Library Revisited

Congratulations Madison, you’ve blown another economic development opportunity. Is anyone surprised the new library project and its related private sector development are now dead?

And before the city rushes forward with renovation of the existing library, there’s another, less expensive alternative the city should consider; do nothing, which saves the taxpayers the cost of a non-urgent expenditure at a time when most taxpayers are having a hard time making ends meet.

Another reason I would urge the city to not consider the renovation option is because, as any developer who has renovated an old building knows, the cost to renovate is always more than the cost to tear down and start over.

Then there is the big question of the city’s ability to raise the necessary private donations for the project to proceed. Under the renovation scenario, the library foundation needs to raise $3.8 million in private donations to make the renovation a “go.” Considering that the foundation has been unable to secure a single dime in commitments for the Fiore proposal, I wonder how the city can assume that almost $4 million in donations will be secured during the present economic hurricane.

But enough about renovation. Looking at how the city got to where it’s at today, the disconnect between Fiore’s cost quote and the city budget is a good lesson for taxpayers wishing to understand why our local government budgets have ballooned. Let’s start with the false assumptions that the city made when comparing the original T. Wall Properties proposal to the Fiore proposal that made the Fiore “gap” smaller than the real figure. In the city’s side-by-side comparison of the two proposals, the city showed the funding gap under the T. Wall deal at $7.8 million while the Fiore gap was over $13 million, a $5.2 million difference.

However (surprise), under the city’s magical analysis, it assumed the Library Foundation would raise an additional $3 million in private donations for the Fiore deal as compared to the T. Wall proposal. Why was this? Because T. Wall offered a $3 million donation (in writing) that reduced the private sector donations needed to $7 million, versus $10 million needed under the Fiore proposal. In order to make the Fiore gap smaller, the city added $3 million in assumed donations to the Fiore side of the analysis. Poof! The Fiore gap becomes $5.1 million rather than a very real $8.1 million. Ironically, the city Library Surplus Committee actually went on the record in a public meeting asking the two developers what contribution they would make to the project, and then rewarded the developer which didn’t make a contribution commitment.

Here’s the beauty of all this: the city chose the Fiore proposal knowing the gap was $8.1 million, but then later “finds” the gap between the Fiore deal and the city’s budget is too large, calling off the project. And this is a surprise?

In addition, Fiore was requiring the city to pay it $13.5 million over 20 years for air rights on the Fiore property. That’s right, while Fiore was valuing the library property at the $4.0 million Fiore was going to pay the city, Fiore was valuing its own adjacent property at more than three times that! But don’t fault Fiore; they were completely upfront about all this in their proposal. Fault the city for accepting a deal with fleas. Worse still, the city decided that this additional cost for the air rights would not be taken into account in the comparison of the two projects.

On top of that, the Library Surplus Committee’s scoring analysis was completely subjective — so subjective in fact, that many committee members awarded the higher cost proposal with more points! If specific criteria were employed, the lower-cost proposal would have received more points. Instead, the subjective personal opinions of committee members were allowed to rule. The end result: the proposal that cost $8.1 million more upfront, plus $13.5 million more over time, was rated as being more cost effective. Only in Madison!

But wait, there’s more! The Fiore proposal included a requirement that Madison commit to providing $10 million in Tax Incremental Financing to make good on the promises for re-development of the old library site.

Unfortunately, that’s Madison. The lack of leadership and the desire to put every decision to the neighborhoods for endless debate has killed more than a few downtown developments. I personally have added up the death rate and the total comes to well over $1 billion in economic value and thousands of jobs. That tax base would have added over $25 million in property taxes per year! That would solve a lot of city and school district budget problems, now wouldn’t it? (I never will understand why the school district doesn’t weigh in, favoring more commercial development that would increase the tax base.)

But the real question remains, why was the proposal that cost $21.6 million more chosen over the one that met the city budget? My own personal observations are these, be they right or wrong … a handful of neighbors and committee members decided they didn’t want the library to be part of a mixed-use building, and accepting a $3 million donation from a developer would have meant giving the developer some say in the design and naming rights.

They preferred a freestanding building fully funded by the taxpayers with no private sector involvement. For you see, this would mean that they and they alone would control the final product.

When will the city wake up and realize that private development is what pays the bills and creates jobs? It’s not a coincidence that the city and the school district have budgetary difficulties following years of rejecting new property tax base from being developed. Here’s an equation the government types might want to think about: Private Development = More Tax Revenue = More Ability to Pay for City Services and Schools!

Is it any wonder that our nation is in the mess it’s in today? We’ve got career politicians who don’t understand a thing about budgeting, finance, job creation, and most important of all, they don’t understand that it’s not their money. They start off in local offices, then move onto the county boards, then the state legislature, and then finally onto the federal government without having spent any time having to make a sale, make payroll, hire or fire, or operate a business.

Isn’t it time we get back to a citizen legislature, when regular citizens temporarily pitch in and serve the people for a period of time before heading back home to their real jobs?

Sign up for the free IB Update — your weekly resource for local business news, analysis, voices and the names you need to know. Click here.