|By Steven Verburg, The Wisconsin State
JournalMcClatchy-Tribune Regional News
Dec. 17, 2011--Madison Mayor Paul Soglin on Friday pronounced the Edgewater hotel project dead for this year, and probably forever, because of a dispute with the developer over what documentation must be given to the city and how large a tax subsidy the city should deliver.
Developer Robert Dunn, who has been seeking $16 million in tax increment financing for more than two years, said he hasn't decided whether to take the city to court, but he repeatedly used the language of lawsuits in responding to Soglin.
"That's a breach of a contract that was signed," Dunn said. "Our damages would be extraordinary ... a substantial amount of money."
Soglin said Dunn would have "a real tall mountain to climb" to win a suit because the developer has failed to produce a detailed financial plan and a construction contract, two essential pieces of paperwork for any city financing deal.
At a press conference in the City-County Building, Soglin described the situation in schoolhouse terms:
"Look, a kid goes to school," Soglin said. "The paper's due today. It's nice for the kid to show up. It's nice to have the pen and notebook, but if you haven't finished your paper, you don't pass."
The Edgewater project has appeared to be in serious jeopardy since the City Council's Nov. 16 decision not to continue authorization for the $16 million into 2012. Dunn said the deal could be completed by year's end, but Soglin said Friday that it was far too late.
Dunn wants to spend about $90.5 million to restore the 1946 Edgewater hotel on Lake Monona off the Capitol Square, cut the size of a 1970s addition and build a public terrace atop it and erect a nine-story tower with rooms.
He battled opposition from neighbors and preservationists, some of whom later filed a lawsuit, before winning City Council approval for the $16 million with the backing of former Mayor Dave Cieslewicz. But by the time Dunn obtained needed private financing, a new mayor had been elected and the authorization for the $16 million was running out.
Cieslewicz has said the Edgewater was part of his undoing with voters. During the campaign, Soglin was critical of Cieslewicz's handling of the project.
"In my personal opinion it was a project that wouldn't work financially from day one," Soglin said Friday. "The fact that there's $41 million in financing missing is beyond me."
Dunn insisted that all the money he needs is in place -- except for the city's $16 million -- and that a private lender's commitment letter for $33.5 million is based on the lender's confidence that he will be able to supply the remaining $41 million.
The commitment letter is part of an escrow agreement that Dunn said is a binding contract signed by city officials. The agreement provides complete protection for the city's investment, Dunn said.
Dunn said he has the construction contract on his desk, that he has told the city about its provisions and that he will sign it as soon as the city fulfills its end of the deal.
"The bottom line is we've done everything we need to do," Dunn said.
Soglin previously said he would sign off on the $16 million if all paperwork was completed by the end of the year. The City Council approved the money in the 2011 budget, but has set aside only $3.3 million for 2012. Dunn has maintained that it won't be enough.
Soglin said Friday that even if Dunn produced the financing and construction documents now, it would take weeks to review and approve them, then the city council would have to approve the sale of bonds, and it would take more time to complete the bonding transaction.
Dunn accused the city of creating a moving target by repeatedly adding new requirements and said he would be foolish to sign the required construction contract until the city financing is assured.
"They are making it up as they go," Dunn said.
The $16 million investment would be the city's second largest. In 1996 and 2000, Block 89 got $27.4 million, and in 1998, the Hilton got $12.9 million.
(c)2011 The Wisconsin State Journal (Madison, Wis.)
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