A state board has offered its initial approval for Madison Area Technical College’s plan to lease its Downtown campus for a $130 million private development.
The Wisconsin Technical College System Board unanimously approved Wednesday the concept to convert MATC’s Downtown Education Center into a hotel, office building and retail space, bringing the proposal by Madison-based Hovde Properties and hotel developer Drury Southwest closer to an intended 2019 start date.
In May, MATC’s Board of Trustees voted to begin negotiations with the development team after it was selected from five finalists seeking to develop the block just off Capitol Square.
College officials intend to move programs to the city’s historically under-served South Side.
Mark Tyler, president of the Wisconsin Technical College System Board, said he fully supports the plan to lease the property, adding that it’s an “interesting concept” that allows the college to avoid costly upgrades to the two aging buildings.
“It’s a good deal in terms of providing a consistent stream of revenue to the college,” Tyler said.
Missouri-based Drury plans to renovate the buildings on the campus, 211 N. Carroll St., into a 197-room, limited-service hotel. On the other side of the block, Hovde would construct a 10-story office tower with retail space and a grocery story to replace a parking lot and the arch from the former Madison Central High School.
The arch would be moved to a courtyard. The final build-out is projected to be 609,000 square feet.
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Under the proposal, MATC would abandon its Downtown campus June 30, 2019. The lease is set to begin the following day.
Payments to the college would start at $750,000 annually, with Drury paying $450,000 and Hovde $300,000. After the first five years of the initial 50-year ground lease, payments would rise annually based on the Consumer Price Index or by 2 percent, whichever is less.
The development team would have the option of six eight-year extensions, potentially totaling 98 years.
Tyler said the only concern among board members was whether the property would be in good condition when it reverts back to MATC, also known as Madison College, at the end of the ground lease.
But he said college officials ensured the board that the development team has a vested interest in maintaining the property.
A final sign-off on the project will be needed by the Technical College System Board, while MATC’s Board of Trustees will also need to approve the lease agreement.
MATC officials did not respond for request for comment.