Madison's Block 89 - American Planning Association, Wisconsin ...

Fact Sheet
Block 89:
DYNAMIC VISION
In 1996, the eastern portion of Block 89 on Capitol Square contained a mix of out-dated buildings and surface parking lots.
It took visionary thinking, a strong partnership
between the City of Madison and a private
developer, and a process which focused on the
approval of the development as a concept to
transform this blighted block...
Barbara Karant/Karant & Associates Inc.
Block 89, 1996
Main Street, 2007
Main Street, 1996
Block 89, 2007
… into a modern masterpiece of design that sets
the tone for future downtown development. The
partnership between private and public entities
was vital to create the award-winning project
which now provides space for office, retail, and
parking at the center of downtown Madison.
© Downtown Madison, Inc, 2007. www.DowntownMadison.org 615 E. Washington Ave, PO Box 71 Madison, WI 53703
CONTINUED

Fact Sheet
Block 89:
DYNAMIC VISION
The Block 89 development was designed to bring vibrancy and activity to the sidewalks surrounding the Capitol Square,
with a five level underground parking ramp to support the retail and office space. This parking required a unique bond
financing/public ownership/leaseback structure and Tax Incremental Financing (TIF).
City staff and various committees worked with the developer to
determine the best use of funding and the most efficient
funding mechanisms. Design, construction, and funding
development proceeded simultaneously. The results of this
dedication are visible in a project which includes underground
parking, retail and restaurants at the sidewalk level and a mix
of buildings designed to recapture the traditional scale of the
Capitol Square.
Property acquisition for a project that would eventually be
called “Block 89” began in the late 1980s. The concept of the
block as a single master plan was supported by a public process
in the mid 1990s. The project, particularly construction of
underground parking, was dependent on the Common Council’s
approval of TIF funds. The city needed assurance that the
proposed development would produce high quality buildings
that maximized the site’s development potential. The excellent
track record of Urban Land Interests (ULI) allowed the city to
move forward with confidence. However, ULI still needed to prove
to the city that the development would be feasible. It was the
continuous communication between ULI and city staff that built
strong mutual trust and ultimately, commitment to the project.
A Model of Successful Public/Private Partnership
Comfort Resolution Process
A Comfort Resolution between the City of Madison and ULI was necessary before the developers could fully define
their project. A Comfort Resolution identifies the key elements of a development agreement that are required to
advance a project. It defines a process whereby trust is built between the city and the developer. Once the concepts set
forth in a Comfort Resolution are approved by the city, a developer can invest further in the project. The Comfort
Resolution between the City of Madison and ULI gave city staff and the Common Council an early vision of the final
project. Within nine months after passing the Comfort Resolution the project had received all required public approvals
and construction began. The Comfort Resolution process was key to the Block 89 project.
City creates TID
The city formed a Tax Incremental Financing District (TID), which enabled the use of tax incremental financing (TIF)
generated by the project to reduce the cost of creating the expensive underground parking.
Partnership among CDA, City of Madison and ULI to build underground parking
A unique financing partnership facilitated the development of underground parking for Block 89. Its parking ramp
was built by ULI under a fixed price contract. Upon its completion, the ramp was conveyed to the Community Development
Authority (CDA), who leased it to the City, which in turn leased it back to ULI. The ramp was financed using
$20,640,000 in taxable revenue bonds which were sold by the CDA. Even at 100% occupancy the parking ramp was
projected to have an operating deficit of more than $1,000,000 per year. To bring this deficit to a level the developer
could bear, the City committed a portion of the tax increment generated by the buildings located above the ramp.
Integration of historic buildings
The underground parking was constructed while retaining the historic character of Burrows Block because the developer
was willing to examine all possible means by which the block could be preserved, and because the city was willing
to listen to the development options presented. Parking was built first. Then the three story building which houses
two restaurants at ground level and office space in its upper floors was reconstructed. Both the city and the developer
recognized that the integration of this historic property was critical for the construction of Block 89.

More expensive underground parking allowed the developer to build retail space at ground level. The project created over
50,000 square feet of active street front uses because of its public private partnership and because TIF was used to support
underground parking.
Architecture is designed to welcome people
and defer to the State Capitol. Historic
buildings are integrated.
Bonds issued in the amount of
$20,640,000 were used to fund
underground parking.
Each year a portion of property tax
paid by One East Main, the Insurance
Building, 10 East Doty and the
new 33 East Main are used to assist
in the payment of debt service on the
bond issuance. The developer
guarantees and pays 100% of the
remaining debt service for the year.
743 parking spaces support office tenants and
retail customers.
Creation of retail and office space on Capitol
Square to accommodate growing downtown
employers
Increase in assessed values:
1996 2007
Total assessment $12,136,000 $56,542,000
Multiply by mill rate .0280 .0195
= property taxes $340,000 $1,103,000
City Investment in Block 89
Facilities Available for Downtown Employers
Sq. Ft. ‘97 Sq. Ft. ‘07 Employees ‘07
1 E. Main 86,016 152,200 409
10 E. Doty 52,661 168,810 431
33 E. Main State Daycare 132,250 236
Totals: 138,677 453,260 1076
Sq. Ft.
Retail on the square: 2007
Vendors
1 E. Main 29,873 Starbucks, Walgreens,
Ocean Grill
10 E. Doty 14,566 Marigold, Johnson Bank,
Johnny Delmonico’s
Results of Investment
Expansion for Existing BLOCK Tenants 89, 1996
Godfrey &
Kahn S.C.
Whyte Hirshboeck
Dudek S.C.
Melli Walker,
Pease & Ruhly S.C.
19,398 37,802
10,142 27,369
8,682 11,189
Walgreens 7,764 15,880
Opera House
(Ocean Grill)
Sq. Ft. ‘97 Sq. Ft. ‘07
1,971 3,113
Court of Appeals 6,755 13,998
33 E. Main 8,520 Park Bank
Totals:
52,959 sq. ft.

Fact Sheet
Fact Sheet 2007 sponsored by Godfrey & Kahn S.C.,
tenants of One East Main since 1988.
www.gklaw.com
“Achieving the preferred urban design
solution for the Block 89 project
required a robust public/private
partnership—one where both partners
were knowledgeable of each other's
needs and committed to optimize the
public objectives with private
investment needs. By properly
understanding the risk / reward
equation for the private as well as the
public sector, and working in an
atmosphere of mutual respect, great
things can happen."
George Austin, Overture Foundation
Doty St., 1996
Doty St., 2007
Blair Kamin, architecture critic for the Chicago Tribune
“... ultimately it [Block 89] strikes
the right balance between being
responsive to its older neighbors and
forging a new identity.
The key ingredients of the award winning Block 89
project were commitment, vision, creativity and trust
between the City of Madison and the developer. This
public/private partnership facilitated the useable,
sustainable and stunning development that graces the
Capitol Square today—Block 89!
With its respect for the traditional
urbanism of streets and squares, its
bold new architecture, and its
gradual, piece-by piece approach, it
forms a model for reconstituting and
reinterpreting the traditional city.”
© Downtown Madison, Inc, 2007. www.DowntownMadison.org 615 E. Washington Ave, PO Box 71 Madison, WI 53703