$6 bid shows the value of recycling

City and company both benefit from buildings' demolition

Feb. 21, 2011

West Allis — Last week, West Allis served as a perfect example of how smart it is to shop around.

The city wants to demolish the huge former Milwaukee Gray Iron foundry and the nearby former Mykonos restaurant in the redevelopment area near 84th and Greenfield Avenue. While one demolition company offered to do the job for $714,000, another offered to actually pay the city $6 to do it.

It's no surprise which company got the job.

Midwest Rail & Dismantling Inc., of West Milwaukee, is betting that the price of salvaged steel will remain high and the company will make a profit on recycling from its $6 investment.

Both the foundry and previously vacated restaurant were left blighted in the floods of June 2008. West Allis received a $4.8 million grant under the Community Development Block Grant Emergency Assistance Program to buy and raze the structures.

Profitable recycling prices

Taxpayers could never have gotten such a break on demolition costs just a few years ago when salvage steel prices were scraping along at only about $100 a ton. Since then, though, prices have risen to the current $350 to $400 a ton, said Bruce Rodgers, sales manager for Midwest Rail.

These higher prices for salvaged steel are encouraging demolition companies to actually pay building owners to tear structures down, he said.

"It's not uncommon in our industry," Rodgers said.

In fact, when it was decided that a building at the site of the former Tower Automotive in Milwaukee had to go, the demolition contractor that got the job actually paid about $350,000 for the chance to do it, Rodgers said.

Because of the cost of disposing of debris, demolition companies have recycled for years.

"We were 'green' before 'green' was the trend," Rodgers said.

West Allis officials actually watch the price of salvaged steel to time any demolition jobs it needs done, said John Stibal, the city's development department director.

One demolition at 65th Street and Greenfield Avenue was 95 percent recycled, he said, saving taxpayers money and earning the demolition company some recycling revenue.

Foundry's hidden treasure

At the old foundry, it is the steel in the ribs holding up the building that are the gold at the end of the rainbow for Midwest, Rodgers said.

Those old structural steel beams will be melted down and probably reappear holding up brand new buildings, Rodgers said.

The foundry will be the concrete walls, floors and foundation will also be recycled. They will be crushed into the size of gravel and used to level the site for the new construction. Any crushed concrete left over will be sold to roadwork companies for new road beds, Rodgers said.

The recycling prices are expected to yield a profit, even though the demolition company will not see a penny from the restaurant debris that all have to be taken off-site. There also will be additional demolition costs because of asbestos in the foundry, Rodgers said.

Arising from the rubble

By May or June, the former foundry and restaurant should be down to make room for a $20 million redevelopment plan that might get under way this summer. The old restaurant will go down first and then the foundry.

"We're excited to be on the front end of making things ready for something better to happen," Rodgers said.

West Allis' mayor is also excited by the prospect.

"We are in a unique position to take blighted properties and turn them into a business district which will create over 100 new jobs for our community," Mayor Dan Devine said in a press release.

The redevelopment plan the city has in mind includes a hotel, neighborhood grocery store and offices. Housing is unlikely to remain part of the plan, Stibal said.

Marketable plans

With a choice of developers for each element of the plan and some developers willing to take on all three elements, the city finds itself in a great position, Stibal said.

"Fortunately we are in the perfect storm," he said.

For one thing, the location is attractive to developers.

The site overlooks the Wisconsin State Fair Park and offers a central location next to family neighborhoods with more than 17,000 vehicles per day going through the intersection, said Gerald Matter, chairman of the West Allis Community Development Authority.

Not only are developers interested, Stibal said, but they want to develop different things on the nearly eight-acre site, which also is good for the city.

Officials are now looking for the best deal it can get, said Patrick Schloss, community development manager.

Their top choice would be developers who will be able to build this year, Schloss said. Of primary importance, however, is that they have the financial backing to pull off the development, he said.

Development plans will need many approvals, including the blessings of the West Allis Common Council, the Plan Commission and the Community Development Authority.

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