconsin Ready-mix land for about $25,000. The Patros property, meanwhile, has been at the center of a quarter century-long battle between the Patros estate and City Hall.

“Nothing can happen until we acquire Patros,” said Kirch.

Willy Patros, one of five heirs, accuses the city of scaring off other developers and trying to buy the property on the cheap.

“They’ve just done everything in their power to discourage people with the wherewithal to develop that property and create tax base,” he said.

Patros said he’d expect the city to match offers from private developers — most recently $5 million.

“But the city doesn’t have any money. That’s why they want to condemn it,” he said.

“Why should they take my property and buy it at a reduced price? They’ve already devalued the property by doing everything they can to keep me from trying to do something down there,” he added.

Kirch said the estate could reap the tax advantages of a friendly condemnation. The city will proceed along those lines, he said, while trying to avoid court by negotiating a purchase price with the family’s legal counsel.

The Patroses’ attorney provided a number to jump-start negotiations, Kirch said, and the city has made a tentative counteroffer.

Patros denies his camp ever made the city an offer.

The city only has about $400,000 on hand, Kirch said, and the balance would be incorporated into a tax increment finance district.

The base value of the TIF district likely will be just a few million dollars, Kirch said, arguing there’s not much value in the land.

City planners contend flood plain and floodway restrictions dictate just three of the 12 acres can be developed.

“The property’s not worth $10 million,” said Patros, “but it’s worth a lot more than the city’s willing to pay for it.”

He said the city appraised his 11 acres plus 2,200 feet of shoreline for about $700,000.

“One time (Larry Kirch) told me that my property was only worth $220,000. That was seven or eight years ago. I hung up on him. That was probably the last time I spoke to him at any length,” Patros said.

The co-owner of Patros Steel Supply said the land would have long been developed if not for City Hall’s greed.

“They’ve tried to say that it’s blighted property,” Patros said. “But they’ve turned it into blighted property by not letting us develop it.”

The city doesn’t want private sector control over the waterfront, Johnsrud said.

“The only way we’re going to move forward is to acquire the Patros property and start a remediation plan,” the mayor said.

Several visions for the site

The Tribune asked several community and business leaders — all champions in some way or another of the waterfront property known as the Mobil Oil site — what is possible, and what is likely on this piece of land roughly one-third the size of downtown La Crosse. Here’s what they said:

Larry Kirch

Director of Planning, city of La Crosse

‘Public input’

The city planner endorses an aggressive quest for public input.

“I think the community should have a say-so, because it’s their money that’s been used to buy it,” said Larry Kirch.

The project should fit with the historic downtown without competing with it as a retail and office park, he noted.

Of existing designs, Kirch prefers the City Vision 2020 plan that calls for a business park, single-family neighborhood and apartments and condominiums overlooking a park setting.

Others call for a series of baseball diamonds and a swimming pool.

The strip along Copeland Avenue would be designated for commercial development as a buffer from the busy causeway, Kirch said.

Several projects introduced by private developers were out of step with the site limitations and community vision, he said.

“The die is cast on a lot of that land because of the flood plain and wetland status,” he said. Just 32 of the almost 60 acres can reasonably be expected to be developed.

Twin towers, a casino and a mini-mall were “nice ideas,” he said, but ultimately rejected.

“Let’s come up with a plan that everybody can live with, and then shop that out to developers as opposed to letting developers say what they want to do,” he said.

Paul Borsheim

Developer, Three Rivers Plaza

‘Setting the bar’

Paul Borsheim pumped millions into developing the east side of Copeland Avenue.

“We wanted to set the bar for the Mobil site — the architecture and urban design standards that we’re incorporating here,” Borsheim said.

The North Side Development builder said he has seen more than half a dozen sketches for the property, mixed-use being the presiding theme.

While he doesn’t consider single-family homes the best use for the property, the land may be prime for senior citizen housing as well as other high-density uses.

Borsheim said offices, restaurants and a hotel all would fit with the urban image, despite his own plans for a 92-room extended stay hotel across Copeland Avenue.

“One thing I don’t want to see there is taking businesses from other parts of town and relocating them there,” he said.

The public shoreline demands a marina, Borsheim said, but he has reservations about creating new festival grounds.

“Wherever you put them, they need to get enough use,” he said. “And the other issue would be parking. If you’re going to put festival grounds next to residential development, it’s going to be difficult to sell condos.”

Borsheim appreciates the need to get public input on the future of the key site, but finding a balance between that and what makes business sense is going to be a challenge.

“If it doesn’t make sense business-wise, no one’s going to do that development,” he said.

Mark Johnsrud

La Crosse MAYOR

‘Patience’

Mayor Mark Johnsrud is confident in 10 years the site will show signs of progress.

It’s not going to happen all at once, he cautioned. The 60-acre development likely will be built out in phases, starting with the Copeland Avenue commercial corridor.

“In this economic climate, it’s going to be hard to get several multi-million-dollar buildings built at one time,” he said.

The groundbreaking phase still is years away, Johnsrud said.

Though the city’s condemnation of the ExxonMobil Oil Corp. property was upheld in a series of lawsuits, Johnsrud said Exxon vowed to drag its feet if the city pursues anything other than industrial uses to limit its own liability.

“They’re kind of holding that over our head,” he said.

Once cleared, an extensive city park would anchor the housing, office and retail space.

He looks forward to the riverwalk connecting the site with Riverside Park.

And he said he expects high demand for the office space, with park and river views.

“I don’t think we should be in a rush,” Johnsrud said. “For the highest and best use, patience is the best thing.”

Dave Clements

Executive director, La Crosse Area Convention and Visitors Bureau

‘Public and private’

Dave Clements said he doesn’t know whether some of his ideas make financial or logistical sense.

But finances aside, the tourism chief expects a healthy balance of public and private uses.

“I think the waterfront land needs to be public land. The shoreline needs to belong to the public,” he said.

Like most, Clements wants public boat docks and an extension of the riverwalk from Riverside Park.

Recognizing the possible environmental limitations, he suggested dredging out some of the wetlands for a recreational lake for fishing and kayaking.

Festival grounds also would tie in nicely with a public amphitheater, he said of his ideal vision. And the confluence of the three rivers would be the perfect place to house the city’s river histories under one roof. “We’ve got this great river history that is sort of scattered in little collections around town,” he said.

“But there’s got to be residential or commercial development that generates property taxes that, if nothing else, pays for the infrastructure that needs to go in there,” he said.

The tourism chief said realistically the property likely will be a combination of shopping, restaurants and owner-occupied, high-density housing.

“You don’t want to do single-family homes out there, from my perspective. It’s got to be a high level of density because there’s so little space, and you’ve got to take advantage of it. You’ve got to build up,” he said.

Bud Miyamoto

Executive director, Downtown Mainstreet Inc.

‘No. 1 project’

Just a week ago, Bud Miyamoto escorted an out-of-town developer through the Mobil Oil site.

“I spent three quarters of the day showing him property around the downtown. The last site I drove by was the Mobil Oil site, and he could not believe that this property was still sitting vacant,” said Miyamoto, executive director of Downtown Mainstreet Inc.

The man intends to come back to tour that locale with some colleagues, he said.

“There are developers that would go crazy over a 65-acre development at the river,” he said. “This is the No. 1-ranked project in my mind.”

It’s not just developers and taxpayers that have something to gain. Travelers using the Mississippi River complain there’s no place to dock, he said.

The property holds potential for the best of all worlds, he said. “We can have green space, we can have trails, we can have a boat harbor,” said Miyamoto.

But even more important, there’s a chance to create tax base through high-end condominiums, single-family dwellings and commercial development, he said.

“With $260 million invested in the downtown, it has become one of the most successful redevelopments of its kind,” Miyamoto said, and the waterfront property just north of downtown should be an extension of that effort.

MOBIL OIL PROPERTY HISTORY

1922 — A group of local investors start Perfect Oil, an affiliate of Milwaukee-based Wadhams Oil and Grease Corp.

1930 — Socony (Standard Oil Co. of New York) acquires Perfect Oil.

1938 — The La Crosse Common Council grants the oil company an option of 26 acres of city-owned land west of the causeway.

1966 — Socony Mobil Oil Co. becomes simply Mobil Oil Corp.

1995 — The land is decommissioned for oil storage and put up for sale.

1996 — Local developer Deak Swanson offers $1.4 million for the former oil tank farm for warehousing and manufacturing.

1997 — La Crosse Common Council votes to negotiate for purchase of Mobil Oil site, but the oil company rejects the city’s offer. Mobil Oil and Swanson agree on a purchase price. After city threatens condemnation, Swanson and city reach a compromise — which ultimately crumbles — to share the land.

1998 — Swanson abandons plans for site.

1999 — Low Motor Co. and McDowellBurchell Auto Supply Inc. offer to buy the front portion of the site from the city, if the city buys or condemns the land. Exxon and Mobil merge.

2000 — Ho Chunk Nation considers Mobil Oil site for a casino. La Crosse County residents voted overwhelmingly against allowing a casino.

2001 — Onalaska developer Jon Sopher proposes a $20 million office complex. La Crosse Redevelopment Authority sends ExxonMobil Oil Corp. a condemnation notice. Common Council approves

$1.1 million to purchase the site.

2002 — Port La Crosse LLC developer Tom Metcalfe approaches city about building a hotel, condominiums, restaurants and bar.

2003 — City initiates condemnation proceedings, which are challenged by ExxonMobil.

2004 — City wins suit over ExxonMobile, which wanted development restricted to industrial uses to limit its own liability.

2005 — City wins condemnation appeal.

La Crosse Public Library Archives and the La Crosse Tribune

Samantha Marcus can be reached at (608) 791-8220 or smarcus@lacrossetribune.com.