After missing two more deadlines, a developer is poised to meet final city conditions and start a much-anticipated, long-delayed $19.8 million remake of the crumbling, landmark Garver Feed Mill and surrounding property on the East Side.
If all works out, Baum Development of Chicago expects to begin construction in late November or December.
“We’re excited,” said Bryant Moroder, a project manager for the developer. “We’re just very eager to get this project underway for a lot of reasons. We know this is going to be a great project for Madison.
In August, after more than two years of delay and negotiations, the City Council approved an agreement with Baum to convert the Garver building into an artisan food production facility with up to 50 “microlodging” units available for short-term rental on the surrounding five acres.
Under the agreement, the city would provide $1.82 million in funding, while borrowing an additional $1.6 million for soil remediation.
Since the agreement was approved, however, Baum missed two deadlines — the latest on Oct. 31 — to complete a necessary closing with the city under which the city would sell the building to the developer but retain the land through a ground lease.
The closing must occur before Baum can begin construction on the site, which is immediately north of Olbrich Botanical Gardens.
Baum has already secured design and site plan approvals but must prove it has met all financial conditions set by investors and lenders before closing. The developer is using federal New Market Tax Credits, a bank loan, equity, historic tax credits, grants, and the long-budgeted $1.82 million city grant to finance the project.
The developer must also provide specifications for a cold storage building it must construct on the property for Olbrich and the city Parks Division.
On Friday, assistant city attorney Kevin Ramakrishna sent a letter to Baum saying the council’s latest resolution authorizing a closing has expired and that the city has become aware of “additional undisclosed financing problems” that require a new extension.
City staff “will not support a new closing deadline without a complete understanding of the outstanding conditions and issues that have been presented by other lenders on the project,” Ramakrishna’s letter says.
“Our goal was to get a serious look at where things stood,” city economic development director Matt Mikolajewski said. “Based on the information we’ve received in the last couple of days, we’re very confident we can get to a closing by the end of the month.”
Moroder said, “We’re on track to close on Nov. 28.
The city has several options to move ahead, with the simplest and most preferable having staff use a provision in the previous resolution to extend the closing deadline, Mikolajewski said. The staff could also go to the city’s Finance Committee or the council for guidance, he said.
The city, which chose Baum over three other suitors for the project in April 2015, had already extended several deadlines for the developer to secure financing and meet other milestones for the project.
In February, Baum secured critical federal New Market Tax Credits, which increased optimism that the project would move forward. The council approved the development agreement in August.
But then, the city and Baum had to address soil problems at the site discovered earlier in the year. The site is contaminated with some petroleum and polycyclic aromatic hydrocarbons (PAHs). Several areas of the property will need to have soil capped or removed, and clean topsoil will also be needed to be brought in.
As part of the August agreement, the council moved to borrow the additional $1.6 million for soil remediation efforts at the site. Under the deal, Baum is responsible for the building while the city is responsible for cleanup of the soil.
The two-story, Industrial Romanesque feed mill, 109 S. Fair Oaks Ave., was built in 1905 and named a city landmark in 1994.