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After years of hope and planning for a new Madison Central Library, a proposal for a new $37 million, six-story glass and stone facility may be dead.

Construction was supposed to start this fall, but negotiations between the city and the developers, the Fiore Cos. and Irgens Development Partners, have broken down over costs.

Unless the dispute over about $2 million in costs can be resolved — a scenario called “unlikely” by a Fiore official — Mayor Dave Cieslewicz said he intends to propose that the existing library at the corner of Fairchild and Mifflin streets be renovated. The mayor said he has “not given up” on the new library proposal.

“We will have a new library,” Cieslewicz said in an interview. “New may mean a rehabilitated library at the current site. But it won’t look anything like the old library. We will do it on time. We will do it on budget.”

A renovation would cost an estimated $27 million, he said. Renovation also would mean that a second phase of development would not occur on the existing library site.

William Kunkler, Fiore’s executive vice president, said in an interview it is “unlikely” an agreement can be reached and blasted Cieslewicz for “a lack of leadership” on the project, proposed for the corner of Henry Street and West Washington Avenue, which the company owns.

“It’s a shame it’s gotten to this point,” Kunkler said. “I don’t think the city has tried to negotiate with us in good faith at any point.”

Cieslewicz disclosed the impasse in an e-mail memo to City Council members Tuesday that was provided to the State Journal as part of a response to a request under the open records law.

The records, and others obtained by the State Journal on Tuesday, illustrate the complex nature of the negotiations and show that the dispute over costs existed even before the council set aside money last fall for the project.

A meeting between Fiore and city officials is scheduled for Thursday, and Cieslewicz said he hopes the impasse can be resolved.

But City Council President Tim Bruer said he sees “little or no chance” that the Fiore proposal will move forward, and that council members are disappointed at the prospect of losing that library plan and its potential economic spinoff.

Kunkler said, “It’s in the realm of possibility an agreement could be reached, but we’re miles apart. It’s hard to imagine getting that bridged.”

The city may still have options beyond renovating the existing library because others have expressed interest in a redevelopment involving the library site, Bruer said, declining to name them.

“There have been decades of want and wait for a new, improved library,” he said. “We should explore the costs and benefits associated with rehab, but also consider other potential opportunities at and around the site. We may see some delay, but we may find ourselves in a much better position.”

A complex transaction

In April 2008, T. Wall Properties proposed replacing the existing library on its current site with a project that also would include offices. That led the city to seek proposals for a new library, and in May 2009, a seven-member committee unanimously but narrowly chose the Fiore-Irgens proposal over Wall’s.

The proposal called for the new library with a two-story entrance, high ceilings, lots of glass, a rooftop patio and 105,000 square feet of space next to the developer’s existing Network 222 building on the 200 block of West Washington Avenue.

Also under the plan, Fiore-Irgens would purchase the old library site and build a 380,000-square-foot mixed-use project, likely with a hotel, retail space and 425 parking spaces. The cost of the full redevelopment is estimated at $88 million.

In November, the City Council approved a plan to spend $37 million on the Fiore-Irgens proposal. Under that plan, the city would borrow $17 million and use $6 million in federal tax credits, $4 million from the sale of the existing library site, and $10 million in private fundraising.

The city and Fiore-Irgens have been negotiating the details of the development agreement since then.

“This was always a complex transaction with lots of details that hadn’t been resolved when the council approved the budget,” library board chairman Tripp Widder said.

A city analysis showed that in the long run the plan would cost taxpayers less than renovating the existing library because the new development at the current library site would generate new tax revenues.

Fiore and Irgens were to deliver the core and shell of the library for a fixed price and the city was to seek bids to build the interior.

But Fiore-Irgens could not guarantee that the exterior could be completed for less than $23.9 million, the price the companies had established before the council approved the budget. Fiore-Irgens had recommended a $38.5 million total project cost.

Cieslewicz had received a report from a private consultant saying Fiore-Irgens could do its part for $20.6 million and the library could be fully completed for $36.2 million.

The mayor said he proposed $37 million in the budget as a reasonable compromise.

Costs-to-date disputed

As negotiations continued, the city offered Fiore-Irgens $23 million to do its part, but the partners didn’t budge from the $23.9 million plus $1.1 million for construction interest and future parking costs.

Because of that impasse, the sides explored doing all construction as a public works project, which would mean that the city still would have to buy the Fiore property and seek competitive bids rather than continue to negotiate exclusively with Fiore and partners.

The developers argued they should continue overseeing the public works project, but the city disagreed, which led to another set of negotiations. Fiore-Irgens sought $7.2 million for the site at West Washington Avenue and Henry Street and the right to build above it, eight underground parking spaces, and the value of their work to date. The city offered $5.1 million.

The biggest dispute is over the value of work done so far. Fiore-Irgens is seeking $2.7 million and the city is offering $100,000.

Fiore, Cieslewicz said, is asking too much for the existing property and has never provided a detailed cost accounting on work that has been performed.

As the sides reached an impasse, Fiore-Irgens said it was no longer interested in buying the existing library site and proceeding with the second phase of development, which means the city would not get $4 million from the sale of the land or tax proceeds from the private project, making the new library financially infeasible.

“The city has cut us out of involvement in the planned library development,” Kunkler said. “We’re not just interested in buying the existing library site.”

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