A proposed nine-story boutique hotel on State Street seems in jeopardy after the developers missed mortgage payments on properties acquired for the $43 million project.
Park Bank filed a lawsuit in Dane County Circuit Court on Wednesday seeking to foreclose on mortgages related to the project, which promised to transform the 100 block of State Street but has already been delayed for a year.
The bank is seeking a foreclosure and money judgment against the developer, Ascendant Holdings of Madison, and others claiming the defendants failed to make payments on two loans now totaling $4.5 million and did not winterize and secure the property, allowing utilities to be cut off.
The developers say they are continuing to seek financing and hope that the project can still become a reality.
Ascendant took out the loans to acquire properties at 122, 124 and 126 State St. The court filing triggers a process that allows time for continued negotiations and Ascendant to satisfy its commitments, but which can also lead to a court judgment and an eventual sale of the properties at auction.
“The bank loans have not been complied with,” said the bank’s attorney, Robert Pasch. “It’s no different than any other foreclosure proceeding. We want our loans to be repaid.”
Ascendant principal Eric Nordeen said he was disappointed by the action.
“We’re not disputing that the loans are in default and that the bank has a right to take this action,” he said. “We’re continuing to work with the bank to find a path forward. We think it’s a great vision for the block and hope that, ultimately, a project that gets built.”
The developers had an option to purchase a final parcel at 118 State St. that’s part of the redevelopment site, but the option recently expired. The owners of that property, the Schmock family, remain interested in their site being part of the project, Thomas Schmock said.
Ascendant and partners have been struggling to secure financing for the project, Nordeen and partner Matthew Prescott said.
“There’s a lot of interest, but translating that into a closed transaction has been a big challenge,” Nordeen said.
He said the partners will continue to pursue financing, but “if there comes a time that we can’t be involved, I believe someone will step in and move it forward.”
You have free articles remaining.
For more than a year, the site has remained a collection of empty buildings and storefronts on one of the city’s prime blocks as Ascendant sought a capital partner to deliver final financing .
“It’s just more disappointing news,” Downtown Ald. Mike Verveer, 4th District, said of the court proceeding. “I was very much looking forward to the new development improving the current environment at the top of State Street.
“It saddens me that the office building and storefronts were cleared out to make way for a project that’s never come,” he said. “It’s just a crying shame that all these spaces have been vacant for so long. It leads to the impression that the top of State Street is economically depressed when that is not the case.”
In October 2016, Ascendant and a development team announced the project, which promised a revitalization of the block.
Two years later, after a lengthy city review and project changes, Ascendant won City Council approval to demolish two buildings and partially raze two others at 118-126 State St. for a 133-room hotel with a first-floor restaurant and a top-story bar and lounge. The council approved a zoning change for the hotel despite opposition from city staff over the building’s height.
The hotel is to be operated by Provenance Hotels of Portland, Oregon, which runs boutique hotels with a local flavor in many cities in the United States.
“The team at Ascendant put their heart and soul into this project and their commitment has always been, first and foremost, to doing right by Madison,” Provenance spokeswoman Kate Buska said. “We remain confident the hotel they proposed is the best possible use for this site and would contribute to the Madison economy and the vibrancy of State Street.
The hotel, which is on an angled lot, would have an up to four-story presence on State Street and rise to nine floors by North Carroll and West Dayton streets. The ninth floor would be smaller to make it less visible to pedestrians on the street. Madison staff recommended the project not be approved as the building exceeds the six-story limit called for at the site in a Downtown plan.
It must still get final approval from the Urban Design Commission and the usual sign-offs from city agencies before securing a building permit, including proof of agreements for off-site parking for a valet service, as no parking space would be provided at the hotel itself.