After nearly two years of waiting, Madison has given a financing deadline to its chosen team for the long-delayed, $19.8 million redevelopment of the landmark Garver Feed Mill on the East Side.
The city on Tuesday sent Baum Development a letter saying it must have all financing secured by Feb. 28 for the project, which would transform the crumbling Garver building and its surrounding 5 acres into an artisan food production facility with “microlodging” units averaging 250 square feet for short-term rental.
On Wednesday, David Baum voiced confidence that critical federal New Market Tax Credits will be secured and that the project is poised to move forward. The developer is also using a bank loan, equity, historic tax credits and grants to fund the redevelopment.
“We’ve been at this for a long time,” Baum said. “We have everything in place but for a final piece of financing. We’re on the 1-yard line.”
The $19.8 million project has two main pieces, a $14.4 million building renovation and much of the rest for the microlodging units.
Baum is awaiting word on the second of two New Market Tax Credit allocations delivering a total $2.5 million for the $14.4 million building renovation.
“The (tax credit) financing is crucial,” said city economic development director Matt Mikolajewski.
In April 2015, the city chose Baum over three other suitors for the project — Alternative Continuum of Care, the Alexander Co. and Ogden & Co.— who responded to a city request for proposals to reuse Garver. Each offered unique uses and costs ranging from $19.8 million to $39.8 million.
The city’s second choice was Alternative Continuum of Care’s $39.8 million proposal, which delivered 148 units of senior housing, event space, day care, a commercial kitchen and other uses.
A year ago, city officials voiced concern about Baum’s lack of progress and set a timeline for remaining milestones, including letters of intent from tenants representing half the space by June 1, 2016; land use approvals by June 19; a construction contract by July 31, receipt of federal New Market Tax Credits by Aug. 31; and proof of remaining financing six days after receipt of those tax credits.
The city has allowed further delays, the most recent deadlines expiring at the end of November 2016.
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As of this week, Baum has secured the required letters from tenants, largely completed land use approvals with only final details remaining, has not finalized a construction contract and not secured the tax credits or provided proof of remaining financing, Mikolajewski said.
On Monday, after hearing from Baum that the company was near securing the tax credits, the city’s Board of Estimates agreed to extend the deadline, with staff to report back at the board’s March 13 meeting.
The city wants to see the successful use of the Garver Feed Mill but understands it is an extremely complex project, Mikolajewski said, adding that it makes sense to extend the deadline a bit before starting over with another developer.
The city has focused on the $14.4 million component because the project can’t move forward without it, Mikolajewski said. But staff will also seek an update on finances for the microlodging component, which does not rely on New Market Tax Credits, he said.
“We want to get moving on the Garver project,” Mikolajewski said. “Folks want to see they’ve made progress on the financing. It will be up to policy makers to make a decision at the March 13 meeting.”
Mayor Paul Soglin and Finance Committee members hope Baum can “get to the finish line,” said City Council president pro tem Marsha Rummel, 6th District, who represents the area.
Paul Jadin, president of MadREP, the economic development partnership for the eight-county Madison Region, said, “I feel very confident this is going to happen now. I’m also very confident this is going to be an even better fit with the Madison Public Market.”
But Ald. David Ahrens, who represents the adjacent 15th District, was more skeptical.
“I think the status is quite uncertain,” he said. “This was approved almost two years ago. Even if they can raise the funds, it remains questionable whether they can meet other requirements for the project to proceed.”
The two-story, Industrial Romanesque feed mill, 109 S. Fair Oaks Ave., was built in 1905 and named a city landmark in 1994. It was declared surplus property in 2005.