Madison will consider paying Beitler Real Estate Services of Chicago $600,000 in exchange for development rights and ownership of an element of the Judge Doyle Square development in order to keep the project moving forward.
Under the resolution introduced at Tuesday’s City Council meeting, Beitler would transfer 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) in exchange for the additional funds.
“The resolution is a way to keep the timelines moving,” project manager George Austin said.
If approved, the resolution would prevent a delay between the city completing construction of 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 to be constructed by Beitler. The podium was the subject of a lawsuit filed by Beitler in June, which was later dropped to allow negotiations with the city to proceed.
Mayor Paul Soglin said he is pleased with the resolution’s introduction and confident in Beitler Real Estate as a development partner.
“I’ve talked to (J. Paul Beitler) several times in regard to some of these underlying issues and there’s no question in my mind that he wants to go through with this project,” Soglin said.
Beitler estimated that the company incurred a loss of $600,000 by not being able to start work on a private hotel on the block that currently holds the Government East parking garage (Block 105) because of the podium construction.
Ald. Mike Verveer, District 4, said the resolution would clear up any “cloudiness” over the right to construct the podium. A seamless transition from the completion of the municipal garage early in 2019 to the podium is necessary because it will cap the garage to allow for development on top.
“It will allow the city to go ahead and build the so-called podium and prevent any undue delay on constructing it,” Verveer said.
Verveer said he is not “enthusiastic” about the resolution but does feel it is the best way forward. He would have liked to see Beitler commit to beginning construction earlier than what is allowed in the current development agreement.
The original agreement allows Beitler two years after the public garage is completed to secure financing for any one of the three major private components.
“We’re convinced that Beitler really does want to continue to be partners with us,” Verveer said. “They just couldn’t give assurance as to timing.”
The city would make the payment in eight monthly installments starting 30 days after the the development agreement is amended. The resolution would require 11 votes of the City Council to be approved. A council decision is expected Oct. 30.
The resolution would also approve 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.
Council President Samba Baldeh said this is Beitler’s “last chance.” Baldeh said Soglin's personal dealings with the company have boosted his confidence in the resolution.
“$600,000 is a lot of money, but we do have do something,” Beitler said. “We’ve already been very invested in this project.”
Beitler Real Estate did not immediately respond to requests for comment.
Beitler sued the city in June after the City Council approved an additional $11 million to the $186 million project to pay for the podium, which will sit on top of the public 560-stall underground parking ramp.
In the lawsuit, Beitler argued that Madison “unilaterally seized” this portion of the project by approving the funding, however the developer informed the city in April that it would not proceed with development on Block 88 without significant cost reductions. The developer voluntarily dropped the lawsuit in August.
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.
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. The city is currently constructing the new underground parking ramp.
Judge Doyle Square encompasses the Madison Municipal Building on Block 88 and the Government East parking garage on Block 105. The square is named after Judge James E. Doyle, a federal judge in the District Court of the Western District of Wisconsin and a leader in the Democratic Party.