Ending a months-long debate over how to resolve a dispute over the Judge Doyle Square project, the Madison City Council last week approved changes that would allow the city to take over half of the $186 million development from its development partner, Beitler Real Estate of Chicago.
Under a deal negotiated by the city and through talks between Mayor Paul Soglin and the Beitler organization, the city will pay the developer $700,000 in exchange for the development rights to Block 88, bordered by the Madison Municipal Building, East Wilson, South Pinckney and East Doty streets.
The city and Beitler have disagreed for months over an aspect of the project on Block 88 known as the podium, which includes a structural slab and development above a below-ground parking garage, currently under construction. That disagreement was marked by a lawsuit filed in June and later dropped.
“The proposal tonight will resolve the impasse and will allow us to build a hotel, I think, as quickly as possible to serve Monona Terrace,” Ald. Mike Verveer, District 4, said.
It will also reduce the risk of future litigation, City Attorney Mike May said.
“We are removing them from Block 88, which is the block we’ve had the most significant dispute,” May said.
The two-block redevelopment project known as Judge Doyle Square encompasses the blocks housing aging Government East garage and the Madison Municipal Building. It aims to bring a new underground municipal parking garage and a hotel to serve Monona Terrace downtown, return two parcels back to the tax rolls, create a pedestrian-friendly environment on Pinckney Street and connect the Capitol to the terrace.
The city’s work on the new parking ramp is currently on schedule on Block 88 and is expected to open this year. When that is complete, the Government East Garage will be demolished and Beitler will take over development of the Block 105 property.
Fifteen City Council members voted in favor of the changes to the development agreement with Alds. Marsha Rummel, District 6; Paul Skidmore, District 9; and David Ahrens, District 15, abstaining. Alds. Amanda Hall, District 3, and Shiva Bidar, District 5, were excused from the meeting.
“I am very pleased and the fact that there wasn’t a single ‘no’ vote gives me hope that as we work toward final construction, we’re going to do it in a solid partnership,” Soglin said.
Resolving ‘podium’ conflict
The resolution is meant to resolve a conflict between Beitler and the city over the podium. Under the original agreement, Beitler was charged with constructing the above-ground portion of this block in addition to building a hotel on Block 105.
In January 2018, Beitler informed the city that the cost of constructing the podium was out of its budget. This led to the city’s decision to pay $11 million for the podium to ensure its viability as a future development site.
The proposal adopted last Tuesday will return development rights for the entire Block 88 structure to the city, opening the possibility of working with a different developer on that block in exchange for the payment.
It would also place a 20-year restriction prohibiting development of a hotel on Block 88 if a hotel is built by Beitler on Block 105. While not “optimum,” Monona Terrace Executive Director Gregg McManners said the 20-year clause is not unexpected.
“To expect a hotel to be developed on city property, I think it’s reasonable to expect the developer would ask for a non-compete clause,” McManners said. “There are plenty of sites in the downtown area, and I fully expect more hotels to be build in the downtown.”
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.
Finally, the change would allow the city to wait to demolish the Government East ramp until Beitler secures an occupancy permit for the Block 105 hotel. This would save the city up to $700,000, according to city estimates.
On two separate occasions, City Council members previously rejected a proposal that would have paid Beitler $600,000 in exchange for development and ownership rights to the podium.
Ald. David Ahrens, District 15, a frequent critic of the project, commended the City Council for pushing for an improved proposal. However, he was so conflicted by the proposal that he ultimately abstained from the vote.
“The big upside is we’re not entangled with Beitler for the development of Block 88, and at least at this immediate juncture, we will not be sued,” Ahrens said. “I can’t vote for this because of the millions expended thus far because we have nothing to show for it.”
While no City Council members voted against the proposal, several alders expressed a resignation toward the project changes.
Ald. Matt Phair, District 20, called the proposal the “best in a series of bad options.” Ald. Larry Palm, District 12, said, “there isn’t any winning here.”
“I wish that we would find ourselves in a situation where we had a relationship that felt more capable of true collaboration, but this seems like a path forward,” Ald. Maurice Cheeks said.