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Union Corners sign

The real estate marketing signs could soon be coming down from the Union Corners property at East Washington Avenue and Milwaukee Street after the city and Gorman & Co. reached a tentative agreement on public support for the project.

After more than a year of negotiation, the city and Gorman & Co. have a tentative deal on public support for the long-stalled Union Corners redevelopment on the East Side.

The agreement, which conveys 7.6 acres to Gorman for $1 and needs City Council approval, would let Gorman proceed on the first four phases of the six-phase redevelopment at the blighted, vacant corner of East Washington Avenue and Milwaukee Street.

The initial phases include:

A $20 million, two-story, 60,000-square-foot UW Health clinic at East Washington Avenue and Sixth Street, with construction expected to start in July or August.

A $13.1 million initial housing development with 90 rental units — 76 for people with lower incomes — and 22,240 square feet of commercial space in two buildings — each considered a separate phase — north of Winnebago Street. Construction could start in November.

A proposed $20 million, five-story, mixed-use building with a 28,000-square-foot Fresh Thyme grocery store, 9,000 square feet of retail space, 102 apartments and parking at the corner of East Washington and Milwaukee Street. The phase needs specific land use approvals but construction could begin in December or the spring.

“I’m really excited,” said Ted Matkom, Gorman’s Wisconsin market president. “We’re extremely appreciative of the neighborhood’s patience and its support.”

The neighborhood has been waiting for more than a decade for a redevelopment. An initial effort by another developer stalled in 2007.

The city acquired the 11.4-acre site in 2010 and launched a process to pick a new developer, choosing Gorman in late 2012. The land and infrastructure improvements are valued at $6 million.

Under the tentative financing deal, the city would convey 7.6 acres — valued at $5 million — to Gorman for $1. To get the land for $1, Gorman demonstrated a financing gap for the first four phases of $5 million, largely for underground parking for the grocery, required infrastructure, and rents for the low-income housing, city officials said.

“We have established a gap of a little over $5 million for the first four phases,” city real estate manager Don Marx said. “We’ve got a deal.”

In the deal, Gorman gets a three-year option on the remaining acreage and must demonstrate a $1 million gap for the fifth and sixth phases — cooperative housing south of Winnebago Street and a small parcel west of Sixth Street, Marx said.

“We’re still committed to those phases,” Matkom said.

Gorman would repay city investments through higher property taxes generated by the project.

Now, the City Council will consider further extending a contractual deadline while a formal financing agreement is readied for consideration in July.

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Dean Mosiman covers Madison city government for the Wisconsin State Journal.