JDS Development has delivered new financing details for the roughly $202 million Judge Doyle Square redevelopment Downtown, but it has only scant information about parking, a major piece of the project.
The developers submitted a tax increment financing (TIF) application Wednesday offering detail about the cost and property tax value of private elements — a new headquarters for booming Exact Sciences Corp. and a hotel to serve Monona Terrace — on blocks that hold the Madison Municipal Building and Government East parking garage.
The information is critical to the city in making decisions about public investment in the project.
JDS, composed of the Hammes Co. of Madison and Majestic Realty of Los Angeles, had to submit a completed TIF application to the city by Friday.
“We’re learning the details,” city economic development director Matt Mikolajewski said. “This is another important step.”
Hammes president Robert Dunn said the submittal is based on a premise of helping the city grow its tax base. “We’ve worked really hard with the city. We think it’s a very strong TIF application. (The project) will greatly enhance the tax base of an idle real estate asset.”
The application also presents questions that must be answered in coming weeks, city officials said.
Mayor Paul Soglin and JDS signed a development agreement on July 14. The sides are now negotiating unresolved issues including parking, number of hotel rooms, and what happens if the project doesn’t proceed. They must bring an amended agreement to the city’s finance committee on Aug. 24 and to the City Council on Sept. 1.
Meanwhile, JDS is proceeding with design.
The project cost, earlier estimated at $188 million, has been updated through additional information, city finance director David Schmiedicke said.
JDS would bring $44.3 million in equity and $89.3 million in borrowing for a total of $133.6 million in private investment, the application says. The development team late Wednesday afternoon — ahead of schedule — verified its capacity to provide equity and will provide verification of borrowing before a coming deadline, Dunn said.
The city would invest $42.5 million in TIF for private elements of the project, including $12 million guaranteed by jobs to Exact Sciences to help build its office building, a $9.7 million grant to help cover costs of property, and $20.8 million to build 650 private parking spaces. Private spaces would be owned by the city but leased to JDS, which would deliver corporate and parking revenue guarantees for repayment through property taxes over time.
The city would use $18 million in parking reserves to build 600 spaces to replace Government East as well as $1.3 million for 40 spaces for city vehicles and $1 million for a bike center.
JDS’ application notes the 650 private spaces but provides no information on how the private parking would be split among private tenants, no breakdown on the number of above-ground, underground and surface spaces, or costs for parking construction.
Ald. David Ahrens, 15th District, a leading critic of the project, said missing information on parking renders the application meaningless.
“How is this a TIF application?” Ahrens said. “To me it’s just a box inside another box. It continues to be a mystery.”
JDS didn’t include financial information on parking because it will be city-owned and because the sides are still negotiating parking issues, Dunn said.
The application is largely intended to establish costs and uses for property taxes generated by the project, Mikolajewski and Schmiedicke agreed. But the city will look for more detail, they said.
The application says a 216-room hotel would have an average daily room rate of $161, 66 percent occupancy, and a net operating income of $578,448 before taxes in its first year. By the fifth year, the room rate would be $178 with 70 percent occupancy and net operating income of $1.3 million.
The city, in its request for developer proposals, required a hotel with at least 250 rooms. JDS’ original proposal called for 210 to 250 rooms, and negotiations with the city produced language with a “goal” of 250 rooms.
JDS is still doing a market study and working on a design, and the 216 hotel rooms in the application reflects a conservative estimate, Dunn said.
“We continue to hope they’ll be able to get somewhere closer to the 250 rooms,” Mikolajewski said.