Throughout its nearly eight-year history under two mayoral administrations, the Judge Doyle Square redevelopment project has morphed in its vision from being a train station to a public market to a downtown headquarters for the biotech firm Exact Sciences.
In its current iteration, the city is partnering with Chicago-based Beitler Real Estate to replace the aging municipal Government East Garage on Block 105 and bring a hotel, apartments and retail and commercial space to the block that currently holds the Madison Municipal Building on Block 88 downtown.
Project manager George Austin said the project goals — putting two parcels “lying fallow” back on the tax roll, replacing the municipal garage, building a hotel, creating a pedestrian-friendly environment on Pinckney Street and connecting the Capitol to Monona Terrace — have remained true.
Likewise, debate on how best to accomplish those goals have remained a constant fixture of the project.
“While there was unanimity in the value of developing these two blocks for the benefit of the city, there has always been diverse opinions about what the best way to do that is,” Austin said.
The development faces a critical juncture on Tuesday, Jan. 8, when the City Council is expected to vote on reconsidering a resolution that would authorize the city to pay Beitler $600,000 as a way to settle a dispute over a portion of the project. In exchange for the payment, the city would own and retain development rights to the podium — the part of the project located above the new parking garage that includes a structural slab, first-floor retail and two levels of private parking.
This would be the third time the City Council considers the settlement. Ald. Mike Verveer, District 4, said the ongoing dispute is wearying.
“Not only the City Council but for the community as a whole, there’s a sense of Judge Doyle fatigue,” Verveer said.
‘A straightforward proposal’
When the city approved Beitler’s project in 2016, it followed Exact Sciences unexpectedly dropping out of the project and another round of proposals with Beitler, Urban Land Interests, JDS Development and Vermilion Enterprises.
Beitler offered a project that brought a new hotel and replacement municipal garage facility with no need for tax incremental financing or other city assistance.
“It was a straightforward proposal and I think following the more complicated real estate projects we had worked to put together ... the right time and place,” Austin said. “It seemed straightforward and simple in comparison and at a relatively low public cost.”
At this point, the project is not as simple as it once appeared. Managing construction phasing of two city blocks is complicated because there is often a drawn out time period before work begins, making it sensitive to economic fluctuations affecting construction costs. In addition, there is now the complication of the disagreement between Beitler and the city.
“The dispute has turned into a unique element that I’ve not experienced before in my career, although it is not rare to see real estate development disputes develop among partners in the big picture,” Austin said.
Complications arose when Beitler informed the city in January 2018 that the cost of constructing the podium was out of their budget. This led to the city’s decision to pay $11 million for the podium to ensure its viability as a future development site and make sure the public ramp would not close in the future.
“The idea is it’s an asset. We’re not giving money away to somebody else,” Austin said. “We were actually taking over a responsibility that was in the city’s interest.”
In response to the city’s decision, Beitler sued the city, arguing that Madison “unilaterally seized” this part of the project. The developer later dropped the lawsuit, but the action has cast a pall over the partnership.
City Attorney Michael May said in a statement Nov. 16 that the benefit of pursuing the settlement is that it “buys peace” and certainty.
Under the resolution, Beitler would transfer development rights and ownership of the podium in exchange for the additional funds.
If approved, the resolution would prevent a delay between the city completing construction of the new garage and the podium above it, which will serve as the base for a nine-story private apartment complex.
In addition, the amended resolution stipulates an accelerated timeline for Beitler to start construction on the hotel. Under the amended development agreement, Beitler would begin construction on the hotel first and start construction 18 months after completion of the parking ramp and podium.
This effectively changes the required start date for hotel construction from November 2022 to May 2021.
The amended resolution also allows the city to hold off on demolishing the current parking garage and does not require the city to restore the site before handing it off to the developer, resulting in a cost savings of about $700,000, according to city estimates.
Verveer said it is important that the City Council approve the agreement so that the city can seamlessly continue building the retail and above ground parking without delay and allow the new parking garage to open on time. The Government East parking garage remains open to the public.
“We don't want this cloud hanging over our podium construction,” Verveer said.
On Jan. 8, the City Council will first vote to reconsider the action from its Nov. 13 meeting. If that motion passes, which is expected, the council will proceed with deliberations on the resolution, which requires 11 votes to pass.
In November, Alds. Barbara Harrington-McKinney, District 1; Matt Phair, District 20; Allen Arntsen, District 13; Keith Furman, District 19; and Verveer, District 4, changed their votes from a meeting in October and did not support the amended development agreement. Verveer’s vote change was to make him eligible to call for reconsideration.
Furman said he previously voted for the $600,000 deal but was not disappointed when it failed to gain the necessary votes for approval. He said he plans to vote against the payment.
“I definitely want Beitler to succeed, but that’s going to take Beitler doing their work to succeed,” Furman said. “As a city, I think we’ve done enough to make sure we’re serious.”
Mayor Paul Soglin has previously expressed confidence in Beitler to follow through with the project. In October, he said “there’s no question” that the developer wants to continue. Likewise, Verveer remains optimistic about the project.
Wanting to dispel some miscommunication about the development, Austin reiterated that the project is not on hold.
“The project has not stopped,” Austin said. “It’s moving forward.”
Though the project may not be as simple, Austin said it remains relatively straightforward. The public components of the project are forging ahead, are on time and expected to be on budget. The municipal ramp is on schedule to be occupied in 2019 and two areas that are currently off the tax roll will be created as new development sites in 2019.
“The public piece of this has gone extraordinarily well,” Austin said. “The uncertainty is whether or not the private pieces as envisioned in the development agreement in 2016 will actually happen.”