Madison’s City Council unanimously supported an additional $11 million in public spending for the downtown Judge Doyle Square development after rising construction costs prompted financial concern from the developer.
If Beitler Real Estate, the Chicago-based developer, does not go through with putting a cap on the new municipal parking garage, the city now has an option that completes the garage and preserves future opportunity for development on the site.
“This would be investment by the city on a publicly owned element,” project manager George Austin said.
The public-private partnership will eventually bring a hotel, apartments, retail and commercial space, a bicycle center and parking on the two blocks to the current site of the Madison Municipal Building and Government East parking garage.
Due to rising construction costs, resulting in an increase from $32 million to $48.5 million for the private component on Block 88, Beitler representatives said they could not afford the apartment project as planned.
Beitler had asked the city to consider funding first-floor retail space, accessory parking and a structural slab, together called the “podium.”
“We don’t believe this is a set up, if you will, that (the developer) is trying to get the city to do something that they otherwise wouldn’t do,” Austin said. “They really are beyond what they can afford.”
Under the resolution, the city would increase the 2018 capital budget by $4.4 million. The $11 million is split between the $4.4 million and $6.6 million in funds that were not expended from what was originally budgeted for the new municipal garage. The city is now investing a total of $50.4 million into the project.
The Council voted 18-0 with Alds. David Ahrens, District 15, and Larry Palm, District 12, absent from the meeting. Several alders expressed disappointment and frustration with the situation.
"I do feel quite cornered with this option and don't feel like we've been left with much choice here," said Ald. Shiva Bidar, District 5.
In the adopted resolution, Ald. Rebecca Kemble, District 18, added language that directs the city’s negotiating team to seek a significantly reduced time for the start of the private development on the two blocks.
“The crux of this is that we made a mistake in the development agreement by giving such a large window,” Kemble said.
Under the current development agreement, Beitler has up to three years from the time the city completes the public garage to close financing on all of the private development project elements, meaning that construction can begin.
In addition, Ald. Sara Eskrich, District 13, called for the negotiating team to work toward removing restrictions regarding the city communicating with other potential developers.
“I do feel it’s important that we have further accountability and opportunity to work with other developers should this development not continue to perform for us as we are seeing right now,” Eskrich said.
Despite the concern about the developer, Ald. Mike Verveer, District 4, sought to assure the Council. He relayed a conversation with the developer that they have “every intention of proceeding as soon as possible.”
“They wanted me to communicate to all of you that they are very much in this,” Verveer said.