As Madison mulls bids by two high-powered development teams to work with the city and build a big hotel to serve Monona Terrace, one City Council member wants another option: Do nothing.
But others maintain the city is on the right track.
Ald. David Ahrens, 15th District, said there’s no evidence to support the need for a new hotel or that it would significantly increase use of the convention center, but there’s substantial evidence it could hurt existing hotels and cause other damage.
Ahrens, a retired UW-Madison researcher elected to the City Council this past spring, is offering the first detailed challenge to the hotel, a key part of a potential massive redevelopment of the Madison Municipal Building and Government East parking garage blocks, called Judge Doyle Square.
“It’s important to look at the underlying rationale (for the hotel),” said Ahrens, who made a data-based, hourlong presentation Thursday to city officials and others. “I can’t find the convincing rationale or evidence.”
But others said there’s ample evidence to support a second hotel for the convention center — the 14-story Hilton Madison next to Monona Terrace opened in 2001 — and the benefits it will bring.
Some officials questioned parts of Ahrens’ analysis and suggested he’s trying to stir uncertainty about the hotel, but most agreed he’s raising questions that must be answered.
The Ahrens study “is not all-inclusive or a show-stopper” but part of a mix of information that will soon include a staff report and presentation that will present the rationale and financing for the project, city Economic Development Director Aaron Olver said.
JDS Development, comprised of the Hammes Co. and Majestic Realty Co., is offering a $159.1 million preferred plan that would use the Municipal Building as a centerpiece hotel with 308 rooms and locate new city offices, housing and other uses on the Government East block. The team is seeking $16.8 million in city tax incremental financing (TIF).
The Journeyman Group, Marcus Hotels & Resorts, and LZ Ventures have a $178.8 million plan that keeps the Municipal Building as city offices and builds a 352-room hotel behind it, with other uses across Pinckney Street. The Journeyman team is asking for $46.7 million in TIF.
The city has hired a consultant to analyze finances of the proposals and negotiate with the development teams, Olver said.
A substantial city investment is needed even without a hotel because the Municipal Building must be renovated and Government East must be replaced, officials says.
In his presentation, Ahrens said Monona Terrace delivers an economic benefit but the exact amount is unknown.
Ahrens said there’s a hotel building boom in Madison, there are ample hotel rooms to meet demand at the convention center, and that city investment in a new hotel could damage existing hotels. The convention center loses business not for the lack of hotel rooms but because of Madison’s weather and the lack of meeting space, he said.
Monona Terrace Director Gregg McManners said the convention center has a big impact on Downtown, now a vibrant place that boosts the entire city. He said both quantity and quality of nearby hotel rooms are important and that, despite fears, the market quickly absorbed rooms when the 240-room Hilton opened .
Three hotel studies — two funded by the city — in the past four years say Monona Terrace needs more nearby rooms to stay competitive and secure lost business, McManners said.
A new hotel would let Monona Terrace expand its lucrative convention and conference business, which now accounts for 10 percent of use but half of revenue, Olver said. Doing so would push some smaller events to other Downtown venues such as the new Central Library, giving them more revenue, he said.
The city will see more hotels Downtown, the question is if the city should invest so one can best serve the convention center, Olver said.