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OAK CREEK, WI-The city approved resolutions Tuesday night for the construction of an 858,000-square-foot mail processing center for the US Postal Service. The new building, which will handle mail for most of southern Wisconsin, will replace an almost 40-year-old facility in Downtown Milwaukee. There’s talk in the commercial real estate community that the older building property, at the intersection of the Milwaukee and Menomonee rivers, could be redeveloped into a mixed-use facility with a residential component.

The Oak Creek Common Council approved the new project at its meeting Tuesday. The government agency will pay the city $200,000 for 20 acres, and will pay an undisclosed amount to the Van Beck family for an adjacent 44 acres. The postal service will also pay $1.4 million, says city administrator Pat DeGrave, in lieu of taxes. “It’s a community impact payment,” he tells GlobeSt.com. “The post office doesn’t pay property taxes, so they’re giving us this revenue. We’re going to put the money into an investment vehicle and use the interest much like we would taxes on the property.”

DeGrave says the 2,200 jobs that will come with the new building are welcome, especially with the closing of other plants in the area. Shuttered facilities in the area include a one-million-square-foot Delphi production plant. “Some people in the area are worried about noise and traffic at the postal facility, but we wanted to keep these jobs in the Milwaukee area.”

The postal service will also help pay for upgrades and expansions roads and infrastructure to the area, at the intersection of Pennsylvania and East College avenues. The building will be constructed starting in late 2009 or early 2010, and move in would take place by 2012.

He says the 941,000-square-foot current processing plant in Milwaukee is an aging structure that the government couldn’t justify using anymore. The Postal Service leases the property from a private investment group, whic reportedly bought the structure last year for $16 million. The owners could not be reached for comment. “From what I hear, the multistory property doesn’t suit their purpose anymore, and structural pillars make it impossible to put in automation.”

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