Despite concerns about many details and the fast pace of negotiations, Madison’s finance committee on Monday endorsed the basic terms of a complicated deal to move ahead with the massive Judge Doyle Square project south of Capitol Square.
The city is engaged in exclusive negotiations with JDS Development and Exact Sciences Corp. on a roughly $192 million redevelopment eyed for blocks that now hold the landmark Madison Municipal Building East and crumbling Government East parking garage.
On Monday, the city’s Board of Estimates said “keep talking,” and Exact Sciences extended the deadline for a preliminary development agreement until July 15.
Key elements of the project include a 210- to 250-room hotel to serve Monona Terrace; up to 357,000 square feet of office space for Exact Sciences; a 600-space public parking garage to replace Government East and a 650-space garage for Exact Sciences, and the hotel to be owned by the city’s Community Development Authority and leased to the developer for 27 years.
Major financial terms include a private investment by JDS of at least $130 million; city funding to replace Government East parking of $19.2 million and $1 million for a bike center; and the city’s $42.5 million investment. The $42.5 million 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 million loan for the fair market value of the land acquired for the private development.
The Board of Estimates publicly discussed the basic terms negotiated so far, with the most concern and questions about the hotel, parking and financing. Concerns focused specifically on the loss of public parking for 17 months during construction, the developer’s assurances on equity and debt, and the $42.5 million in city money outside the replacement of Government East.
The pace of the negotiations — the City Council had only directed exclusive negotiations with JDS and Exact Sciences on May 19 — have left city negotiators unable yet to provide specific answers to many questions, with the potential of more answers by the council’s next meeting on July 7, the draft agreement on July 15, and a final agreement by Aug. 24.
“To make the project work, finances have to be in place by all the parties, public and private,” Mayor Paul Soglin said after a 90-minute closed session.
While in open session, board members voiced concern that JDS could not yet guarantee a 250-room hotel as sought in the city’s request for developer proposals.
City project manager George Austin and interim director of Planning, Community and Economic Development Natalie Erdman said JDS has a goal of 250 rooms but can’t commit until a now downsized underground parking garage is redesigned and other work, including a market analysis, is finished.
There were many questions about parking, especially why the proposal has only one level below ground on the Municipal Building block and is much deeper on the Government East block, where it could hit the water table and add significant costs.
Austin said Exact Sciences’ need to start construction this year and occupy its main building in mid-2017 is driving the pace of negotiations. A deeper garage on the Municipal Building block, where Exact Sciences offices would be built, isn’t feasible because it would delay the opening of offices. But the now smaller garage across the street should avoid water table issues, he said.
Some board members were concerned about the lack of a plan to temporarily replace Government East parking and lost parking revenues. “We know (the parking utility) is going to have a very tough 17-month period,” Soglin said.
Others had questions about the developers’ debt and equity commitments and guarantees. Austin said those elements will become more clear once the city demonstrates its commitment, and that guarantees remain under discussion.
Ald. David Ahrens, 15th District, voiced concern about financial commitments from the developers and basic terms requiring more than a dozen exceptions from city tax incremental financing (TIF) underwriting and policies. JDS 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.
“All of us in City Hall are trying to meet this tight timeline,” said Ald. Mike Verveer, 4th District. “We still have tons of unanswered questions. There’s a huge trust factor among all the parties.”