Possible public cost raising concern about Judge Doyle Square project
Wisconsin State Journal (Madison, WI), 2014-07-17
July 17 --As negotiations continue, a whopping potential public cost is renewing questions about the massive Judge Doyle Square project near Capitol Square .
An initial tax incremental financing (TIF) application submitted by JDS Development shows a $44.6 million financing gap on a $111.2 million redevelopment that would include a 318-room hotel to serve Monona Terrace , retail space and a 283-space underground parking garage on the Madison Municipal Building block.
The TIF application from JDS, comprised of the Hammes Co. of Madison and Majestic Realty Co. of Los Angeles , doesn't cover another piece of the project that would rise across Pinckney Street on the block that hosts the aging Government East parking garage. A less refined concept for that block includes, housing, retail, a bike center, and parking to replace Government East and serve other uses.
Mayor Paul Soglin said it's too early to say if the financing gap threatens project and that more will become clear as the parties negotiate and analysis is done in coming weeks.
"We don't know yet if the project is feasible," Soglin said. "The project may work; the project may not work. Is it possible it may not go forward? That is an option."
Hammes president Robert Dunn could not be reached for comment Wednesday afternoon.
City Council President Chris Schmidt said, "The $44.6 million is too much. It puts this iteration in jeopardy. I feel we need to look at other options."
Ald. David Ahrens , 15th District , the most outspoken critic of the hotel, said the application suggests the project is so thoroughly flawed that it can't attract enough investment in the private market and funding from banks.
"To characterize this as a simple gap is a misnomer," Ahrens said. "This is a canyon we're trying to fill up. It should disqualify it. I think it disqualifies it in terms of the public."
The TIF application, submitted on June 16 and made public this week through open records requests, is part of an ongoing negotiation, city officials stressed.
The financing gap seems to be created by public connections through the project and Municipal Building , civic gathering space, and underground parking needed to maximize air rights to construct the kind of hotel sought by the city, finance director Dave Schmiedicke said. A public assistance request for the Government East block is likely to be much smaller, he said.
The city is now analyzing the best mechanism for delivering assistance, which could be reduced by providing land, and repayment, which would be through property and room taxes or other commitments, city officals said.
Ultimately, the city will have to weigh the investment against potential property, room and sales tax revenues, the economic benefit to Monona Terrace , and the catalytic benefit for Downtown, economic development director Aaron Olver said.
City officials have given a positive response to a preliminary design that sets part of a hotel tower above a portion of the Municipal Building . It would rise above a single-floor area at the rear of the U-shaped landmark, between its two three-story wings, and extend to Pinckney Street .
The application describes spending $104.6 million for a 318-room, 260,600-square-foot hotel and $6.5 million for 21,600 square feet of retail space. The $10.5 million cost of the parking garage is included $111.2 million pricetag for the block. It proposes a $46.4 million construction and $20.1 million in developer equity, leaving the $44.6 million gap.
Soglin said he doesn't know if the JDS application is an opening proposal intended for negotiating purposes or a bottom line and said his experience in completing major city projects cautions against prejudging. A full report could be ready as soon as Aug. 15 , he said.
"We need all the information," he said. "No one has it yet."
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