After two failures, Madison got dynamic revised proposals Tuesday from two developers for the Judge Doyle Square project south of Capitol Square, while a third developer lost its hotel operator.
Three development teams — Doyle Square Development of Madison, Beitler Real Estate Services and Vermilion Development, both of Chicago — had until 2 p.m. Tuesday to submit revised proposals for the redevelopment of blocks that now hold the Madison Municipal Building and Government East parking garage. Keys to the project are a hotel for Monona Terrace and parking to replace the crumbling Government East. A renovation of the Municipal Building for continued use as city offices will begin later this year.
Beitler and Vermilion submitted revisions with projects similar in scale and scope to those they initially offered last May, city project director George Austin said.
But just hours before Tuesday’s deadline, Doyle Square Development, initially comprised of Urban Land Interests and the North Central Group of Middleton, submitted a one-page letter announcing that North Central Group had dropped out and that ULI has not been able to secure a commitment from a new hotel partner to advance the project under the terms the city set forth.
“Our main concern was the quality of the proposals,” Mayor Paul Soglin said. “Both proposals certainly are very interesting and we’re looking forward to examining them. We will get to work on these immediately and it will be a thorough, public process.”
Beitler is offering a $126 million project featuring a 252-room hotel, 210-unit apartment building, and 927 parking spaces, most of them above ground. A glass-sheathed structure with 621 public parking spaces and 31,000 square feet of retail with food court and bicycle center would be on the Municipal Building block. The hotel and apartments would be above 306 parking spaces across the street.
The proposal would require $26 million in public support only for public parking to replace Government East and to create city-owned retail commercial space, which the developer would lease.
The proposal has huge advantages because it seeks no public support for private elements of the project, provides a hotel and housing, puts the public parking next to the Municipal Building with no loss of spaces at Government East during construction, and pays the full appraised value of land through leases, company president J. Paul Beitler said.
“It’s a win-win,” he said.
The city’s requirements for the project said applications without a fully underground parking structure won’t be considered, but Beitler didn’t submit such an option. “If they want all underground, we’ll be happy to do it,” Beitler said.
Vermilion has proposed a $199 million project with 279-room hotel, 125-unit apartment building, 94,000 square feet of office space, 13,000 square feet of retail and 1,108 parking spaces, all underground. The hotel, restaurant and some retail would be on the Municipal Building block, with the housing, office space, more retail and a bicycle center across the street.
The hotel would feature a skywalk connecting to the Hilton hotel across the street, which has a skywalk to Monona Terrace.
The project would require $49 million in public support for the underground public and private parking.
Vermilion’s president could not be reached on Tuesday.
“I have mixed emotions,” said Downtown Ald. Mike Verveer, 4th District, who represents the site. “I am, of course, happy we have some competition moving forward. It’s unfortunate ULI could not find a hotel partner.”
Although ULI has done big mixed-use projects, including Block 89 across the street from the Judge Doyle Square site, it is not a hotel developer or operator.
ULI still has the interest and capacity to complete the non-hotel part of the project, especially a fully underground parking garage, the letter says.
“I’m not sure anyone is going to meet the requirements the city laid out,” ULI principal Brad Binkowski said early Tuesday afternoon. It’s up to the city to evaluate the submissions and decide how to move forward, he said.
Andy Inman, vice president for development for North Central Group, said his company began to express concerns about the Judge Doyle project in November and withdrew because restrictions placed on the hotel after the latest negotiations with another developer didn’t make sense for North Central’s business model. He declined to share details, but said ULI’s inability to secure another hotelier validates their concerns.
North Central is now building a 165-room AC Hotel by Marriott at 1 N. Webster St., three blocks away from the Judge Doyle Square site.
In May 2015, the city began exclusive negotiations with JDS Development and set the three other suitors aside. The talks resulted in a $200 million project with up to 357,000 square feet of office space for Exact Sciences Corp., a 216-room hotel, commercial space, a bicycle center and 1,250 parking spaces. It required a $46.7 million public investment.
But JDS’ $200 million proposal collapsed when Exact Sciences on Nov. 1 announced it will instead expand at University Research Park on the West Side.
The city budget passed Nov. 10 provides $35.4 million in TIF for eligible project costs, including parking and land acquisition.
On Nov. 17, the council decided to leave JDS out of future negotiations and gave Doyle Square Development, Beitler and Vermilion until Tuesday to update their initial submissions from May 2015.
The council, after failures with JDS, also tightened requirements for the project, including a minimum 250-room hotel, city ownership of parking, an option for all-underground parking, and strict requirements for city TIF support.
The city’s negotiating team will now review revised proposals and seek further council direction by the end of February. Austin hopes to have a report for the Board of Estimates on Feb. 15.
Verveer said he hopes the submissions will lead to a positive end “to the saga that is Judge Doyle Square” and “lead to a high-quality Downtown project.”
The city is already planning a $30 million renovation of the landmark Municipal Building, with work starting late this fall.
After years of study, the city first began a process seeking developers in February 2013 and chose JDS a year later. The city and JDS then began protracted negotiations on details of the project. Negotiations got complicated when city officials voiced concern about the high public cost of a full-service hotel with a dedicated block of 250 rooms for Monona Terrace and underground parking, and talks shifted to how to downsize the project.
The proposal was downsized, but the council eventually voted to reopen the process to others because the project — especially the hotel — had evolved too much. That’s when JDS, Doyle Square Development, Beitler and Vermilion entered the fray.
The revised proposals received Tuesday “will allow the process to proceed,” Austin said.