Best Delivery Method for New Library?

You might be wondering what’s been going on recently with the library project. After gaining City Council approval in November 2009, the Fiore-Irgens development team and City Staff have been diligently reviewing i) the relative benefits of various project delivery approaches for the new Madison Central Library facility, and ii) structuring ownership to maximize the benefits available from the New Markets Tax Credit program. Concurrently, the City has been progressing through the selection process for interior design services.

As you may recall, the RFP issued by the City of Madison in September 2008 anticipated that a Library Condo Unit would be finished to “grey box” specifications by a private developer and 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 the requested turn-key development of the library “grey-box” building shell at the price to which we committed. 

Current overall project budget constraints, timing concerns and the political sensitivity of this project have led Fiore-Irgens to suggest that an alternative project delivery method may be better suited for the library project. This alternative project delivery method is known as a “developer services approach”. This approach allows the project to be managed as a whole where the City undertakes the entire Project as Owner and engages Fiore-Irgens as “development manager.”

We believe a public works project utilizing a developer services approach is the best delivery method in order to achieve the $37 million cost target established by the Mayor and approved by the Common Council. Some of the advantages of this approach include:

• Development management will encompass the entire project (both shell and interior) creating a single point of accountability. Full alignment of interests will eliminate potential cross-fire about where certain costs must be borne.
• Time will be saved because fast-track construction processes that overlap shell and interior construction will be enabled.
• The overall project budget can be better understood and managed by the City because all parts of the project are managed as one.
• Value-engineering options will expand because trade-offs can be made across the entire project scope, i.e. shell savings can be applied to interior improvements and/or interior savings can be applied to shell enhancements.
• Financial (and political) risk is mitigated because total Project costs will be fully understood before the City becomes obligated to acquire the site and start construction expenditures.
• Most efficient utilization of New Market Tax Credit funding opportunity due to consistent ownership throughout project development, design, construction, and operations.
• Total development, construction management and owners representation fees will be reduced. (The entrepreneurial return is shared with City.)

The developer services approach recommendation is based on our team’s interest in creating a structure best suited for the project and the City, creating as much value as possible by extending the buying power of the $37 million project budget, and providing a solution to give the project the best opportunity for success. Fiore has a unique long-term interest in the success of the Central Library development and the team we have assembled reflects our care.

We look forward to continue working with the City to create a world class library within the budget approved by the Mayor and Common Council.

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]