Let’s Correct the Record

By now you’ve heard that the new Madison Central Library proposal is “dead.” I’m not interested in speculating on why this played out the way that it did. Let's just say that it is very disappointing to our entire team.

However, there have been some inaccurate impressions in recent media coverage about the price and process dispute between Fiore-Irgens and the City of Madison. So I’d like to set that record straight. Here are the facts:

1. Fiore-Irgens never raised its price on the grey-box library shell. In fact, we reduced it in August 2009 from the original price of $27 million to a then-current price of $23.9 million. We stood by this price through the Common Council deliberations and after.

2. Fiore-Irgens never changed the deal. In December 2009, we prepared a discussion memorandum on “Project Issues and Development Roles/ Responsibilities” in which we recommended an alternative delivery approach to the City that would bring process efficiencies and cost savings to the City to help assure completion within the budget. Here’s how we described our position:

The RFP issued by the City of Madison in September 2008 anticipated that a Library Condo Unit would be finished to “grey box” specifications, then sold to the City. The design and build out of the Library Condo Unit would be the responsibility of the City and be subject to the city’s Public Works Contracting Ordinances. Fiore-Irgens remains ready, willing and able to carry-out this request for turn-key development of “grey-box” building shell. However, given budget constraints, timing concerns and the political sensitivity of this project, Fiore-Irgens recommends that a developer services approach be taken, in which the City undertakes the entire Project as Owner and engages Fiore-Irgens as “development manager” to provide services that will mitigate normal development cost risks.

This recommendation was never explored by City Staff, who instead determined that they wanted to undertake the public works approach without our development team.


3. Fiore-Irgens never demanded $2.7 million for services rendered to-date. We did attempt to accommodate the City by offering to sell the site and project work. However, we were very clear that this price must include some compensation to our team for the many thousands of hours that we spent on bringing the project to this point.  We asked for $900,000 for development services to-date.

A Major Hurdle Cleared

This IS The Right Time!

One of the common reactions to the proposed new Central Library for the Madison Public Library system is:

"I support this project, but think it should be delayed for a few years until the economy recovers."

This would seem to be a reasonable, but to further delay action will be costly.

Why? ... Because we have a rare opportunity as a community to build a new library for a small fraction of its usual cost due to a unique confluence of factors:

1. Historically low interest rates. Just as if you were buying a new house, the City will borrow the capital to fund this construction and repay it over time. (Because Madison is so fiscally conservative, it plans to pay this "mortgage" back in only 10 years.) Interest rates on municipal debt are now lower than they've been since Lyndon Johnson was in the White House.

These rates are not expected to remain this low for long.

2. Federal subsidy is currently available under the New Markets Tax Credit program that is expected to range from $6 - 8 million. The City funding commitment is only $17 million - out of a total budget cost of $37 million.

The New Markets Tax Credit program is currently set to expire after 2010.

3. Construction prices are currently depressed. The estimated cost to build the library is $6 million lower today than it was one year ago. However, material costs are already beginning to move upward.

In short, there has never been - nor may ever be - a better opportunity in our lifetimes to make this much needed investment in the Madison Public Library system.

The Mayor's office has estimated that the cost on the average Madison home will average $17 per year starting in 2011. And when the debt is paid off after 10 years, the City will continue to enjoy new tax revenues from the redevelopment of Block 66 for decades to come thereafter.

This investment is worth it. And we owe it to future generations to act wisely now.

Strong Support from Three Former Mayors!

The Wisconsin State Journal ran a guest column today co-signed by three former Madison mayors expressing their support for a new Downtown library:

"As three former Madison mayors, we have followed with great interest the various proposals for a new Madison Central Library.

We were very gratified to see funding for the Fiore/Irgens proposal for a new Central Library in Mayor Dave Cieslewicz's proposed capital budget, which the City Council will consider this fall.

We couldn't be more supportive..." [read more here]

A Conservative Economic Analysis

One of the important factors that weighed in Mayor Cieslewicz's decision to support the new Central Library is the impact analysis performed by Andrew Statz, his Fiscal Efficiency Auditor. He described this analysis in a powerpoint presentation to the Common Council on August 27, 2009.

Everyone acknowledges that significant new tax revenues will flow to the City from redevelopment of the existing library site. Indeed, our team estimated that these new revenues could exceed $100 million over a 50-year horizon, including just the City portion of property taxes and room taxes. However, before putting this project in his 2010 capital budget request, Mayor Cieslewicz wanted to take a look at this from a very cautious and conservative perspective.

Statz did this in his comparison of the costs and benefits of the proposed project with those of the remodeling alternative. His conclusion was that in a worst case scenario the net cost to taxpayers over a 15-year horizon would be no greater for the new library than the remodel. Under expected conditions, the new library will actually be $8 millions less.

What makes his assumptions conservative?

1. A 15-year analysis period was used. This timeframe covers repayment of all City debt and results in four years where the tax revenues exceed the debt service costs. However, tax base created by the Phase II development will generate revenues to the City for decades thereafter.

2. Debt service costs were estimated assuming a 5% interest rate. Current ten year rates for municipal bonds are 3.3% - and federal "recovery zone" subsidies could reduce this rate even further.

3. Property tax rates and assessments are projected to decline every year during the analysis period. In contrast, Fiore-Irgens projections reflected a 2.5% average increase in property taxes.

4. The "status quo" value of Block 66 is escalated by 4% annually to determine the increased property taxes. On the other hand, the value of the fully-improved Block 66 is assumed to increase by only 2%.

We are cautious investors ourselves, and generally approve this approach. After all, if a project still makes sense when the assumptions are stacked against it, you know you have a good one!

Access: City HallA New Central Library

Stu Levitan hosts an hour-long program that takes an in-depth look at issues facing Madisonians. The current episode looks at the New Central Library.

Click the image above to watch this episode.

Mayor Backs New Central Library

News: Mayor Cieslewicz Proposes New Library in 2010 Capital Budget

Mayor Dave Cieslewicz has thrown his support behind construction of a new library. This was a very important move forward for this project. Next step: Common Council approval of the capital budget.

We are also pleased to have received strong backing for the new Madison Central Library from Capitol Neighborhoods, Inc., Downtown Madison, Inc. and the City of Madison "Downtown Coordinating Committee."

Wisconsin State Journal, Sunday August 30, 2009:
Madison Mayor Wants to Move Ahead with $37 Million Library

Briefing Memorandum

At the request of the Madison Common Council, we prepared a brief that addresses many "frequently asked questions." Topics covered include:

• Public Library Role
• Central Library Role / Issues
• New Library Development
• Design Questions
• Economic Benefits
• Timing / Funding Concerns
• Rehab of Existing Building Alternative

If you are interested, you can download a copy here.

Should Madison simply remodel the existing library building?

At a minimum, the existing building requires mechanical and structural repairs in excess of $8 million. These expenditures would be funded exclusively by City of Madison taxpayers, and these maintenance expenditures will not make any improvement to the interior or exterior appearance, nor improve the functionality, of the library.

We’ve seen several proposals over the past decade that promised significant improvements to the existing building. Fiore-Irgens estimates that a comprehensive budget for renovation of the library would cost at least $30 million, and this estimate is consistent with the findings from two prior renovation studies by the Madison Public Library, which both estimated renovation costs at $28 - $30 million.

But when comparing options it is important to compare both costs and benefits. Even with $30 million of improvement, the renovated library would perpetuate the following deficiencies:

o Lack of natural day lighting. The entire rear elevation of the existing library is without windows and 40% of building area is below grade.

o Low ceiling heights. The two public floors of the existing library are 14 ft high from floor to floor, which yields a finished ceiling around 9’. This ceiling height is inadequate for effective utilization of natural daylight, will consume more energy for lighting and will still present a dark, institutional environment. It will also continue a displeasing sense of proportion in the space. Larger floor areas demand higher ceiling heights.

o Compromised Functionality and Less Public Space. The remodeled library would consist of two and a half floors (75,000 SF) above-grade including a new third floor addition. The remaining area (23,000 SF) is very low quality storage/mechanical space located in the basement level. A substantial portion of the collection will remain inaccessible to the public in this area.

o Limited Meeting Space. The remodeled library allows just 4,200 SF of meeting space, which is only a modest increase from the existing facility.

o Lack of Parking. The lack of connected parking at the existing Central Library diminishes its ability to serve as a community-wide destination.

o Limited Visibility and Exposure. The building itself is out of scale with surrounding uses, and the Mifflin Street location provides poor visibility within the community.

Most significantly, a remodel "compromise" would cement the existing under-utilized condition of this site for one or more generations and foreclose the opportunity for the City to realize the “highest and best use” of the entire block. This would be a tragic lost opportunity for Madison taxpayers. Based on the City Assessor’s estimates, building a new Central Library on West Washington Avenue will unlock future City of Madison tax revenues on Block 66 to the tune of $25 million over the twenty year period that follows construction.

3D Model of the Proposed New Central Library

Our colleagues at Eppstein Uhen Architects have created a model for the new Madison Central Library. Here are some pictures . . .





You might also be interested in viewing the "fly around" computer model.

A Common Question

"From the comments on my Central Library story today, you might think so. In some ways, the idea makes sense on the surface -- if you can find information online, why go to a special building to do so? Looking at statistics from the Madison Public Library system, however, the short answer is 'no'..."
>>> Read more

Related links:
Have Libraries Been Made Obsolete by the Technology Revolution?

Excited to Move Forward

The folks at InBusiness invited us to participate in a web video to tie-in with their feature story about the Central Library project in their June 2009 issue. Requisite Video did a really nice job on the production. I think you can sense how excited we are to undertake this project! ... To see it, just click this image link to the IBTV video page:

NEWS FLASH: June 5, 2009

Last night, the Madison Public Library Board unanimously approved the selection of the Fiore-Irgens proposal for a new free-standing library. This was an important hurdle!

Our next step will be to engage in discussion with the Common Council about the costs and benefits of this project. We know that this mixed-use development - new free-standing library, new hotel with lobby at Mifflin/Fairchild, new structured parking for 400+ vehicles, new retail - will provide very significant economic benefits to the greater Madison area. Now we must begin to share this understanding with the community at large!

We are quite grateful for the recommendation by the Central Library Disposal Surplus Property Criteria and Selection Committee. This group spent six months deeply considering the options before the community. It also made great efforts to include public input.

A public hearing was held, including full presentations by Terrance Wall and the Fiore team, which was taped by Madison City Channel and is available online. We also participated in a Public Forum sponsored by Capitol Neighborhoods Inc.

We greatly appreciate the public service provided by the committee members!

Links of interest
Madison Library Board Backs Plan With Total Support,
Proposal for New Facility, Location OK'd.

The Rest of the Picture

We have argued all along that one of the advantages of the Fiore-Irgens development proposal is that it will "look good from all four sides of the block." And we have provided views of our project from all angles to support that assertion.

At the last Central Library Disposal Committee, we were finally provided a copy of the "rear elevation" for the proposed library development by T.Wall. (This had not been included in the RFP response ... for reasons quite apparent.)

I gave this elevation to our architects and asked them to illustrate the view from West Washington if the T.Wall building is constructed. Here's how it will look from Capitol West:


The material for this rear wall was described by the T.Wall team as "cement block." (At least the windowless wall at the AT&T Building is constructed of quality building material!)

So, which developer's vision do you think will create more value downtown? The T.Wall plan above?

Or the Fiore-Irgens plan shown below?


Only one proposal provides a comprehensive and integrated plan for this block. The Fiore-Irgens development plan will create more economic value from day one - and substantially more value for the community over the long-term.

Our Funding Plan

We understand that the City of Madison issued its RFP for a new library with a "budget in mind" of $30 million. This cost was to be funded with:

• $16 million of City financing (tax-exempt municipal bonds)
  $ 4 million proceeds from sale of existing library site
  $10 million from private section donations
  

However, both new library proposals are in the neighborhood of $40 million - well over the simple cost estimate. And to further complicate matters, the Madison Public Library Foundation seems to be unsure about its ability to raise more than $10 million in donations in order to contribute to this gap.

We have suggested a plan to the City of Madison that would bridge the funding gap by utilizing federal financing subsidies. Our alternate financing plan utilizes two different subsidies: 1) New Markets Tax Credits and 2) bond financing using Recovery Zone Economic Development Bonds or Build America Bonds.

In simple terms, this financing structure would allow the City to get $25.5 million of building for the same annual cost (or less) that would be incurred for $16 million without these federal programs. The New Markets Tax Credits would be structured to provide $8-10 million of "equity" to the Library - meaning that only $15.5 to $17.5 million would need to be repaid by the City.

Block 66 - the library block - is within a high-priority Qualifying Census Tract for New Markets Tax Credits. To learn more about New Markets Tax Credits, please visit www.cdfifund.gov/what_we_do/programs_id.asp?programID=5.

The Recovery Zone Economic Development Bonds are authorized under the American Reinvestment and Recovery Act of 2009. The Federal government will subsidize 45% of the interest on these bonds. Recovery Zone Bonds may only be issued until December 31, 2010.

What is a Library Worth?

At the last meeting of the Central Library Disposal Surplus Property Criteria Selection Committee, City Comptroller Dean Brasser mentioned that the City of Madison currently subsidizes the operating budget for the Madison Public Library System by $11 million annually. This translates into an annual cost to the city's taxpayers of $50 per capita.

If the City issues 20-year municipal bonds to finance $16 million of new library construction, this budget subsidy is estimated to increase by $1.2 million (or $5 per capita).

However, this modest increase in the library budget need not be borne by the taxpayer. If the investment creates new private development, the taxable property generates new tax revenues that will offset this cost.

Under our proposal, the new hotel, retail and parking facility is expected to generate an average of $2 million per year of property and room taxes (and more than $1.2 million in year one.) This represents a net benefit to the taxpayers.

In contrast, if the existing library is simply repaired for $16 million, no new tax base is created and the remodeled library will represent a new net cost to the taxpayers.

I've read a number of reports about the economic return from public libraries suggesting a return of $4 - $5 for every dollar spent... So libraries may well be one of the most productive investments that the public can make!

Curious for more? Here are some links you may appreciate:

Public Libraries - A Wise Investment - a return on investment study by the Colorado Public Library. I would guess that our community's relationship with the library may be consistent with these interesting survey results.

The Economic Contribution of Wisconsin Public Libraries to the Economy of Wisconsin by Northstar Economics. The title says it all.

Development Context

I walked around Block 66 with my camera to provide location context to our proposal for a new Central Public Library...

The corner of Fairchild and State Street. Overture Center for the Arts on the left.

View up Fairchild. We propose that the new library enjoy transparent window bays extending over the sidewalk similar to this element at Overture.

The existing Central Library is out-of-scale with surrounding uses and underutilizes its site.

View west down Mifflin Street. Overture Center on right. After the library moves into its new facility, Fiore-Irgens will purchase the old library site for slightly more than $4 million. We plan to build new hotel and retail facilities, with internal parking for up to 400 vehicles.

We expect new hotel and parking facilities on the existing library site to catalzye redevelopment on the 100 Block of West Mifflin. These storefronts have been vacant for almost 10 years.

The existing Central Library building presents an "unfriendly" pedestrian streetscape. View west from Fairchild Avenue to Mifflin Street

Network222 is a 190,000 sq ft Class-A office building owned and managed by The Fiore Companies. It is one of the most connected and fiber-rich buildings in the state and is served by fully underground dual-circuit power grid. These technology advantages will all be available to the new library.

Corner of Fairchild and West Washington. View northeast toward Capitol Building.

Corner of Fairchild and West Washington. View southwest toward Bassett Neighborhood.

View down West Washington Avenue from Capitol Square

Network222 in center. New library site to left (behind tree)

Site of proposed new library. The single story structure will be removed, but existing foundations and structure support will be re-used.

Property across Henry Street from new library. These historic structures create a welcome setback from the SBC Building.


View southeast toward Lake Monona from Henry Street. Capitol West condominiums and Capitol Lakes retirement community on right.


View west from Mifflin and Henry Street. Currently, another "pedestrian-hostile" streetscape. We envision sidewalk cafes...

Overture Lobby as viewed from the proposed new hotel lobby.

... and I Meant Every Word

Our team was asked to make a 15 minute presentation about our project at a public forum entitled What is the Future of Madison’s Central Library? Here’s what I what I used my time to say:

Our proposal for the Central Library is uniquely distinguished by several major features:

• It creates a new free-standing library on West Washington Ave – locating it on a primary downtown arterial and the major axis through Capitol Square. The site at West Washington will provide more visibility and stature to the Library as a civic institution, and the self-contained building provides maximum security and control for library staff.
  
• This approach completely avoids costly interim relocation and operational disruption during the construction period - and those costs are simply wasted resources.
  
• After completing the new library, we plan $46 million of new construction on the existing library site, which will generate new property and room taxes expected to exceed the entire City cost for the new library.
  
• This plan creates 400 new parking stalls that help satisfy the need found by the City’s LRTPC in 2001 - at the #1 location recommended by the City’s Ad Hoc West Washington Parking Committee in 2003
  
• Finally, it provides a green-built building at a guaranteed cost - and LEED-Silver certification reflecting the value Madison places on sustainability

The public experience will be outstanding at this facility. Southern exposures and 18 ft floor heights will bathe the interior with natural light. And bay window will provide the public with fantastic views of our city up and down West Washington and of both lakes - views usually reserved for the executive suite.

Our team well understands that more public discussion is needed about the value and role of libraries in our community and the central library in particular. But as a starting point, please allow me to share our beliefs with you:

• The role of the library is changing, but libraries are not becoming obsolete.
• Libraries are popular and well utilized by all segments of our community.
• The library is the only institution that offers free and equal access to all members of our society.
• Libraries are places of opportunity for education, self help and workforce development.
• Libraries are economic generators. Studies show that libraries provide $5 of economic benefit for every dollar invested.
• Great cities have great central libraries. And many have been re-investing in them to be properly positioned for the 21st Century.
• Great central libraries are popular destinations for the regional community as well as visitors to the central city.
• The central library performs substantial service for the branches in the system. The system is dependant on the central core.
• Libraries are icons to cultural intellect.
• Finally symbols are important within a community. . . and not just dollar signs

Madison is a city that values education, literacy, the search for knowledge, democracy and accessibility, welcoming the diversity of our community - and all of these values are most symbolized by the central library. Just as the State Capitol building is symbolic of the value we place on democratic government; so Madison’s Central Library should represent the value we place on free access to knowledge and opportunity for our entire society.

This is a defining moment for us… future generations are going to live with this decision - and we need to do it right.

I hope that you agree with me that one of the clear lessons from our current economy is that we must all begin to shift our focus from short-term financial thinking to a longer-term view. We must distinguish meaningful investment from short-term costs. And we must act responsibly.

Madison has a unique opportunity right now to take advantage of several federal financing programs to aid in the creation of a new Central Library. Washington has recognized that our nation’s infrastructure is aging and is providing resources for projects just like this. For example, we have identified programs that could provide $9.5 million of federal subsidy to our project. It is both wise and patriotic to participate in these. But realize that these extraordinary stimulus programs are only available for a short period of time.

Our proposal for the library - at an expected total cost of $40 to 42 million - appears on the surface to be the most costly option. But I would argue strongly that it is the best value. First, it’s a better and more valuable site and building structure. But more importantly, if Madison analyzes these 3 alternatives from the perspective of an investor - it will consider both costs and benefits.

And when the City’s cost is offset by the new revenues generated by each proposal - our vision certainly comes at the lowest net present cost. Similarly, the most costly alternative to the taxpayer is the remodeling option because it offers no new tax base - and its entire cost must be borne by the taxpayers.

Our architect - Steve Holzhauer at EUA - likes to imagine this image as a postcard - showing the Library as one of the icons of our City. And I think it would be one - not because it presents a flamboyant and gold-plated building, but because our attractive and functional architecture exploits the natural physical advantages of this location … Because the views out will be as pleasing as the views in. … And because it will be a highly visible landmark. This will be a place that is authentically special because of it topography and the attractiveness of Madison’s urban environment!

Finally, I want to comment on our development team. I am very proud of the professional firms we have assembled. Fiore - Findorff - Eppstein… We are all headquartered in downtown Madison - we understand the central city - and we have a long history supporting it. And we’ve added Irgens Development Group and PSA/Dewberry to form a “super team.”

We are here to work with you! . . . This selection will not be the end, but the beginning of an important public dialogue. There remains a long road ahead - and lots of decisions to make. We want to be your partner in this, and we hope to be given the opportunity. Thank you.

Pictures from Network222

These pictures were taken last week from the roof at Network222. They are comparable to the views that will be available to the public from the proposed library on West Washington Avenue.

View east to State Capitol Building

View south to Monona Bay

View down West Washington Avenue

The proposed outdoor patio on the top floor would begin 40 feet further east, and be about 30 foot lower.