Judge Doyle Square vote: Proponents optimistic that project will succeed

During Tuesday’s Madison Common Council debate, opponents of the proposed Exact Sciences development at Judge Doyle Square expressed a fair amount of pessimism about the future of the company and the project, but nothing has shaken the proponents’ belief that it’s a game-changing project for downtown Madison.

Following yet another debate that ended in the early-morning hours, the council voted 12–6 to approve a development agreement that calls for $46.7 million in public costs and tax incremental financing. Other municipal bodies can still modify elements of the $200 million project, but common council approval virtually ensures the project will move forward on a timetable acceptable to Exact Sciences, which had other suitors.

“The vote is an important statement about who we are and what we are becoming as a city,” says Zach Brandon, president of the Greater Madison Chamber of Commerce. 

Exact Sciences, a molecular diagnostics company now headquartered in University Research Park, is rapidly expanding its workforce after receiving Food and Drug Administration approval for Cologuard, its non-invasive DNA screening test for colorectal cancer.

The Judge Doyle Square development will take place on two city blocks that now contain the Madison Municipal Building and the Government East parking garage. The mixed-use development will include 250,000 square feet of space for a new Exact Sciences headquarters, plus another 107,000 square feet for future expansion, a 216-room hotel to serve as a second convention hotel for Monona Terrace, 600 public and 650 private parking spaces, and a bicycle center. 

Susan Schmitz, president of Downtown Madison Inc., is among those who believe the presence of Exact Sciences will be a “game-changer” for the downtown. She notes in the 5th annual “State of the Downtown” study that 44% of the downtown workforce is in public administration, 11.9% is in accommodations and food, and only 8.2% is in scientific and professional services. “With 44% the downtown workforce being in public administration, that won’t support the housing and retail services or the schools in the long term,” she says. “The downtown needs a more clear economic strategy to attract what we would call traded-sector employers. Those are industries that create goods and services sold outside the area, thus bringing in money instead of just circulating local money.

“A good example is Exact Sciences because it’s a high-value, traded-sector company.”

City priorities

City funds would be used for land acquisition, the private parking spaces, and to support job creation by Exact Sciences. Critics of the proposal objected to using tens of millions in public funds for a private business when there are so many unmet social needs, including more public housing.

Former Madison alder Nino Amato, who has served as a senior executive corporate officer in the health care, biotech, and energy industries, believes there are too many unanswered questions about the project. However, he gave it a qualified endorsement and advised the city to address one red flag in particular. Amato, who now serves as president of the Coalition of Wisconsin Aging Groups, notes that every time he’s done due diligence for venture capitalists or other investors, he’s found that when a company has only one product, it is an immediate target for an acquisition or takeover.

“Somewhere in this complex, layered contract, the city needs to insert a legally binding clause to protect their investment and the taxpayers by making it clear that the financial obligations to the city automatically transfers to whoever should acquire or potentially partners with Exact Sciences,” Amato advises.

Project supporters point to the large number of government properties that are tax exempt, and note the city must take advantage of private development opportunities to expand its tax base. According to Jeff Huemmer, a property appraiser with the city assessor’s office, the most recent estimate shows the Judge Doyle Square development would increase the value of the two city blocks by nearly $106 million.

Brandon notes that tax incremental financing is about using the growth of tax base to repay the debt, so the city is investing in itself and its economy. “It’s too myopic to think of a solution to a challenge as big as poverty is about saying we should just put more government money into those programs,” he states. “Those types of programs have to be augmented and, in fact, should follow private sector development because it’s not just about tax base, it’s about jobs and jobs that have ladders.

“We heard the testimony Tuesday night from a number of people who said they came to Exact Sciences and were able to grow within the organization,” Brandon adds. “It’s exactly the type of organization that we’re looking for, where there are ladders to progress within the company. The fact that we can open our economy and become inclusive in our economy to that underrepresented side of the workforce will do more to change the trajectory of poverty than any government program.”

Exact Sciences CEO Kevin Conroy has said the company needs to start the building project by the end of 2015 so that it could move into its new headquarters by July 2017. Other suitors included University Research Park, Fitchburg, and the Town of Madison, where Exact Sciences already has a clinical testing lab that handles patient samples. No matter where its headquarters is located, Conroy says the company would continue to operate the testing lab in the Town of Madison.

Agreeable terms

Under the terms of the development agreement, Exact Sciences would face penalties if it fails to create a certain number of new jobs by various dates.

The project developers, JDS Development, which is comprised of the Hammes Co. and California-based Majestic Realty, must guarantee $20.8 million in property taxes from a public parking garage.

Still to be determined are the convention-friendly components of the hotel. The hotel is needed to complement Monona Terrace in a way that Madison can compete more effectively as a destination community. Deb Archer, president and CEO of the Greater Madison Convention and Visitors Bureau, wants a hotel with amenities that convention-goers would expect and have them on-site and inside the property. That would include networking spaces, small meeting spaces, and food outlets.

“All we really know at this time is the room count and the location,” Archer says. “The discussions about brand or flag and the scope of meeting space and amenities inside the hotel — those are important parts of the next phase of conversations with the developer. We will stay as close as possible to the city in terms of that conversation to help guide those decisions.”

From the standpoint of downtown businesses, another important aspect of the project is how the city will handle the parking issues that will arise as the aging Government East parking garage is replaced with a new parking facility. Brandon says the Chamber of Commerce will be engaged with city planners to develop the least disruptive plan possible.

Click here to sign up for the free IB ezine – your twice-weekly resource for local business news, analysis, voices, and the names you need to know. If you are not already a subscriber to In Business magazine, be sure to sign up for our monthly print edition here.