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April 20--Madison Area Technical College leaders have picked a $131 million project that would turn their Downtown campus into an upscale hotel and fill the rest of the block it sits on with a 10-story office building as their choice for redeveloping the site just off the Capitol Square.

MATC President Jack Daniels told the Wisconsin State Journal editorial board Thursday that he will recommend the college enter lease negotiations with Hovde Properties of Madison for the current site of the Downtown Education Center, picking the company's proposal from a group of five finalist developers.

The project, a partnership between Hovde and hotel developer Drury Southwest of Missouri, calls for remodeling the college's existing building at 211 N. Carroll St. to open a 197-room hotel. On the other half of the block, Hovde would construct a new building facing Wisconsin Avenue with offices, retail space and a grocery store.

Daniels is pushing for the college to move out of the Downtown campus in 2019 and shift many of MATC's programs to Madison's historically under-served South Side.

MATC officials chose the Hovde and Drury proposal from a field of five finalist developers -- whose ideas for the prime site ranged from apartments and hotels to a center for youth arts-oriented nonprofit groups -- in large part because the winning companies promised to pay far more in rent than their competitors.

"With the return on investment, it allows us to continue with our mission in the long run in serving the community," Daniels said.

Hovde officials told the college they would start out paying MATC -- also known as Madison College -- $750,000 annually in rent and increase that amount over the years, eventually reaching more than $4.5 million per year by the end of the 98-year lease on the site.

Based on those figures, the college would expect to take in more than $200 million over the life of the lease, MATC officials said. The next closest developer, Alexander Co. of Madison, promised about half that much.

"After you look at the numbers and everything else and the type of firms that (Hovde and Drury) are, I think the majority is going to say, 'This is something you have to do,'" Daniels said.

The developers will seek help from the city and state to finance their project through historic building tax credits and a tax increment financing district, college officials said, though it's not yet clear how much assistance they will request.

Hovde President Mike Slavish did not return a message seeking comment Thursday, and MATC did not provide specific details of the proposal's financing.

Still, Daniels said he believes the project can be done -- and that Hovde can make the rent payments it has promised -- even if the developers don't get help from the city or state.

Daniels will formally present his recommendation to the MATC District Board during a meeting Monday, after which the board will hear public comments.

The board will decide at a meeting May 3 whether to give college officials approval to execute a lease agreement, and has the final say in picking which developer's plan will move forward. The ground lease will have to be approved by the Wisconsin Technical College System board as well.

Plan for grocery store, new hotel

Renderings of the Hovde proposal show a striking office building with a wavy glass exterior facing Wisconsin Avenue, replacing what is now a parking lot and the arch from Madison Central High School. The arch would be preserved and moved to a roof deck on the site.

Plans call for a grocery store on the West Johnson Street side of the building, with retail space on the West Dayton Street side. A three-level parking structure below ground would provide space for 392 cars.

The Drury Plaza Hotel, which would open in the existing Downtown campus building, would be a "limited service" hotel with a restaurant, spa and meeting rooms. The developers plan to add two floors to the top of what is now a five-story section building facing North Carroll Street.

It would be the second new hotel development planned within a block of the Madison Concourse, the city's largest hotel, and come amid a boom of hotel construction in Dane County.

Questions over financing

Mayor Paul Soglin said picking the Hovde and Drury proposal was "a wise decision by Madison College."

"It is a good, intensive use of the site, it will be of benefit to them and it will also contribute to Downtown," he said.

Still, Soglin acknowledged that there are some "tough decisions" ahead for city officials who will decide whether to provide public financial support for the project, though he declined to comment on that possibility because he does not yet know what developers will ask for.

Ald. Mike Verveer, 4th District, said the MATC site is not currently in a tax increment financing (TIF) district, meaning the city would have to either create a new district or extend an existing one to help finance the project. That question -- along with concerns that developers might look to lease parking spaces in the city-owned garage across North Carroll Street from the potential hotel -- could prove controversial, he said.

City officials may be more enthusiastic about supporting the project if MATC had chosen one of the proposals for the Downtown site that included affordable housing in its plans, Verveer said. The Hovde and Drury development would not build any new housing.

"It's not as exciting to provide TIF ... to an office building, as it would for something that more of the community agrees is needed," Verveer said.

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