So, I’ve been hearing it is dead, watched the council list it repeatedly as something to cut from the budget, and saw the memo late last week . . . and all indications are . . . well, not good for Judge Doyle Square. Yesterday’s Board of Estimates meeting was another clear sign things are not going well. Can’t say I’m too sad about that, we have better things to spend our money on.
Here’s the memo.
Here’s the quick explanation and mayor’s comments from the Board of Estimates meeting last night.
Motion was to accept the report.
George Austin was asked by the mayor to deliver the report. Aaron Olver and Anne Zellhofer also joined him. Austin says that the four of them (including the mayor) are the negotiating team (including the mayor) and prepared a report at the direction of the council from FEb 25th, 2014. The report was supposed to be done by August 15th. They were at the Board of Estimates and gave an interim report on July 28th, presenting the project that had been brought through the RFQ and negotiating phase. The message back to them was that the project was too expensive. They went back to the table with that message, the developer is prepared to continue negotiating. The developer asked to continue negotiations through October 15th, which would be before the capital budget would be considered to allow them to figure out other ways to lower the city investment. That will not bring back a different development, but allow them to frame alternatives that would significantly lower the city investment and implications for the development, land uses for the development and the cost and approach to the project in terms of financing. It allows them to bring them the information that they want.
Larry Palm comments on the down-scaling of the building and the best and highest use of the land. In his opinion if there is a substantial reduction in the size he wants to make sure that they build for expansion given the lack of availability of land.
David Ahrens asks about the letter of commitment for Bob Dunn’s equity share and the source of the debt for the proposal, has that been forthcoming since the last meeting? (Someone off camera says “no”, I think it was Olver) Ahrens says that leads him to believe that the issue is not about a 400 room or 200 room hotel or if it is luxury or select, but the issue is if the developer has other sources of money. He says we can’t have a tiny hotel, but what is needed is a showing that the developer has a source of debt and this has been going on for 6 months now and there has been no showing to that affect and how is that likely to change by October 15th.
Austin says they will likely not have the commitments by October 15th, a normal process they would not expect to have the commitments in place. Tey asked the developer to show financial capability during the RFP and RFQ processes and that has been vetted as part of that, the equity partnership is real partners and entities with real proposals about what would go into the project. They need to modify that as the process goes forward, along with the city commitment.
Olver the other part that is embedded in your question is that when the Edgewater was constructed, there was a replacement for the TIF and I don’t know exactly what that was, but there appear to be stakeholders willing to do that in that project that are not the same as the stakeholders in this project.
Joe Claussius says he doesn’t think the project is dead in the water yet, but he wants to see a a scaled down project but we all agree the parking lot is going to be done regardless in some shape and form. If this comes back as a total project can you break it out and address the parking ramp and the 150 room block and the rehab of the municipal building. He thinks it is going to have to be done piecemeal. If the developer comes back with a lower price we can deal with he would consider the whole package. He would like to see the components separately.
Mayor asks if he has been sneaking peaks at the capital budget.
Claussius says there are rumors.
Mayor says that with any kind of development there are two important things to do, look at the land and the highest and best use and when you have a specific need, you ask where is the best site. The two of those don’t always converge, hopefully often they will. The utilizing this land and the back half is obviously one consideration, tho in terms of most uses, I think it is pretty certain, this is something that goes back to the ULI discussion, this is something that will utilize a TIF, this goes back to the discussion last week about downtown construction and while we have net profitability over a period of time, for both the city and the school district and the county, it is very difficult to do significant construction without TIF, as long as they are able to build surface parking lots in cornfields, that is the economic reality of what we are competing against. Until we get a state legislature that is willing to realize that amendments to TIF law and problems with land use provision going back ove rthe last 20 years and in some longer, until we have a legislature with the wisdom to recognize that, we are going to continue to have this problem. If the back portion of this block is not used for a hotel, we are very limited in terms of a hotel site within 2 blocks of Monona Terrace. Right now, the revenues that come in from te room tax based on Monona Terrace booking is very profitable for the city and it is basically our single, controllable source of revenue, the only one we have, because of the limitations on the property tax and other alternatives, because of the way Wisconsin state law works. We don’t have employment taxes, we don’t have local income taxes, we don’t even have a local sales tax, so I think we have to keep that option open. WE have to realize that we have to have additional hotel rooms. Its not as good as having additional hotel rooms AND meeting space, we really want to grow that revenue source. Yes, we will look at ways of doing renovation of this building in a separate package, that is part of the Capital budget, there is a separate item on the parking and in terms of the back half of this block as a third alternative they are trying to keep the option open until they vote on the capital budget. He would have liked to have put in a complete package but it didn’t seem realistic in regards to where they are in terms of this part of the project.
Mike Verveer says he doesn’t disagree with Clausius’ pessimistic view and asks Austin to expand on the paragraph on page 6 in terms of the thoughts of the developer in terms of where we sit now.
Austin says there is not a lot to expand on but they wanted to make sure if the project is reconfigured to reduce city investment that the developer was willing to continue to discuss that with the city. If the developer was not willing this iteration of Judge Doyle Square would be dead. That was the single most significant piece of information since the 28th, the willingness of the developer to proceed given the city’s desire is, given that the project is too expensive. They are willing to proceed to find alternatives to lower the city’s investment and do that evaluation, because you will want to know it is still worth doing. They intend to do that level of analysis. He doesn’t know what the options are. They know where the investment is needed, its promarily on block 88, on the hotel site and there are probably some opportunities on block 105, but then you get into the room block, the meeting spaces, teh amenities of the hotel, the design, they all work together and you will have a different, not inferior, product. This next 45 days will allow them to come up with detail to allow them to come up with the next steps.
Verveer says some of the specifics are those that they talked about at the Judge Doyle Square Committee, to get to a project they can afford. To follow up, and cut to the chase, the developer has said they are able and willing to work with this 60 day extension and keep with the capital budget calendar and they see a reason to keep meeting? Austin says yes.
Palm asks about the phases, 105 has the parking and the amenities and residential above it, the parking is under the road and those things can conceivably be done with nothing on top of it at all.
Mayor says yes, that is the way the envision the budget for next year.
Austin says, replace what we have.
Palm says rather than replace what we have, we won’t have parking for the future use of the land, from talking to ULI they need 2 spaces for every 1,000 sq feet and presumably we need to build a parking structure that gestimates a future use of this land.
Austin says yes. Mayor says parking would come up to the edge of the block and be able to interface with whatever gets built on the block. Something at some point would be able to be put on the site if they build everything else.
Ahrens asks if there is an assumption that JDS is the developer for 105.
Austin says for the private components.
Mayor says the only part in the budget is the parking utility piece.
They accept the report and give a 60 day extension, they will have a resolution later. (Arguing about process . . . )
