Meeting Madison

As talks continue on Judge Doyle Square and the Alliant Energy Center, area execs try to shape the city's future as a corporate meetings destination.

From the pages of In Business magazine.

When event planners prepare to book conferences around the country, does Madison stack up to Chicago, or Milwaukee, or even Wisconsin Dells when apples-to-apples comparisons are being made?

Meeting planners compare venues and cities, often requesting that their attendees be located within easy proximity of the conference facility. Other common requests might include the availability of additional meeting rooms for breakout sessions, or full-service restaurants serving breakfast and dinner, or transportation options, but first and foremost it’s all about the number of hotel rooms available.

These are the things Deb Archer, president and CEO at the Greater Madison Convention & Visitors Bureau, wrestles with every day, and some encouraging news may be on the way.

In July, the Madison Common Council agreed to proceed with Judge Doyle Square, a two-block area of downtown currently occupied by the Madison Municipal Building (Block 88) and the Government East parking ramp (Block 105). Plenty of details still need to be ironed out, including those regarding a new convention hotel. For Archer, these decisions can’t happen soon enough.

“The developer (Beitler Real Estate Services) has been approved,” Archer notes. “The proposal says 252 rooms, but that’s still not finalized. We need the maximum number of rooms possible. We’re optimistic that it could be even larger.”

She would have preferred a 400-room hotel because conventions can only utilize a portion of a hotel’s inventory, but if 252 is the final number, it’s still better than zero. “I always say we have a racehorse in Monona Terrace that’s been confined. We want to set it loose.”

Time is of the essence. The GMCVB is already booking events for 2020 and 2021, and Archer is champing at the bit to help move the process forward because event planners typically don’t book ahead based on the promise of what might happen. “We can’t present this as an option until a shovel hits the ground or construction permits have been released,” she explains. While she hopes the GMCVB can soon begin including a new convention hotel into its presentations, she’s not done lobbying for more full-service amenities. “That’s what conference attendees want and our understanding is that that discussion is still fluid,” she says. “Those details are the next phase of negotiations.”

Gregg McManners, executive director at the Monona Terrace Community and Convention Center, is at the center of the hotel issue. In his view, the problem Monona Terrace has is that downtown demand is so robust that hotel general managers can pick and choose whether they want to offer discounted room block rates (versus market rate) to accommodate Monona Terrace conferences.

So what’s the solution? “In my opinion, the Judge Doyle Square hotel won’t be the last hotel built in downtown Madison,” he states. “As long as consultants study the Madison hotel market and its absorption rate, more hotels will come. I think that any building that is vacated downtown provides a tremendous opportunity for redevelopment and there are a number that could be repurposed for something of greater use to downtown.”

Monona Terrace hosts about 260 conferences a year. It is still not profitable and requires a subsidy to operate, McManners notes, and that’s why the big, multiday conventions are so important. “They represent only about 10% of our total events but 50% of the revenue.”

The key, he says, is attracting people from out of town. “My biggest concern is this — if we don’t have more hotels to support and draw outsiders to Madison, then we’re just churning business that already exists.”

McManners believes the Judge Doyle Square development is a huge leap forward for the city even though the hotel being discussed may not be to the scale he would have preferred.

How many is enough?

So will Madison’s convention and conference scene ever have enough hotel rooms? Archer believes the future Judge Doyle Square hotel, whatever it becomes, will only help the city move a little closer to its potential, but it is still progress. “For each 150 to 200 more rooms we get in a room block, the universe of business grows.”

McManners has a different take: “Nearly every downtown Madison hotel that’s opened in the past five years — the Edgewater, the Hampton Inn, Hyatt Place — has not had an adverse effect on either the rate or occupancy of downtown hotels. In fact, one or the other has typically grown when a new hotel opens.

“What that tells you is we’re not sure how much pressure there is on room capacity downtown. We could be displacing a lot of rooms that are going to the perimeter [just outside downtown] because we don’t have the rooms to accommodate the current demand. Until we start seeing a dip in hotel rates and occupancy, the question is open as to how many hotels the downtown area can accommodate.”

(Continued)

Alliant’s Energy Center

When the Veterans Memorial Coliseum first opened in 1967, the population was likely rocking to Lulu’s chart-topping rendition of “To Sir With Love.” Over the years the Coliseum attracted crooners, concerts, and circuses, not to mention high school and college athletics, monster trucks, conventions, and trade shows.

The New Holland Pavilions helped the Alliant Energy Center get in the black again. This year, it's running ahead of projected revenues by 4%, according to Dane County Executive Joe Parisi.

But concerts like the recent Def Leppard/REO Speedwagon/Tesla show are fewer and farther between these days thanks to music-on-demand technology, and while the New Holland Pavilions cemented mega events like the World Dairy Expo and the Great Midwest Horse Fair for years to come, what about the rest of the campus? What lies in store for the Alliant Energy Center?

AEC’s 164-acres sits in the Town of Madison on land that was part of a planned annexation scheduled for 2022. But a new proposal from Madison and Fitchburg officials to amend the agreement and accelerate the Town’s annexation by six years — perhaps to as soon as Dec. 31 —  could make the AEC part of a city TIF district.

Dane County Supervisor Sharon Corrigan chairs the Dane County Board as well as a relatively new committee formed to study the future of the Alliant Energy Center, which lost money between 2006 to 2014 and didn’t have sufficient funds to pay off its long-term debt. Because it is obligated by the county to do so, AEC was forced to dig into its reserves. “They’re required to pay that,” Corrigan explains, “but it also generated some concern.”

The New Holland Pavilions helped right the AEC ship. It is in the black again and running ahead of projected revenues by 4% this year, according to Dane County Executive Joe Parisi. “In 2016 there have been 20 shows booked in the pavilions, at least 11 of which are brand new shows. It’s been a smashing success.”

That gives the planning committee even more reason to delve into the AEC’s financial future with a master planning study.

“[Dane County] has owned this property for over 100 years,” Corrigan notes. “We need to plan for the next 100 years in a way that it will be a strong property with a vision that meets the needs of exhibitors. Where do we want to be?” Corrigan asks. “We need to have a plan.”

Parisi supported the study, to a point. “What I am not supportive of was a piece that called for privatizing the workforce,” he clarifies, “and another item that would ask the Legislature’s permission to impose a food and beverage tax to further fund operations. I oppose that. In my opinion, it’s a regressive tax and completely unnecessary.”

With about seven acres of the entire AEC campus still developable due to surrounding wetlands, Parisi would like to see private investment get involved. “Then we could put out an RFP and lease the land to a private developer with no subsidies,” he states.

Corrigan’s committee has hired Hunden Strategic Partners of Chicago to develop the master plan that should be completed by the end of the year. “We want them to analyze our current business model and look at the current economic impact AEC has on the community as a whole,” she explains.

It’s not just about the big shows the center attracts, but also the needs of other stakeholders, such as the City of Madison and surrounding neighborhoods. “Can we help invigorate the South Park area?” she asks. “Are there jobs that can be created? How can we be better neighbors? [The AEC] is right on the lake, for example, so we also need to be cognizant that one of our roles through this is to keep our lakes clean.”

Corrigan hopes the plan identifies alternatives, as well. “Are there different models for owning or operating a venue like the AEC?” she asks. “Let’s look at the business of it. If you invest so much, what will be the return? We have to have a plan to pay for those AEC bills 365 days a week, not just for the five or 10 days that a show is in session. That’s our dilemma. We have shows that could justify much more space than we have, but we don’t have the year-round business to help pay for that added space.”

Interested committee and board members are reportedly keeping a close eye on Milwaukee’s development of an entertainment district around the Milwaukee Bucks arena and wondering if Madison should do the same.

Looking ahead

Nobody’s more clued in to discussions about the Alliant Energy Center than Mark Clarke, AEC executive director. Clarke has been around long enough to see the best and worst of what the venue has to offer. “Ten years ago you’d never have dreamed we’d have the capacity we do now,” he says, crediting the pavilions, a focus on more strategic spending, and even decisions to drop some less lucrative shows. The facility can handle any size function, whether corporate, public, banquets, or trade shows, but it thrives on the 15,000 people per day, multiday events, particularly agricultural.

“We have the campus, the infrastructure, and the room for livestock trailers, which is key,” Clarke says. “Plus, we have one of the best ag universities in the world just five minutes up the road.”

Not every facility can pull off a livestock show, Clarke explains, but the AEC has become world renowned for its capacity to do so. “How do you handle manure? Milking? It’s a pretty unique venture,” he says. The availability of parking is a huge asset, as well. “Parking is one of our most important assets because it allows us to host the larger shows that require trailer or big-truck parking. We bring in the Goldwings, Airstreams, hot rod shows. They’re coming here because we have that outside capacity,” he says. Replacing ground-level parking with a multilevel parking ramp would be self-defeating.

The pavilions have attracted new events to town such as the recent Junior National Hereford Expo in July. A national sheep-and-goat show is booked next summer, and in two years the AEC will host a national beef show that Clarke describes as “very large.” Suddenly, he’s in the enviable position of turning events away simply because there aren’t enough days in a calendar year.

The master plan is just a piece of the puzzle, he notes. While it may take a long look into the future, immediate upgrades to AEC are still necessary to keep things chugging along.

Clarke is involved in all decisions affecting AEC, including managing and making it profitable. “The RFPs all come out of my office,” he says, and its public-private partnership is crucial to his funding model as he looks toward the future.

“We’re only a mile and a half from downtown but we don’t have a lot of good restaurants, nightlife, or bars around here. The hotel inventory is growing — now we have four — but we need to keep people here,” Clarke says. “We’re lacking a great transit system to get people downtown, which is something planners look at when we compete for shows. We need to demonstrate that if they’re going to bring their people here, there are things they can do. Those entertainment districts are paying off for cities elsewhere, but they’re long-term investments.”

Clarke considers the opening of the New Holland Pavilions the pinnacle of his career thus far. The Coliseum has its own charm, perhaps, but the aging structure is at a disadvantage when competing against facilities elsewhere. “When you’re paying a decent amount for a ticket, you expect a newer venue.”

Corrigan says the jury is out on the Coliseum. “We don’t know what the master plan recommendations might be. Nobody’s said absolutely tear down the Coliseum and do something else. Our resolution just states that if you have a better space and make some improvements to the campus you’re likely to have a better ROI. If you’re just fixing the leaks and air conditioning, you’re not going to get a decent return.”

(Continued)

Marking time: The agony and ecstasy of Judge Doyle Square

The decision to redevelop two blocks — 88 and 105 — of Madison’s downtown has been long and arduous. What started as a plan with Marcus Corp. to renovate the aging Madison Municipal Building, add a new convention hotel and parking for a proposed train station at Monona Terrace, and add a public market on Block 105, has taken several turns. The result is the biggest combined public and private development project in Madison, one that requires the city to invest $43 million — more than half of which will come from tax incremental financing. On the private side, about $131 million in funding will come from debt and equity sources. Here’s a capsulized look at how plans for Judge Doyle Square changed through the years, culminating with a development agreement with Beitler Real Estate Services of Chicago.

2010

As part of a “consolidated idea” under then Mayor Dave Cieslewicz, the city of Madison initiates a master-planning project to study the Central Business District, including a Public Market Square comprised of Blocks 88 (the Madison Municipal Building) and 105 (the Government East parking garage), and bounded by Martin Luther King Jr. Blvd., Doty Street, Wilson Street, and buildings along King Street.

2011

An early rendering of Block 88.

A master plan for Block 105 is under development with Kimley Horn and Associates, and the city works with Marcus Hotels and Resorts and Urban Land Interests to develop options for Block 88. Gov. Walker returns federal funding for the rail project, eliminating that portion of it, the Common Council removes the public market as an option for Block 105, and the project is renamed Judge Doyle Square.

2012

Plans begin formulating to include parking, ground floor retail, and private development for Judge Doyle Square. The Madison Common Council directs that a Request for Qualifications/Request for Proposals process be initiated and that a hotel feasibility study be prepared.

April 2013

In response to Request for Qualifications, four plans are received from developer groups, but only two — JDS Development LLC (Hammes Co./Majestic Realty of Los Angeles) and the Journeyman Group of Austin, Texas — make the cut. The JDS plan would cost $159.1 million and calls for repurposing the Municipal Building as a 308-room hotel. It would require $16.8 million in TIF. The Journeyman Group plan would cost $178.8 million and would not change the Municipal Building. It would include a 352-room hotel and require $46.7 million in TIF.

February 2014

JDS plan moves forward.

Council directs the city to enter into negotiations with JDS Development LLC.

August 2014

Some council members begin to balk at the project’s rising costs and discussions turn to downsizing the hotel.

December 2014

Citing growing costs to the city and an RFP process that produced proposals too costly to consider, the Common Council directs that negotiations with JDS be terminated.

February 2015

Common Council approves new Judge Doyle Square RFP specifying new parameters for the hotel and narrowing potential city financial participation in the project.

May 2015

Urban Land Interests/North Central Group plan.

Four new proposals are received from Beitler Real Estate Services Joint Venture of Chicago; Doyle Square Development LLC (Urban Land Interests, North Central Group); Vermilion Enterprises LLC of Chicago; and JDS Development. This time, the JDS Development plan incorporates an Exact Sciences corporate headquarters and research facility. Exact Sciences’ at-home colon cancer screening test, Cologuard, soars toward commercialization and the company is eager to either move or expand its Madison headquarters. The Common Council directs the city to enter into exclusive negotiations with JDS Development LLC and Exact Sciences before negotiating on the other three proposals.

July 2015

JDS plan incorporates Exact Sciences headquarters.

Council approves preliminary development agreement. Anticipated real estate closing is set for Dec.15, 2015. Projected cost: $200 million, with a $47 million public subsidy.

October 2015

A week after the project wins approval, the U.S. Prevention Services Task Force characterizes Exact Sciences’ Cologuard product as an “alternative” screening method rather than a “recommended” one. The company’s stock plummets by 50%, and Mayor Paul Soglin gives JDS Development and Exact Sciences two weeks to respond to questions about the impact.

November 2015

Exact Sciences withdraws from the Judge Doyle Square development, opting to expand its headquarters at University Research Park. The Board of Estimates votes to go back to the drawing board, and the Common Council directs the city to negotiate with the other development teams.

January 2016

Proposed Vermilion plan.

Two updated proposals are submitted, one from Beitler Real Estate Services Joint Venture and one from Vermilion Enterprises LLC. The Beitler plan would cost $126 million, with $26 million from the city, and include a 252-room hotel, 210 apartment units, and 621 parking spaces. The Vermilion plan would cost $199 million, with $49 million from the city, and include a 279-room hotel with restaurant and retail, apartments, and offices.

April 2016

Mayor Paul Soglin breaks a 3–3 tie, the Board of Estimates recommends, and the Common Council approves a more expensive alternative from Beitler that increases the number of apartments to 144 and offers underground and above-grade parking.

July 2016

Beitler approved as developer.

Madison Common Council unanimously approves a development agreement for Beitler Real Estate Services to pursue a $170 million mixed-use development including 354 apartments, a 252-room hotel, and a $43 million public portion that includes $24 million in tax-incremental financing.

2018 and beyond

Barring further delays, the parking structure is to be completed by November 2018, with private development completed by 2022.

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