Looking to end a legal dispute over the Judge Doyle Square development, the Madison City Council on Tuesday approved paying Beitler Real Estate Services $700,000 in exchange for the developer giving up rights over half the Downtown project.
Council members voted 15-0 in favor of the proposal — which also requires Beitler to accelerate construction of a hotel to serve Monona Terrace — after the body last year rejected two other proposals meant to resolve the dispute with the Chicago-based developer.
The proposal amends a development agreement between Madison and Beitler and would free the city to seek a new developer to build behind the Madison Municipal Building.
“We are on our way to reaching a hotel. We need your support tonight,” said Ald. Mike Verveer, who represents the core of the Downtown. “This has been a long time coming. It wouldn’t be what we know as (the) Judge Doyle Square project if it wasn’t for bumps in the road, and we’ve had quite the bump.”
Several council members expressed their dissatisfaction with the situation, but backed the proposal, saying it was the best option to avoid future problems.
Alds. David Ahrens, Marsha Rummel and Paul Skidmore abstained from voting. Alds. Shiva Bidar-Sielaff and Amanda Hall were absent.
Ahrens, the project’s most vocal critic, said he continues to have misgivings about the deal but supports the reduction of Beitler’s development rights.
“This is a much-improved proposal than the ones that we’ve had previously,” he said. “On the other hand, I would like to vote for it because it takes Beitler out of the development of (the Municipal Building block).”
As part of the two-block Judge Doyle Square project, Beitler is proposing to build a hotel and apartments where the city’s Government East parking ramp now stands.
The city is currently building an underground parking garage to replace Government East on the block with the Madison Municipal Building and has approved $11 million to construct ground-level commercial space and two floors of private parking — collectively called the podium — above the underground garage.
It was the City Council’s vote in May to approve funding the podium that prompted Beitler to sue Madison in June. The developer argued the city unilaterally seized its development rights on the podium, while the city maintained Beitler asked it to consider building that portion of the project due to rising construction costs.
Beitler dropped the lawsuit in August, and the two sides have been negotiating since then. If the dispute over ownership of the podium was not resolved, Beitler had threatened to sue the city for tens of millions of dollars.
“It greatly reduces the possibility of litigation,” City Attorney Michael May said of the amended agreement.
“It is so much neater and cleaner to not have that uncertainty of who has that right to own and develop the podium,” Verveer said.
Under the project’s original plan, in which Beitler was proposing to construct apartments above the podium, the entire Judge Doyle Square development was estimated to cost $186 million.
Two previous proposals to resolve the dispute were rejected by the City Council.
In October, the council voted 10-8 — failing to get the necessary 11 votes — in support of a $600,000 payment to Beitler that would have given the city the explicit right to own and build the podium. On Nov. 13, the council voted 14-6 against a proposal that included the payment, along with some other concessions by Beitler.
Those proposals, though, would have let Beitler retain the right to build on top of the podium. Instead, the city can now seek proposals from other developers for what goes above the podium.
Tuesday’s agreement also includes a 20-year restrictive covenant on the Municipal Building block to bar a hotel from being constructed there if Beitler goes through with its hotel plans on the Government East property.
Mayor Paul Soglin called the 20-year restriction on a hotel for the Municipal Building block “very reasonable.”
The deal shortens the time Beitler has to start construction on the hotel to 18 months after the podium is completed from the two-year time frame originally agreed upon.
The city estimates the $700,000 payment can be absorbed from the $50.4 million budgeted for the 560-stall underground garage and the podium. It is set to be paid to Beitler in one lump sum within 10 days of approval.
City staff said the podium is expected to be completed by October with the underground garage likely being open in August.