Archive for September, 2009|Monthly archive page

Area hotels complain about Edgewater, but get many facts wrong

OK, I thought I had just one more hotel post left in me, but then came the letter on Friday from a group of Madison hotel general managers. To read it and a few paragraph summary, I refer you to the Cap Times story or Dane 101’s coverage, because they both actually include the letter.  (The WSJ covered it too, with the nicest summary, but didn’t give the actual letter. I wish the WSJ would join the 21st century and remember that the web version of stories aren’t physically constrained by column inches, or at least can link to primary sources). I may still get to my “final” hotel blog post, but not anytime soon.

This post will look like a wall of text, but let’s dig into the letter a bit.

Dear Alders,

We are writing to provide you with some additional information on the Edgewater and Fiore Library/Hotel development proposals. Many statements have been made and statistics quoted that we feel have been misleading. As hotel managers, we wish to clarify this information with our hotel operational experience. The new hotel development proposals would put Madison hotels at a major competitive disadvantage and put many hotel employees’ jobs at significant risk. Mayor Cielewicz [sic] has not done proper due diligence and has not used the information presented to him in the hotel studies he commissioned before including both projects in his capital budget.

It’s worth noting that the Fiore hotel project may or may not, by the end of the project, actually be a hotel. They can’t start building there until the new library is built and the old library is deconstructed. That’s probably three years away, and the market may be very different by then. I don’t think the Mayor is putting the Fiore hotel in the budget so much as he is putting the new library in the budget. And you can’t blame the Mayor for not using information from the hotel studies when the hotel studies, particularly the second study, didn’t have any information. (OK, The first study wasn’t so bad)

A recent study listed the Edgewater as a blighted structure. The major reason that the property is in its current condition is the lack of capital investment and profits being invested back into the hotel. National Guardian Life, a company with over $2 billion in asset owns 30% of the Edgewater and did not properly maintain the hotel, allowing it to age with minimal improvements and reinvestment. Now they will likely make a significant amount of money pending the sale of the Edgewater to the Hammes Company, which is completely dependent on the $16 million TIF Hammes is requesting. To remain competitive, hotels must continually update their properties by reinvesting operating funds, not by asking the city of Madison for subsidies.

Amusingly, the argument the business community is making against National Guardian Life is the same argument that many preservationists make when they testify against tearing down older homes. Also, they may not be right about the requirement for TIF money. I don’t believe Hammes has said one way or the other that they would walk without TIF. And to be fair, Hammes has always claimed the TIF was for the public plaza. Personally, I’m open to the idea of TIF here. Yes, we should have gotten real access in the 1970s when we paid for it the first time, but better public access isn’t magically going to appear. If we’re not getting what we are legally entitled to, it’s time to sue. If we’re getting what we agreed to, it’s time to stop sulking. We got screwed the first time, so this time we need learn our lesson and do a better job in ensuring that we don’t get screwed out of it again. That lesson might be costly. Ideally, Parks would own the new terrace.

There has been speculation about the amount of increased room tax that the new Edgewater project would generate. We feel it is essential to use actual data instead of estimated numbers. Bob Dunn has stated that the hotel would command a $200 per night price tag which we feel is unlikely in this market. The average price for a room in Madison based on Smith Travel Research reports, a professional hotel research company, is as follows: the 2009 average daily rate for a Madison hotel room is $89.28 and the 2009 occupancy is 54%. Adding 107 rooms to the Downtown market on top of the existing 143 rooms at the Edgewater would only give the city an annual hotel room tax increase of $57,457, which is a far cry from the $16 million gift the city is offering. In addition, the revenue from hotel room tax would decline as the occupancy rate in the existing hotels would decrease with the increased competition.

I can’t decide if this paragraph is intellectually lazy or just dishonest. First, I simply don’t follow their math. 107 rooms times 365 nights a year times 54% gives 21,089 hotel roomnights a year. Assume $89 a night room rate, with a 9% tax, or $8.01 a night tax, that comes out to $168,922 a year. Perhaps they’re counting the room tax in some screwy way. The room tax gets split all over the place – most if it (61.8 %) goes to the Monona Terrace. The numbers about work out if they take the non-Monona Terrace portion of the room tax increment. That’s just dumb, since if we didn’t fund the Monona Terrace out of the room tax it would come from somewhere else.

It’s also dumb because it makes some ridiculous assumptions:
  • First, using the city-wide average room rate is not actual data. We don’t know exactly what the average Edgewater guest will pay, but it’s certainly not going to be $89 a night. It’s not competing with the Super-8 and Travel Lodges along the Interstate.
  • You can’t use the city-wide average occupancy rate of 54%. As I argued earlier, we need some unbiased professionals to give us an estimate. If the Edgewater is really going to be a destination hotel, its occupancy rate should be somewhat independent of the citywide average. It’s probably even independent of the “Competitive Hotels”, which the Hunden report put at 67.8 for 2007. (Obviously, the economy over the past year has pushed that number down)
  • You can’t complain about $16 Million in TIF and then only mention the room tax revenue. TIF money comes from the property tax. If this had been a $100 million condo project with a $16M TIF, the room tax would bring in $0 but Madison would still take in $1.6 million a year in taxes, or an increment of $1.5 million a year (I’m using a $19.47 mill rate, which looks like what was in effect in 2008. I’m assuming the building is worth $84 million in this case. Add another $300k a year to the taxes if the TIF money gets included in the valuation of the building. (EDIT, years later: commercial real estate valuation is trickier than residential, as you have to figure the revenue-generating potential of the building. This gets into time value of money, discount rates, future revenue growth, and what gets counted by investors and what gets counted by tax assessors, etc etc etc. The original point still stands: you can’t complain about financing from future property taxes and then only count room taxes)
  • The hotel room tax revenue won’t decrease with more available hotel rooms. If the occupancy rate goes down at one hotel because of increased competition, it goes up at the other hotel(s).  The only way the revenue goes down is if people stop coming to Madison and the number of rooms rented a night across all hotels goes down, not the per hotel percentage. Having more hotel rooms available isn’t going to stop people from coming to Madison. The revenue would go down if more cheap rooms were available, but I don’t think that’s the case with the Edgewater. Property tax rates might go down if the a hotel is less valuable, but that’s a way trailing indicator regardless.

Bob Dunn is claiming that the new Edgewater development will add 500 jobs and mayor Cielewicz [sic] recently stated that the project would add 1,000 new jobs to downtown. The fact is that a 250 room hotel will support only between 125 to 175 employees of which only 50% would be fulltime. The Edgewater currently employees 100 people which means the new development would only increase employment by 25-75 people. Many of these employees may come from a pool of employees laid off from other hotels when occupancies decline due to the new city financed hotel development.

This is most useful part of the letter. Clearly, the hotel itself isn’t going to employ 400 new people. What Dunn and Mayor Dave are probably getting at is the “multiplier effect”, that is, how many jobs are created in the local economy beyond the jobs directly created by the hotel project, or who’s going to be the butcher, the baker, and the candlestick maker to the hotel clerks the Edgewater employs, and to the guests that the Edgewater draws to Madison. This is worth arguing about, because I’ve always thought the multipliers were the most dismal part of the dismal science. Where did 500 come from? Why is it not 600, or 200? The 1000 job figure the Mayor mentions is from construction jobs, which admittedly sounds a little high. Perhaps once you start totaling up the construction guys on site, the workers at the cement factory, the officeworkers at the dumptruck shop, etc, maybe it all adds up to 1000 jobs. They may also have a point about laid-off employees. The room tax revenue will remain stable, regardless of how many new hotel rooms open in town, but if there are too many hotels then some may not be able to make it on the lower occupancy rates, or won’t be able to make it without cutting operational expenses.

The developer states they need the $16 million for the proposed public space. Complete open access to this public space will create serious operational difficulties for the hotel. Monona Terrace has experienced many of these operational issues with the rooftop terrace public space and they now close this space to the public when events are taking place. As an Innkeeper, it is your responsibility to provide security for your guests and allowing the public open access could create security concerns. Many national hotel chains may not be willing to put their flag on a property with this type of public space. The public space is only proposed so the developer can receive the $16 million up front, but what will happen when these operational difficulties present themselves?

It’s a concern, but it’s a non-starter to consider any other options. Madison should settle for nothing less than full open access to the public space, or at least any occasional private access is managed by the city, not the hotel.  The lake access is too important to give up. If it doesn’t work with a hotel on the site, we find something else to put there. I suspect a good hotel management company can make it work. (The hotel could, I don’t know, close their door? It’s not like the outdoor terrace is actually inside the hotel.) If I were a hotel operator, for that location I’d certainly try and make it work.

In order to gain clarity on the need for additional hotel rooms, the Mayor hired the Hunden Strategic Partners Company to complete a downtown Madison hotel feasibility study. In the original study dated December 2008, it stated that the city should concentrate its efforts on developing a 400-room hotel attached to Monona Terrace at the Madison Municipal building location site. The city was in negotiation with Marcus Hotels and Resorts until recently when Marcus pulled back due to the economy. Subsequently, three other projects emerged onto the scene – the Apex project, Edgewater project, and the Fiore Library/Hotel project. The Mayor again hired Hunden to perform a follow-up study to determine which project the city should invest in. The report, released August 27th 2009, states that the Edgewater is worthy of priority amongst the projects listed above, but the most important project should be the convention hotel proposed by Marcus. The study also concluded that the Library project hotel portion should not be a city priority at this time. It also states the city has to carefully choose the projects to include and the timing of those projects. The library project should fall below a true convention hotel, the Edgewater project, and a larger full-service project in terms of priority for the city. A few days after the last report was completed, the Mayor decided once again to back the library/hotel project, not following the recommendation from the professionals he hired. In total, the city has paid $50,000 to Hunden for this research which is a waste of taxpayer’s money if the information is not utilized.

True, the report said all of that. But the report also said that the Marcus/convention project wasn’t going to happen, so go after the Edgewater proposal now. To quote the August 27th report:

As a result, the City should advance the Edgewater project immediately, work to expand its future options for convention hotel development over the next 18 – 24 months, and suggest to the other two projects that they should adjust their hotel plans and wait until the other projects have been absorbed into the market. At such time the projects will be reconsidered  for city investment and/or priority.

Now, I’m all for ignoring the August 27th report because it was a waste of taxpayer’s money, but that’s a different argument. In this case, the Mayor is following the report. And again, I don’t think he’s advancing the Fiore hotel project, I think he’s advancing the library project.

The study also points out that the Apex project is probably not feasible because Apex has no experience in developing and operating a hotel. Bob Dunn has made it clear that Hammes will own and manage the Edgewater Hotel. The study does not point out that Hammes also has no experience developing and operating hotels. It is very risky for the city to invest in a developer that has no hotel experience.

Good points. However, even if the Edgewater completely fails, we get our money back from property taxes in fairly short order, and a different hotel company gets a chance to pick up a lakefront hotel from the Hammes bankruptcy for cheap. The city’s not taking an ownership stake in the Edgewater, so the use of the word “risky” here is odd. At worst, the TIF money that was used to build the public terrace is written off, but we still get a public terrace and better access to the lake.

This year has been one of the worst years on record for the hotel industry and many luxury hotels are currently in bankruptcy or facing bankruptcy due to the change in corporate and consumer buying habits. Many hotels are choosing to drop their star ranking because of the expense to operate 4 and 5 star hotels. In most areas of the country it will take 5-10 years for average rates to recover to 2008 levels. A hotel which will require a $200 average rate to remain financially feasible is not possible in this market and is a very risky investment for the city of Madison.

Again, good points, but how does the city lose if the Edgewater goes bankrupt? What do they mean by “very risky investment?” They’re making a case that it’s a risky investment for Hammes, not the city.

We ask that you look at the facts and join us in our fight against Madison putting the average business owner at a competitive disadvantage.

I’m about to unfairly blow up at the these letter writers, but I swear to God I hate this cliche line. “Why is Madison anti-business?” It’s like Goodwin’s Law, but for Madison development. It gets trotted out when the city doesn’t immediately roll over and give in to the demands of business. Nevermind that what might be best for one business may not be in the best interests of the entire city. If Madison is so anti-business, why is there nearly half a billion dollars of development projects under proposal in the downtown alone?  Madison is proud of its quality of life and wants to improve it, which is in part directly through good developments, and in part indirectly from the increased revenue from the good developments. I can’t think of anyone who doesn’t want Madison business to succeed, and I’m tired of hearing otherwise.

This group of hotel owners general managers could have made a case for why the Edgewater is a bad deal, but they’re not going to do it by getting all the facts wrong and repeatedly misspelling the Mayor’s name.

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A few notes about my BH column

My piece in the Badger Herald today made three claims that need a bit more explanation, in details and length that just weren’t appropriate for the print version. They all concern the redevelopment of the corner of Francis and Johnson, the current home of the Nitty Gritty.

First, here’s what I was thinking – the corner of Frances and Johnson has three buildings:

545 W Johnson St:

545WJohnson

Then, the Nitty Gritty itself, technically on N Frances St

The Gritty

And finally, a small apartment building on N Frances St

North Frances

There’s a large parking lot behind the three that completes the corner of the block, with the same footprint as the Palisades just down the block. Collectively, they bring in about $50,000 a year in property taxes a year, compared to the $254,000 the Palisades pays.

So, the first objection to address: The Nitty Gritty as a historic building. (I don’t think anyone would object to the other two buildings going away, especially 545 W Johnson). The building itself is about 110 years old, but I don’t think it is distinctive enough architecture to qualify it as a historic building just from how it was built, so we need to look at the history of the site instead.  If I was more of a Madison historian, I might know more historic details of the building, but its main claim to fame is its connection to the 1960s and 70s protest movements, in particular it was the place the plot to bomb Sterling Hall was hatched. I can’t speak to its role as a headquarters/gathering location for the protestors, but at least according to the Gritty’s website it played a role there.

Madison should find a way to maintain physical linkage to those times, but I’m not sure that landmarking/preserving the Nitty Gritty would be the best way to do it. I especially don’t think that the bombers use of the building qualifies it as something worth preserving.

A better historic connection to the 60s would be to preserve the character of “Miffland”, ie the 400 and 500 block of Mifflin Street.  It’s currently mostly dominated by 2 or 3 flat homes, with the large porches and good street interaction. I think you could make a good case for a Neighborhood Conservation District there, if not a Historic District. The Daily Cardinal makes a false choice today – you can have development and progress on the block, without having to  change the character of the block. As some of those structures reach the end of their useful life, they can be replaced, but only by structures with similar sizes and characteristics. For the buildings still in good shape, they get rehabbed. David Waugh likes to point out that when older homes are located in areas where developers try and put together a couple of parcels to build something bigger, the economic incentives to invest in the upkeep of the building vanishes – it becomes a better deal to let the property deteriorate until someone comes along and says “these are terrible, let’s build something big on top of them”, and sell then. If it’s up-front agreed to that this demolition won’t be permitted, the incentive to allow the property to deteriorate diminishes, because the exit strategy of major redevelopment is not available.

If over the next decade or two, more and more of the downtown moves into larger, multi-unit buildings without separate entrances, so be it. However, we should preserve “Miffland” as a monument to a defining moment in Madison’s and our nation’s history. It seems to me a to be a far better way to connect than to remembering the booth where a murderous act was hatched.

The second objection that might be raised to my plan is we don’t want more 10-12 story towers in the downtown area, and there’s a valid point to be made there. Madison has established the Johnson/Gorham/University corridor as a sort of “canyon” of large buildings. Building on this corner doesn’t expand the canyon, it just fills in the wall a bit more – it’s between the Palisades (11? stories), and Witte Hall at 10 floors. Madison has been at a pretty steady pace of adding about one of these buildings a year for the past decade, and its had a remarkable effect on keeping downtown housing prices low and offering students and other residents more choices. They seem to remain popular with students, and there would have to be studies to see how many more of these things we can build, but at least from a zoning or city policy position there’s nothing that says we’re as dense as we want to be. This might also be a perfect time to build one, because construction costs are at very low rates, and if you can get financing, money is pretty cheap. Given the success of all the past towers, building another one seems like it’s about as low-risk as you can get in today’s real estate market.

Finally, I think people might object to my suggestion of using TIF money as part of the project. Let me be clear, the idea behind using TIF is to serve two goals: unlock the potential of that corner, and to fulfill what I think is a good public policy goal of putting a large establishment in University Square to serve Kohl Center events. On the first point, I don’t think anything is going to happen on that corner unless the Gritty moves – it seems unlikely to fail as a business anytime soon, and it’s even less likely that the current or new owners would just decide to walk away. Given that we can’t simply eminent domain our way onto that corner to build a new development, I think it meets the “but for” test of TIF help cover the cost of relocating the Gritty in order to better utilize that corner. They may not need it, if they make enough money from selling the land as part of the tower project, but that’s not a given. On the second point, it also meets the “But For” test to encourage a business to move specifically into the corner of University Square, especially if there’s a half-million dollars of construction work that has to go into the space just to undo what’s already been done.  (Apparently there are some crazy things in the current, half-built designs, like bathrooms right along the Johnson street frontage, which seems completely dumb). TIF money shouldn’t be used lightly, but there’s at least a plausible set of reasons of why it is appropriate for this plan.

My Herald piece

[This ran in today’s issue of the Badger Herald. Comments are off here, please see the actual BH version.]

We learned last week the Hall of Fame Grill walked away from trying to open in University Square after licensing difficulties. It follows the failure of the Field Pass, in the same location, which fell apart mid-construction due to financing problems.

So now what?

No one wants to see the site sit empty. But unless Madison takes a more hands-on approach, that’s what is going to happen.

First, let’s be clear about what should go in the space — something that compliments the Kohl Center. The Kohl Center is one of the premier sports and entertainment facilities in the state. It routinely brings 17,000 people to downtown Madison. On event days, we want to serve as many of these people as we can. Even if we doubled our existing capacity, it still wouldn’t handle the surge of people who want to spend money downtown. We especially want a space that has a lot of seating and works no matter if you’re there for a Badger game or stuck taking your tween cousin to a Miley Cyrus concert. Wando’s or Brothers do not fit the bill. This is not a new idea — since the day the building was designed, that corner has always been meant to serve the Kohl Center, and it’s an embarrassment every game day when crowds stream past the empty space.

The political reality is the Alcohol License Review Committee is not going to permit anything new in the downtown area. There may be enough votes at the Common Council for an establishment like the Hall of Fame Grill, but it’s going to be uncertain enough that it will take a special breed of developer to put itself through the process.

At the same time, the economic reality is no business will be able to pay the bills unless it has a plan to operate for most of the day and night, and yes, that means operating as a bar at night. The ALRC may be ready to give a Chuck E. Cheese a license to serve a few beers on that corner, but you don’t need to have spent years in the hospitality industry to recognize anything big enough to serve Kohl Center-sized events will have a significant portion of its revenue from alcohol sales at night.

Given the demands we’re going to place on the eventual applicants, a better approach is for city staff, the concerned alders and the owners of the building to actively find the business we want in the space. There’s an obvious place to start: Marsh Shapiro and the Nitty Gritty, one block down.

If we’re never going to permit anything new, we have no choice but to look at current businesses to preserve the status quo. Following the existing University Square plans, the Gritty could serve up to 900 people in the new space, up from their current 375. That’d be a nice expansion of game day capacity. The Gritty has an established client base drawn from all parts of the city that would easily follow it to a new location, and it has a workable business for non-event days. That’s important in the current economic environment, given that banks aren’t likely to fund even slightly risky businesses. The fact that the University Square development has been slow (except for the lunch rush, is the food court ever busy?) makes anything new even riskier.

Shapiro is currently trying to sell the Gritty; after 40 years of running it he’s ready to retire. Now is a perfect time to move it. Even better, by moving the Gritty, there’s an opportunity to put together a deal to redevelop the corner of Frances and Johnson. (We’ll ignore for the moment any historical status the location may have.) If, as a city, we need to throw in some money to make this move practical, there’s a soon-to-be-amended Tax Increment Financing district right across the street. The current corner generates about $60,000 a year in taxes. The Palisades, also on that block, generates about $250,000 a year. A quick quarter-block tacked onto that TIF district would let us pay back a substantial TIF loan in just a few years, and then use the increment to finance other projects in the area and eventually give a substantial boost to local schools and government.

Aligning all of the players in this deal would be complicated, and could fail for both business and personality reasons. It’s further complicated by the fact that Shapiro has a role on the ALRC and is on record as being opposed to the Hall of Fame Grill. It would raise quite a few eyebrows if the Gritty moved in after the Hall of Fame Grill threw in the towel at the ALRC. However, in the end, the move would be good for the downtown. Two failures in a row should be the sign that more active involvement is needed to make that corner what we want.

The Followup Hotel Study

[A couple of notes. First, Brenda scooped me, and if I didn’t hurry up and get this posted I imagine the excellent dane101 coverage would get some of it as well. Also, comments are turned off, because this is cross-posted to Muckrakers on the Badger Herald, so comment there]

Earlier in August, after a number of hotel projects were brought forward, the Mayor ordered a study of the new downtown hotel proposals, as a followup to the earlier, larger study. That earlier study identified as the number one priority for downtown hotel projects would be a large hotel attached to the Monona Terrace.

The followup report from the consultants is done. I haven’t found it online anywhere, but Rachel Strauch-Nelson of the Mayor’s office emailed me a copy within a few mintues of my request, which is here:  Final – HSP Summary Analysis of Hotel Proposals – 8-27-09 (when I find the real city home for this document, I’m going to remove my copy). It’s an easy read, and since we paid $10,000 for it, I’d encourage everyone to spend a few minutes and flip through it.

I didn’t think the study was that helpful, as they ducked the central issue of “how will these proposals affect each other”. Instead, Hunden dismisses the Apex project  as unrealistic, and doesn’t consider the Marcus project because it appears to be on hold.

As for the Fiore library/hotel project, the report notes that the earliest the hotel could open is four years from now. It also mentions that the hotel would be an extended-stay hotel, which I don’t remember Fiore saying in their meeting a month ago. From the August report:

Although the project would introduce a new hotel product type downtown, the effect on Monona Terrace and Madison overall would not be material. Instead, the project may, if timed poorly, siphon demand from new and existing hotels that are establishing themselves after the recession (and for one or two, after opening). The hotel portion of the project should not be a priority for the city at this time. Providing TIF funds to the project, even for parking, in essence subsidizes the hotel and creates a cycle of additional funding needs for both. The city has to choose carefully which projects to induce and the timing of those projects. This project would fall behind a true convention hotel, the Edgewater project, and a larger full-service project in terms of priority for City participation.

The report doesn’t consider the effect of taking the room taxes out of the financing picture for the Fiore project. With the room taxes, in the July presentation Fiore claimed their whole block redevelopment would have a 72 million dollar positive impact over 50(!) years. Without the room taxes, using their figures the project breaks even from property taxes alone in year 51.

The report reviews the basics of the Edgewater, with no new information that what’s already been widely reported. HSP takes great measure to stress that the Edgewater doesn’t materially improve the ability of the Monona Terrace to book larger convetions, and instead we should treat the Edgewater as a “Destination” hotel. The Edgewater should be thought of as a hotel you stay at when you want to visit Madison, or even when you want to stay at the Edgewater.  The Monona Terrace Hotel/Marcus Project would have been a hotel you stayed at because you’re attending a convention or conference that’s located in Madison, and things like Inn on the Park are hotels you stay at because you have business somewhere in Madison.

The August report’s thesis is that given that the Marcus Project is dormant, and the other two aren’t going to happen anytime soon, any hotel is better than no hotel, and we should abandon the public policy we adopted this past March and support the Edgewater. Making the Monona Terrace and downtown Madison more attractive for convention and conference planners should be put on hold, and revived when they won’t disrupt the Edgewater’s integration into the Madison hotel market.

There were a bunch of things I wish were included in this report. First, the original report the council adopted in March listed the following as consequences of not building a Monona Terrace-serving hotel:

  • The relative, and absolute, strength of the hospitality and tourism industry would likely decline. This would be especially pronounced when comparing Madison to its peers and competitors. Those building and/or expanding their convention, hotel and event package would penetrate the market for events at a higher level relative to Madison. As a result, financial rewards to Madison would decline in relative terms.
  • The hotel quality, capacity, and pricing power in Madison would stagnate, relatively speaking, compared to a scenario with a new, high quality, large and well-located facility.
  • Hotel taxes collected would be less.
  • Sales taxes collected would be less.
  • Fewer people would be employed, both in the hotels and from spin-off impacts.
  • The quality and quantity of meetings and events would stagnate and potentially decline.
  • The incentive for hotels to improve, renovate, and promote high service levels will be less than if a strong new competitor was introduced.
  • The existing lower quality hotels serving downtown would continue to serve downtown at similar levels of quality as today.
    Loss of a $100 million+/- development project and the jobs, taxes and impact associated with it.
  • There will be less revenue at Monona Terrace.
  • There will be more subsidy needed to support Monona Terrace.
  • Which of those still apply if some or all of these hotels opened? Some obviously still would, like the traffic at Monona Terrace, but others would not, like room tax rates. I’m interested in knowing how much the other hotels would improve if a new, high quality hotel opened downtown, but wasn’t attached to the Monona Terrace.

    There were some other major items that weren’t discussed at all in the August report:

    The report doesn’t consider the 151-room Hyatt’s on West Wash’s effect on the downtown market. This one is just inexcusable. The original, long report didn’t consider the Hyatt because they considered it hypothetical. True, it hadn’t yet broken ground, but the approval process was done when the report was drafted. However, construction was well underway when the August report was created, and I don’t understand why they didn’t acknowledge the Hyatt. This is especially puzzling since, using the original report’s figures, the hotel market took 4 years to fully absorb the 225 rooms Hilton when it opened in 2000. Obviously, another 151 rooms is going to do something downtown.

    The August report doesn’t give guidance on how long the market may take to absorb the Edgewater, given that the Edgewater is a ‘destination’ hotel. Will people actually come to Madison just to stay at the Edgewater? There’s not really any way for us to know, which is why we pay national hotel experts to tell us. I’d like to believe that they would, but then again I think Madison is just about the greatest place on Earth.

    The August report doesn’t give guidance on how a convention hotel would be absorbed in the face of other options, given the unique dynamics of a conference headquarters hotel. The August report warns us not to open a major hotel with 18 months of another major hotel (read: if you expand the Edgewater, don’t open a conference headquarters hotel until later). This just doesn’t make any sense, especially if the hotels are Edgewater/Marcus. The Marcus conference headquarters should have its use determined by how many big events can we book either there or in the Monona Terrace – those are people who aren’t coming to Madison if the conference/convention goes somewhere else. That wouldn’t be true if we were opening, say, the Edgewater and the Apex.

    The August report doesn’t consider expected room rates, and how much we can expect to pick up from room tax. Madison charges 9% of the room per night as a tax. As you might remember from the Fiore project, this can be a lot of money – far more than the property tax. Hotel rates are tricky, especially for conference hotels and national chain hotels, because no one actually pays the “posted” room rate at those places. We need some professional guidance to give us some idea of what rooms are actually going to go for a night for most visitors in order to sanity-check what developers tell us.

    Neither report ever study throwing money at the Inn on the Park. The Best Western Inn on the Park, right on the Square, is big enough and within the magic 1200 feet to be a factor for the Monona Terrace. However, to put it charitably, Inn on the Park is “not of the quality level that planners expect.” Well, what would it take to get it up to the quality level that planners expect? Could we do it for less than building a new hotel, and if it was a quality hotel, what would our needs be? Are the owners content and making plenty of money with the hotel in the shape it’s currently in, or would they be better off investing in their hotel, or would the city be better off investing in their hotel?

    Dusty, writing for Dane 101, reports that Edgewater is going back to the drawing board. That’s good for me, since I can hold up on my post on what I’d like to see at the Edgewater. However, I’m not quite done on hotels – check back later for my “Rube Goldberg designs a hotel solution for the Monona Terrace and Downtown Madison” post

    Bike compromise necessary for city (September 2009)

    [This originally appeared in the September 1st issue of the Badger Herald.]

    I don’t like bikes. I have ridden a bike exactly twice since I got my driver’s license, and both times served to remind that I don’t like riding bikes. I scream in my car when I’m stuck in a line of traffic behind some guy slowly huffing and puffing his way up a hill, and I’m convinced the last thought on Earth is going to be “damn bikers,” right before my head is slammed into the pavement when a biker runs a red light and hits me full speed.

    Thankfully, no one is making me ride a bike, and I’m able to walk or use the bus every day. Most days I don’t even touch my car. I’m thankful I live in a part of a city with plenty of transportation options.

    Writing a pro-biking column in Madison takes about as much political courage as taking a pro-‘Union Terrace on nice days’ position, so I’ll spare you another missive on all the reasons bicycling is good. Over the past year, a few bike-related projects and proposals have come before the Madison Common Council, and they’ve all passed 19 to 1. Ald. Thuy Pham-Remmele, District 20, has been the lone holdout. If she was voting against these proposals for cost reasons, I might understand, but none of the projects have been that costly, and some of them cost the city nothing. No, instead it seems she just doesn’t like bikes and bikers.

    As someone who shares her sentiment, this position completely baffles me. She should be leading the charge for expanded bike infrastructure. Biking is not a choice she or I are going to make, but plenty of others are biking. Why not get them into their own bike lanes, or onto more bike paths? That way we don’t even have to “share the road with bicycles.”

    She should also recognize the incredible economic development opportunity that comes with Madison’s commitment to being bike-friendly. Companies can create good jobs and offer good salaries, but quality of life is the city’s responsibility. Selling Madison to potential new hires is tough enough with our winter, so we need to have other things to point to. I’ve been involved with graduate student recruiting in my department the past few years, which is basically the same thing as recruiting new employees. After the quality of UW professors, the single most effective recruiting tool I could use was talking up biking in Madison. Even though we don’t have it yet, just explaining that the city was committed to obtaining a “platinum” rating for bicycling friendliness was a powerful statement.

    Adopting the “platinum” report (another 19-1 vote) and its goal of achieving the highest rating from the League of American Bicyclists was an important milestone for the city. One of the most surprising things about moving up one rating from gold to platinum is what we don’t have to do. The reason we’re not platinum isn’t because we need to pave more bike paths or build more bike bridges. Indeed, Madison’s bike infrastructure is the envy of the country. Instead, says former district 5 alder and current bicycling advocate Robbie Webber, we need to have more education, encouragement and coordination. Education and encouragement must be tied together: August and September typically see the most bike crashes in Madison, when thousands of new bike riders hit the streets. We have programs in all of these areas, but expanding their visibility will help when Madison’s status is reviewed next spring.

    To be sure, there are some new infrastructure pieces that are eagerly anticipated. The Badger State Trail is just six miles short of connecting downtown Madison all the way to Illinois, and the gap is only four miles between Madison and Waukesha. Madison will also soon be considering designating East Mifflin and Kendall Bluff as “Bike Boulevards.” Bike Boulevards would look and feel like some combination of State-Street-style pedestrian malls and regular city streets. They wouldn’t deny cars the right to drive on a street, but instead would render cars the secondary users of the street. Building such boulevards can be as simple as repainting a few lines and putting up some signs, or adding some traffic calming devices. Madison prides itself on its willingness to innovate. The Bike Boulevards are a chance to do so.

    If you’re new to Madison, take some time to check out some of the online resources about biking in the area and how to bike safely in the city. And if you’re like me and have sworn off biking forever, give it another thought. Webber made a pretty persuasive case, so maybe even you’ll see me biking every now and then.