If you're just tuning in to the Edgewater hotel soap opera as the City Council prepares to decide (again) whether to commit $16 million in public financing, here's what you need to know.
At this point pretty much everyone agrees that a number of exceptions to city rules, policies and processes were made for the $90.5 million project to renovate the Lake Mendota hotel. (Though I did get into a discussion with Ald. Mark Clear, a key Edgewater backer, about whether the term "special treatment" was fair to use.)
What still is at dispute is whether this unusual deal involving $16 million in public assistance for a luxury hotel will be worth it.
Developer Bob Dunn, president of Hammes Company, a multibillion-dollar development firm, has been awarded very close to the amount he has been asking for in public assistance — after more hassle than he had hoped for, however — from that very first day in July 2008, when he started meeting with then-Mayor Dave Cieslewicz to broach what soon became their shared vision and campaign for a new "destination" hotel.
But what's in it for the rest of us?
That's the uncomfortable question alders will have to answer during budget deliberations next week, thanks to Mayor Paul Soglin's move to slash the $16 million in tax incremental financing promised in 2010 to $3.3 million in his proposed budget. Soglin says the city can no longer afford to give the redevelopment project more than what it would warrant if normal city TIF policy had been followed. (The city's "50 percent rule" warns against giving a subsidy that equals more than 50 percent of the tax increment, or additional property taxes, the project is expected to generate. The new increment is used to pay back the city's initial investment. In the case of the Edgewater, $16 million is more than 240 percent of the Edgewater's projected increment.)
Project backers say the city can't afford not to do the project, its benefits are so fantastic. (We're talking more than purely financial benefits here, since the $90.5 million project will cost more than twice what it will be worth when it is built.) This is pretty much the argument that Cieslewicz made when I called him a few weeks ago to ask him to comment on reports that city staff was under terrific pressure to "make it work," in the words of TIF coordinator Joe Gromacki.
"Well, hell, yes, I hope I did," Cieslewicz told me when I asked him if he had pressured staff into pushing the deal through. "I don't know what to say to that. I supported the project and I really wanted to get it done."
This project, Cieslewicz says, is "beautiful" and desperately needed to shore up the city's anemic tax base and economy. Likewise, Clear says such forward thinking is needed right now, and that critics including the Madison School Board, which voted against funding for the project fearing it would take tax dollars away from city schools, missed the point.
"If you are only thinking about short term gain, TIF is a bad deal," Clear concedes, talking about the Edgewater specifically. "But this is a long-term investment. The increase in the tax base will last forever."
Supporters, who include some of the city's movers and shakers in the business community as well as union members anxious to create jobs for unemployed workers, say the project will transform a dingy old hotel into a hip hangout. "Destination" was the word used at the first meeting between Dunn and Cieslewicz on July 30, 2008, months before many city staff and certainly the rest of us knew there was such a project in the works.
The $16 million in TIF, project supporters say, will help pay for what they call a "grand staircase" to the lake, a public terrace, and an ice skating rink, making this a place even more exciting than Monona Terrace and Memorial Union. Dunn, whose family lives in Madison, says he has a personal stake in making this project define Madison the way Rockefeller Center defines New York City. "It's going to be a great use of that space," agrees Downtown Madison Inc. President Susan Schmitz.
But all this is just more of what has been a history of hype, critics say, claiming that the Edgewater has been a rip-off for city taxpayers since 1965, when the city relinquished its ownership of the end of Wisconsin Avenue to the hotel for a dollar and a promise to preserve public access and views of the lake. "The roof of the addition will be built as a public promenade, with entertainment facilities available," a 1972 article in the Wisconsin State Journal promised.
What we got instead was an asphalt rooftop littered with cigarette butts few people would want to hang out on even if they knew about it or could find it. Even if the much vaunted public terrace ends up being nicer, critics say it will often be closed to the public for private hotel functions. And they question its price tag. "Think of all the ice rinks I could build for $16 million," Soglin said during a recent interview.
As for the argument that the project will generate new jobs, critics say those benefits have been oversold. Several years ago both Dunn and Cieslewicz were regularly claiming that up to 1,000 new construction jobs would be created by the project, but as Capital Times editor emeritus Dave Zweifel reported after talking with two executives of prominent construction companies, the number is probably much closer to 200. Cieslewicz now refers to "hundreds" of jobs while estimates from Dunn and his contractor are around 700.
"The numbers have been way overblown," says Ald. Marsha Rummel. Cieslewicz "had to back down but then nobody ever really pinned it down." I finally got Steve Breitlow, business manager with the Plumbers Union Local 75, to estimate that maybe 500 jobs might be generated in a year, but he wasn't sure of that number, either.
Critics say the number of permanent hotel jobs to be generated by the project has also been inflated. But Breitlow, one of the union negotiators who has been working with Dunn, says the real "problem here is that the city is holding this up yet again" while workers in trades face 30 percent unemployment. "It doesn't make a difference if it was 300 jobs or 500 jobs or even 100," Breitlow says. "It's more than we have right now while this is waiting to be approved."
It will take a simple majority of 11 council members to restore the TIF funds during next week's budget deliberations, which would toss this hot potato right back to Soglin. Then he would need to decide if he wants to veto the entire budget over the Edgewater. Stay tuned.