Negotiators for the city and JDS Development have produced basic terms of a complex deal to move ahead with the massive Judge Doyle Square project south of Capitol Square.
The terms generally follow JDS’ initial proposal for land use but include numerous changes to financing the redevelopment eyed for blocks that now hold the landmark Madison Municipal Building and crumbling Government East parking garage.
In a 20-page report, the city negotiating team recommends the city enter an agreement with JDS, composed of the Hammes Co. of Madison and Majestic Realty of Los Angeles, based on a series of “key elements.”
Land use elements include:
- A 250,000-square-foot corporate headquarters for Exact Sciences Corp. on the Municipal Building block and 107,000 square feet of expansion space for the company on the Government East block.
- A 210- to 250-room hotel on the Government East block with JDS agreeing to a goal of 250 rooms.
- A 600-space public parking garage to replace Government East on that block to be owned and operated by the city’s parking utility.
- A 650-space garage to serve Exact Sciences and the hotel on both blocks to be owned by the city’s Community Development Authority and leased to the developer for 27 years. JDS initially sought a minimum of 800 spaces.
- Retail space and a bicycle center along South Pinckney Street.
Financial terms include:
- A private investment by JDS of at least $130 million.
- City funding to replace Government East parking of $
- 19.2 mil
- lion and city capital funding for the bike center of $1 million.
- City investment of $42.5 million in other elements of the project. That includes a $12 million grant to Exact Sciences to create and retain 400 jobs at the site for at least 12 years, a $20.8 million loan for private parking and a $
- 9.7 mil
- lion loan for the fair market value of the land acquired for the private development.
The report describes a series of guarantees on jobs, the repayment of tax increment financing (TIF) loans, timelines, labor peace and other terms, including the likely loss of parking at Government East during construction from March 2016 through July 2017.
The negotiating team also requests eight specific exceptions from city TIF loan underwriting policies and seven exceptions from TIF goals, objectives and process. The report also highlights areas still to be resolved, largely in the area of guarantees.
“The negotiations have gone extremely well,” Hammes President Robert Dunn said. “We’ve moved at a very fast pace and the city has kept pace with us. I think we’ve got a very good format for an agreement that will protect the interests of all parties.”
The City Council on May 19 directed the negotiating team to enter exclusive negotiations with JDS/Exact Sciences and to report back to the Board of Estimates with a report and preliminary agreement by Monday. The directive said that if a preliminary agreement couldn’t be reached by Monday, and Exact Sciences couldn’t extend the deadline, the negotiating team would start a review of proposals from three other development teams.
The negotiating team is delivering the report on time but proposing that the sides continue talks that would lead to a preliminary agreement that could be put before the City Council on July 7.
The negotiating team took “very seriously” an accelerated timeline driven by booming Exact Sciences’ need to break ground on new facilities somewhere by the end of the year, city project director George Austin said. “We’re optimistic we can continue to meet the timelines needed to make the project happen,” he said.
The Board of Estimates meets at 4:30 p.m. Monday.
Mayor Paul Soglin said he supports the team’s recommendations.
“If the private parties and the city can get the finances in order, the project is certainly doable,” he said. “I’m confident about the city’s part. We have to see more evidence that the financing is in place from the private sector.”
Ald. Mike Verveer, 4th District, who represents the core Downtown and is a Board of Estimates member, said, “I’m comfortable with the general outlines. I have questions about specifics.”
JP Fielder, a spokesman for Exact Sciences, declined to comment on details. “Negotiations are very active and ongoing,” he said. “It’s been a very collaborative process.”
Originally, JDS proposed a $186.4 million to $203.2 million redevelopment featuring the 210- to 250-room hotel for Monona Terrace, a “Civic Core” with a public food hall, conference center and more, up to 350,000 square feet of office space for Exact Sciences, and parking.
Given the time available, many hotel details could not be completed this month and negotiators focused on the hotel’s key elements, the negotiating team’s report says.
Initally, JDS looked for public funding to help support the Civic Core, but negotiators moved away from that approach to basing a chunk of that support on Exact Sciences’ job creation.
Now, the Civic Core is being re-evaluated and the conference center use may be more focused to the needs of Exact Sciences, the report says.
The proposal for Exact Sciences’ building needs remains largely the same.
The report, however, outlines city research into the risks of having so much of the redevelopment rely on a single business. Exact Sciences has created the first and only federally approved, DNA-based noninvasive colorectal cancer screening test. It currently has headquarters on the West Side and a new lab in the Novation Campus off Rimrock Road.
The prospects for Exact Sciences are “very positive” and led to the provision that the company will guarantee jobs at the site for 12 years, the report says.
JDS, the report says, proposes bringing $46 million in equity and $91.7 million in debt. The city, meanwhile, envisions two main sources of public funding — parking utility reserves and TIF.
It’s been long thought that the project would be supported by a very successful, existing TIF District, called TID No. 25, but the report says the redevelopment could also get funds from a new district to be created nearby.