Of course, the one thing the city negotiators conceded on was the Labor Peace Agreement . . . and it appears to have cost us $1.25M more? (notes on “fee structure” are unclear to me) Board of Estimates will be discussing this tonight . . . in closed session . . . public beware.
LAST FOUR REMAINING ISSUES IN NEGOTIATION
So, according to the memo from Friday . . .
There were 4 remaining issues 2 weeks ago
1.Development Services Agreement terms;
2.Timing of the demolition of the Government East Garage;
3.Project Labor Agreement and Labor Peace Agreement language;
4.Termination language
The memo outlines the city’s position, Beitler’s position and what happened.
Development Services Agreement (DSA) Terms (Section 5.1(a))
City: City to coordinate design and construction of the public development (new parking garage) with Beitler. City would execute a DSA with Beitler for services and pay time and materials up to a maximum not-to-exceed contract of $250,000.
Beitler: Beitler to have day-to-day management of the public developmentincluding directing team members of the public development.The City would execute a DSA in the amount $1.5 million,payable over 20 months at $75,000 per month. (Estimated design and construction period)
Compromise: Beitler modified language in Section 5.1 of the agreement and Exhibit D to be ore
responsive to the City’s concerns. City accepted Beitler’s proposed fee structure.
GE Garage Demolition Timing Section 5.1(e)
City: Beitler has the right to request that GE be demolished in advance of the completion of the new garage on Block 88, subject to the City, in its sole discretion, finding adequate replacement parking.
Beitler: Beitler has the right to request, after securing financing for at least one of the private development elements to be constructed on Block 105, that the City, on sixty-day notice, vacate the GE ramp and commence demolition.
Compromise: Beitler accepted City’s language
Project Labor and Labor Peace Agreements Sections 5.2(f) & 5.3(c)
City: City wanted a Beitler commitment to enter into a Project Labor Agreement during the construction period and a Labor Peace Agreement for the operation of the hotel.
Beitler: Beitler has offered language that the private development’s general contractor will be responsible for all organized labor agreements in accordance with customary practices in the Madison market. Beitler has offered good faith negotiations for a labor peace agreement.
Compromise: City accepted Beitler’s language.
Termination Provisions Section 12.1(b)
City: Beitler must comply with the Schedule in Section 5.2(d) unless the parties agree to extend the date.
Beitler: Once Beitler has commenced one private development element, the schedule in Section 5.2(d) for the remaining elements no longer would apply.
Compromise: Beitler accepted City’s language.
DETAILS – IF APPROVED
The full development agreement is here. It’s 32 pages of legalese. So this is the summary that was provided to the council.
Article I – Development of the Project
The project will implement option B of the Beitler Request for Proposals response which was selected by the Common Council on April 19, 2016, and is comprised of three private development project elements.
1.On Block 88, an apartment element of approximately 144 units and a retail/commercial component of approximately 33,400 square feet plus ancillary parking.
2. On Block 105, an apartment element of approximately 210 apartments and a retail/commercial component of approximately 7,800 square feet plus ancillary parking.
3. On Block 105, an urban mixed-use hotel element of no less than 250 guest rooms within
approximately 164,000 gross square feet of floor area plus ancillary parking.
The public development consists of two public development project elements, the replacement of the City’s Government East garage with an approximately 600 stall underground ramp, and a bike center on Block 88.
Article II – Division and Leasing of the Property
Upon completion of the public ramp on Block 88, the City will lease to Beitler portions of the property on Blocks 88 and 105 under terms provided in Exhibit B of the development agreement. Key elements of those terms are:
Term:
98 years with two 50-year extensions options
Rent:
Block 88 apartment parcel: $180,000 annually
Block 105 apartment portion: $225,000 annually
Block 105 hotel portion: $350,000 annually
Rent Escalation:
Beginning in the 5th lease year, rent will escalate 5% every 5 years.
Rent Commencement:
First payment will begin 10 months after issuance of the Certificate of Occupancy by the City.
Property Taxes: The private development will pay its property taxes.
Subordination: Any debt will be subordinate to the ground lease agreements.
Termination:
1. At the end of the term of the ground lease agreements, including extensions;
2. In the event of default under the ground lease agreements;
3. Failure to comply with the timeframes of Article V of the dev agreement;
4. By mutual agreement of the parties.
The City will create, approve and record a two-lot certified survey map for Block 88 prior to the public development closing on Block 88 to create a MMB parcel and a Block 88 development parcel.
Article III – Public Development Financing
The City will start the construction of the underground public parking facility by May 1, 2017 and be responsible for all costs of the public ramp, City fleet parking and the bike center. Sources of funds for the public development are Parking Utility reserves (estimated at $13 million) and TID #25 cash (estimated $24 million).
Article IV – Land Use Approvals; Permitting
The City and Beitler will each pursue the needed land use approvals for their respective developments on Blocks 88 and 105, following the Master Development Schedule in Exhibit C.
Article V – Construction of the Project
Section 5.1 – Public Ramp.
The City of Madison will be responsible for the design and engineering of the public ramp, including the bike center, the preparation of bid documents, the bidding process and the construction of the public ramp on Block 88, and the demolition of the Government East facility on Block 105 prior to the private development closing. The public ramp shall be completed by November 30, 2018.
Beitler has the right to request that the Government East Ramp be demolished in advance of the
completion of the public ramp on Block 88, subject to the City, in its sole discretion, finding adequate replacement parking.
The City will contract with Beitler to provide pre-construction and construction phase coordination services as described in Attachment D, on a time and materials basis, for a not-to-exceed cost of $1,500,000 to be paid in level amount over 20 months.
Section 5.2 – Private Development.
All private development costs are to be responsibility of Beitler. The closing of the financing of not fewer than one private development element, as described in Article I, must occur within 24 months of the public ramp completion date. The closing of the financing for the second and third private development elements must occur no later than 36 months after the public ramp completion date.
Prior to commencement of the private development, Beitler shall cause its general contractor to execute an agreement with the City governing targeted business participation with a private
development goal of at least 10% of all construction contracts awarded to targeted businesses.
The private development general contractor will be responsible for all organized labor agreements in accordance with customary practices in the Madison market.
Section 5.3 – Block 105 Hotel.
The plans for the Block 105 Hotel advanced by Beitler will incorporate the brand and operator of the hotel and a room block agreement to support Monona Terrace and will be subject to review and approval by resolution of the Common Council prior to the private development closing.
No later than the Block 105 Hotel opening date, Beitler and/or its successor in interest shall supply to the City evidence that Beitler, or its successor in interest, has entered into (or caused the Hotel operator to enter into) good faith negotiations for a labor peace agreement with a labor organization that validly represents hotel employees and seeks to represent the Block 105 Hotel workers.
Article VI – Conditions Precedent to Project Commencement
Prior to the public development commencement, the City must (1) approve and record the Block 88 certified survey map, (2) budget funding for all of the public development, (3) receive certification of a TID #25 Project Plan Amendment from the Wisconsin Department of Revenue, and (4) receive land use approvals for the public ramp including the bike center.
Prior to the private development commencement, City must (1) complete the public ramp and (2) deliver to Beitler a Phase I environmental report and any recommended follow-up testing covering the entire property. Beitler must (1) execute the ground lease agreements, (2) receive land use approvals for each private development element and (3) receive approval from the Common Council of each element of the Block 105 Hotel development set forth in Section 5.3 of the agreement.
Article VII – Article XI – City Boiler Plate Provisions
Article XII – Termination of the Agreement
The development agreement will terminate if:
1. The City fails to satisfy all of the public development conditions by the public development closing deadline;
2. Beitler fails to comply with the schedule in Section 5.2 of this development agreement; and
3. The date on which all of the parties’ other respective obligations under this development agreement are satisfied.
IF APPROVED, WHAT’S NEXT?
The council will vote on this July 5th.
The resolution says the following:
NOW, THEREFORE BE IT RESOLVED that the Common Council does hereby accept the Recommendation of the Board of Estimates and the June 24, 2016 Amended Report of the Judge Doyle Square Negotiating Team and authorizes the Mayor and City Clerk to execute the Development Agreement with Beitler Real Estate Services, LLC for the Judge Doyle Square Project and directs follow-up actions by the City including executing the Ground Leases, Developer Services Agreement, and any other necessary contracts and the recording of the same to fulfill the objectives as described and agreed to in the development agreement subject to final approval by the City Attorney;
BE IT FURTHER RESOLVED that the City hereby finds and determines that the project is consistent with the public purposes of Tax Increment Finance Law, representing the potential to eliminate blighting conditions, attract and retain businesses and employment in the Capitol Square area that would stimulate redevelopment in TID #25, thereby making more likely the accomplishment of the public purpose objectives set forth in the Project Plan, the TIF Law and City TIF Policy.
The memo has more details:
City Financial Participation, Land Use Approvals
• Development Agreement to BOE – June 27,2016
• Development Agreement to Common Council – July 5,2016
• Sign Development Agreement – July 15,2016
• 2017 Executive Capital Budget to Council – Sept 6,2016
• Board of Estimates Action on Capital Budget – Sept 26,2016
• Final 2017 Capital Budget Adopted by Council – Nov 14-15,2016
• Land Use and CSM Approvals/Recordings/Permits – By May 1, 2017
• Public Development Commencement Closing – May, 2017TID #25 Project Plan Amendment
• Letter to Overlying Taxing Jurisdiction – July 25, 2016
• Introduce Resolution to Common Council – August 2,2016
• Organizational Joint Review Board Meeting – August, 2016
• Plan Commission Public Hearing and Action – August 29, 2016
• Board of Estimates Action – September 12, 2016
• Common Council Action – September 20, 2016
• Joint Review Board Action – Early Oct,2016
• Documentation to DOR (deadline) – October 31, 2016
• DOR approval of Project Plan Amendment – First Quarter 2017Public Ramp Construction
• Design, Bid and Award Public Ramp Construction – July 2016 -May 17
• Demolition of MMB Annex – By May 1, 2017
• Complete Construction of Block 88 Public Ramp – November 2018
• Commence Demolition of Government East Garage on Block 105 – November 2018
