StartingBlock, Madison’s Answer to Chicago’s 1871, Hits Crucial Stage
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real estate company Gebhardt Development—which is working with StartingBlock organizers on the project—received initial approval from a city committee. Gebhardt, which was the only developer to respond to the city’s request for proposals for the site, now has an option to buy the property and has been given several months to turn in an updated proposal that would require Common Council approval before Gebhardt could negotiate the purchase of the land from the city, says Matthew Mikolajewski, manager of the city’s Office of Business Resources. Mikolajewski previously told the Wisconsin State Journal he wasn’t concerned that Gebhardt was the only developer to submit a proposal for the site, and he thinks StartingBlock could help spark the boost in entrepreneurship that city officials desire for the Capitol East District.
The city acquired the site in 2010, when it bought the former Don Miller auto dealership for $5.8 million, which also included parcels across the street, according to the Capital Times. The city has been selling the land off in pieces to encourage economic development in that neighborhood, historically home to manufacturing companies. Gebhardt has been one of the biggest beneficiaries of the city’s strategy in that area. Across the street from the proposed StartingBlock building, Gebhardt developed the Constellation, a 12-story building with 220 apartments, a coffee shop, and Google’s Madison operations, among other tenants. Gebhardt is also developing the adjacent Galaxie complex currently being constructed, which will include more apartments, offices, and a grocery store, according to the Wisconsin State Journal.
Organizers haven’t released an official estimate of the StartingBlock building’s total construction costs, as the designs are still being modified, but something of that size could exceed $30 million, Gebhardt president Otto Gebhardt says. The project would be financed primarily with private money, although Gebhardt proposes an undetermined amount of tax increment financing from the city to build an on-site parking structure and for potential soil remediation costs.
StartingBlock supporters are already out raising funds.
The city of Madison has committed $1.5 million for StartingBlock capital expenditures, Mikolajewski says. Gay is also working on winning a $500,000 federal grant that would fund StartingBlock operations over the next three years. That grant would be used to rent a temporary space while StartingBlock’s permanent home is being built, and to hire an executive director who would begin recruiting future tenants before the building opens, Gay says.
If all goes according to plan, construction would begin next year, and the building would open by the end of 2016.
But that will partly depend on successfully courting private backers. StartingBlock project manager George Austin, who has consulted on several prominent Madison real estate projects over the years, says the group is in talks with a potential partner that would provide “major support.” Once that deal is finalized, StartingBlock would pursue an additional $3 million or so from other sources, he says.
StartingBlock officials say they plan to share updates on the project this week, which could include news about fundraising.
“This next month or two is going to be extremely instrumental in rallying the coalition of interested parties around the table to invest in this project and to move it forward to the next phase,” Gay says.
Madison’s aspirations to become a leading tech startup hub don’t hinge on StartingBlock coming to fruition, but the initiative could form a “critical piece of the ecosystem puzzle,” says Greg Robinson, a former … Next Page »