An effort to resolve a dispute between the city of Madison and Chicago-based Beitler Real Estate Services over the Judge Doyle Square project failed to gain approval from the City Council Tuesday night.
Under the resolution, developer Beitler Real Estate Services would have transferred development rights and ownership of retail space, private parking and a structural component — collectively called the podium — on the block that holds the Madison Municipal Building (Block 88) to the city in exchange for a $600,000 payment.
Judge Doyle Square project manager George Austin said the funding is needed to keep the project moving forward in a timely manner.
“What’s before you is a function of the give and take between the city and the developer,” Austin said.
The original development agreement does not allow the city to build the podium, and Austin said the original price offered by the developer was much higher.
Alds. Marsha Rummel, District 6; Paul Skidmore, District 9; Ledell Zellers, District 2; David Ahrens, District 15, Amanda Hall, District 3; Rebecca Kemble, District 18; Arvina Martin, District 11; and Larry Palm, District 12, voted against the payment.
Ald. David Ahrens, District 15, said it is time to “cut our losses.” He proposed an amendment that ultimately failed, which would have required Beitler to refund the city the $600,000 if the developer did not begin construction on Block 105 within three months.
“We stand to lose tremendous amounts of money with someone who may not be interested in building anything,” Ahrens said.
The motion, which required 11 votes for approval, failed on a 10 to 8 vote. Alds. Shiva Bidar, District 5; and Steve King, District 7; were not at the meeting during the vote.
Those who were in favor of the agreement argued that the resolution is a way to resolve an ongoing dispute over who has the right to develop the podium.
“It’s the cost of doing business,” Ald. Mike Verveer, District 4, said.
Verveer said it is likely the resolution will be reconsidered.
The city is responsible for building a new public parking garage on Block 88 and the podium above it, which will serve as the base for a nine-story apartment complex that Beitler will build.
In May, the City Council approved an additional $11 million after the developer said the apartment component of the project was getting too expensive. In a lawsuit filed in July and later dropped, Beitler claimed that the city “unilaterally seized” the podium.
Beitler also plans to develop two towers, which will include apartments, a hotel and retail space, on the block that holds the current parking garage on Block 105.
“The contention by the developer is that by the city taking over the podium and extending construction of the municipal garage by about two months ... that that delays their ability to start construction on Block 105,” Austin said.
The major public-private partnership between the city and Beitler will eventually bring more hotel rooms downtown to support the Monona Terrace Convention Center and replace the aging public parking ramp with an underground facility.
Mayor Paul Soglin said the city’s “major objective” is to get a hotel built. If the city does not adopt the resolution, Soglin said it is likely the city would be engaged in litigation for years.
“It’s my judgement that we are at a crossroads. We have an objective which is to complete a hotel on that site,” Soglin said. “Yes, there is a risk involving the $600,000, but there is a greater risk in going down the other path, both in terms of cost, in terms of not having a hotel and the impact on Monona Terrace.”
Soglin said Beitler has not wavered from their commitment to building a hotel. If Beitler’s plans fall through for the private construction on top of the new municipal garage, Soglin said the city could pursue another developer.
The resolution would have also approved a room block agreement for Monona Terrace in the approximately 250-room Hilton Embassy Suites hotel to be built on the Government East block. The agreement would reserve a minimum block of 210 rooms for convention center events booked at Monona Terrace at least one year in advance.