Pending a City Council vote, Madison will no longer be working with Gebhardt Development to build affordable housing as a part of the Judge Doyle Square project and will pursue work with another Madison-based developer.
In a special meeting Monday, the city Finance Committee heard from Gebhardt Development and discussed the project in closed session. Ultimately, the committee decided to instead pursue negotiations with Stone House Development, which responded to the city’s original request for proposal along with Gebhardt and the Mandel Group.
“The Finance Committee has voted to terminate negotiations with Gebhardt and open negotiations with Stone House according to the original staff recommendation,” Mayor Satya Rhodes-Conway said. “Our negotiation team will move forward with that direction.”
The City Council is expected to vote on a resolution at its meeting Sept. 3 that would end negotiations with Gebhardt and open them with Stone House.
Madison was pursuing a development agreement with Gebhardt Development to build a housing structure on top of ground-level commercial space and private parking — collectively called the podium — that is now taking form above the underground garage on the block that includes the Madison Municipal Building.
Ald. Mike Verveer, District 4, said Gebhardt's proposal was "too ambitious." It also would have required costly and time-consuming modifications to the podium.
"When all was said and done, there was consensus tonight that we needed to move on to the more realistic proposal," Verveer said.
Stone House Development was among three applicants who responded to the city’s request for developers. It's proposal also secured a recommendation from city staff.
“We believe that Stone House balanced the delivery of the workforce housing with the financial return to the city and provided the most straightforward development framework,” project manager George Austin said in May.
Stone House proposed building a 159-unit apartment project and 7,000 square feet of retail space in the podium would cost an estimated $40 million. Occupancy in 37 units would be restricted to renters with household incomes at or below 80% of the Dane County median income.
Stone House is also requesting $1.2 million from the city in affordable housing funds and proposing to pay the city $5 million to purchase the air rights and the podium.
Proposals were required to include an element of workforce housing. The city prioritized projects that maximize the tax base, have a straightforward development framework and utilize sustainability concepts in the design, construction and operation of the building.
Gebhardt’s ambitious proposal concerned the Finance Committee because it proposed to separate affordable units from those that would be market rate. However, the developer said dispersing the units throughout the structure is complicated for purposes of financing and ownership.
CEO and founder Otto Gebhardt said Monday that “if it can be done, we’re absolutely open to doing it.”
“We’re totally committed to this project,” Gebhardt said. “We’re putting all of our resources into getting this done.”
In its original proposal, Gebhardt Development proposed separating 78 affordable housing units — reserved for residents making salaries at or below 60% of the county median income — from the rest of the 118 market rate units.
After committee members objected to separating the units by income restrictions, the Finance Committee asked Gebhardt Development to create proposals for dispersing the subsidized units among the market-rate apartments.
Gebhardt responded with three options that scattered the units. The proposals affected the number of affordable units available in the development and the cost, increasing it by as much as $2.4 million.
The developer offered two new proposals that would return to the original plan of locating the affordable housing component on three contiguous floors in a single condominium owned by Gebhardt.
The proposals would have also decreased the number of affordable units to 65 or 71 and eliminate a floor of office space. Michael Carter, business director for Gebhardt Development, said the affordable units would not be built differently than the market rate units.
“Our building will include like for like finishes for each unit type,” Carter said in Gebhardt’s community development plan. “For example, if you live in a one-bedroom affordable unit your finishes will be the same as your neighbors living in a market rate one-bedroom.”
All residents would have had access to shared amenities, including a gym, patio decks, recreation rooms and community events.
“Our goal is to foster an environment that allows people from all walks of life to experience and enjoy all Madison has to offer,” Carter said in the plan.
The two new options included:
- 208 residential units, 71 of which would be reserved for people making 60% of the county’s median income; 148 parking stalls, 4% WHEDA tax credits, $1.6 million from the city’s Affordable Housing Fund, projected tax base of $40 million and $6.2 million for the air rights and podium.
- 169 residential units, 65 of which would be allocated for people making 60% of the county’s median income; 148 parking stalls, 4% WHEDA tax credits, $1.5 from the city’s Affordable Housing Fund, a projected tax base of $32 million and $5.6 million for the air rights and podium.
The proposals also addressed concerns with what material is used for the structure and how it would affect the podium. Both new options would have used concrete and steel in addition to modifications to base layers of the structure.
The option with 71 affordable units would have required 12 foundations, 12 columns and two shear walls on the lowest level of the garage below the podium at an estimated cost of $1 million. The second option would have needed five foundations, five columns and two shears walls in the same area at an estimated cost of $500,000.
Ahead of the Finance Committee’s decision, Austin said the project is behind the schedule set in June when Gebhardt was selected, but it is not a major concern at this point.
“We have active development projects being formed for both blocks,” Austin said. “Hopefully those will come to fruition, and we’ll keep the private portions of the development moving forward.”
Madison is partnering with Beitler Real Estate to build a hotel and an apartment complex on Block 105, which is the current location of the Government East parking garage. The Plan Commission recommended Aug. 19 that the City Council approve an amendment to Beitler’s plan for the hotel. The council will take up the amendment Sept. 3.
If approved, Beitler’s plans would substitute a swimming pool for parking. The city previously approved an agreement with Beitler to lease 40 valet parking spaces in the new city-owned garage.
“It will be in Beitler’s hands to continue to move that forward,” Austin said.
The underground public garage is expected to be completed at the end of October.