Public Market Fiasco: City Hall’s Costly Mistake Hits Taxpayers Hard

Illustration: Madison Public Market Foundation

As I mentioned in a recent post, I’ll be sharing information with you between now and the election on November 5 that you won’t hear from the mayor’s office or read in the press regarding city hall’s fiscal irresponsibility—and why that’s a reason to vote "No" on the referendum to permanently increase property taxes. It doesn’t make sense to give our elected leaders more money when they’re not doing a good job managing what they have.

A good example is the city’s public market. The city is currently renovating the Fleet Services Garage on First Street at a cost of $23.6 million for the market. City hall's poor decisions on this project have resulted in lost opportunities for tens of millions of dollars in revenue, a significant boost in housing, and long-term financial growth in the property tax base.

Let’s take a look at the details and you be the judge.

Lost Opportunity: 300 Badly Needed Housing Units

The Eastern, formerly The Standard, is adjacent to the site of the Fleet Services Garage, which is the white building to the right. The Eastern, completed in 2024, is located at the corner of First Street and East Washington Avenue. It is an excellent example of what could have been on the site of the Fleet Services Garage, five stories of needed housing over first-floor commercial space featuring the public market. This six-story mixed-use development, which is on a 146,718-square-foot site, includes 289 dwelling units. At 153,787 square feet, the site of the Fleet Services Garage is slightly larger. Photo credit: The Eastern.

Madison continues to grapple with a severe housing shortage. How often have you heard the mayor or an alder say, "we have a housing crisis?” Redeveloping the site of the Fleet Services Garage as a mixed-use development, with the public market as the anchor tenant on the first floor, would have created 300 badly needed housing units. These units would have been conveniently located on multiple bus lines and just a block from the Bus Rapid Transit (BRT) system. The site is perfectly located to support the city’s transit, housing, and land use goals, creating dense infill redevelopment with more accessible, and potentially affordable housing close to public transportation. Instead, the common council and mayor chose to renovate the existing 45,000-square-foot, one-story garage located on a 153,787 square foot site, failing to address these pressing needs and underutilizing this valuable site.

Lost Opportunity: $6.7 Million From the Sale of Development Rights

City hall's decision to push forward with the current iteration of the public market means the city forgoes $6.7 million in revenue from the sale of the development rights for 300 units of housing in a large mixed-use development. This multi-million dollar windfall could have helped pay for the market, been invested in important city projects like affordable housing, or used to help pay for basic services.

Lost Opportunity: $33.6 Million in Property Tax Revenue

In its current form, the public market is a missed opportunity to significantly increase the property tax base. The current iteration isn't on the property tax roll, and will not generate any property tax revenue, but will still require city services. Had the city opted for a mixed-use development similar to the new development on the adjacent property, the privately owned multi-family component would have generated more than $112.6 million in property tax revenue over the next 50 years for Dane County, the Madison Metropolitan School District, Madison College, and the City of Madison, with $43.6 million going to the city. This incremental and sustainable property tax revenue would have helped pay for basic city services. Yet again, the common council and mayor chose to leave this money on the table in their haste to get the public market built.

Lost Opportunity: Development Inconsistent With City Goals

Renovating the one-story Fleet Services Garage, which occupies a small portion of this prime three-acre site on the Isthmus, directly contradicts important goals championed by city leaders and embodied in the comprehensive plan. The mayor and council members have consistently advocated for more housing to meet the growing demand and denser infill development near mass transportation. However, city hall's decision to proceed with this low-density, single-use project with a large surface parking lot near mass transit on the city’s Isthmus shows they don’t walk the talk.

A Stunning Hypocrisy in Leadership

The decision to approve the public market in its current form isn’t just fiscally irresponsible—it’s stunning in its hypocrisy. For years, both the mayor and members of the common council have repeatedly emphasized the need for more housing, denser infill development, and accessible public transportation. They’ve championed city-wide goals focused on smart growth, dense infill development, increasing housing supply, and building developments that align with our transit network to promote sustainability. Yet, this approval flies directly in the face of those very ideals.

By approving the renovation of the modest Fleet Services Garage on a large, three-acre site with a surface parking lot—on a site that could have supported hundreds of housing units, along major transit lines—the mayor and council have demonstrated a “do as I say, not as I do” approach.

This project was an opportunity to create a model of sustainable urban growth. Instead, it has become a textbook example of how city leaders say one thing and do the opposite when it comes to making tough choices.

Consultant’s Recommendations Ignored

In addition to the lost opportunities and the hypocrisy, city hall’s decision to site the public market on First Street directly contradicts the recommendations of its own consultants. The Site Analysis for Locating a Madison Public Market (2010) made it clear that location was critical for the market’s success. The consultants advised that a public market is a strong first-floor retail use that could help anchor a larger commercial development. "A public market could help to catalyze a larger mixed-use development and provide a vibrant street-level use," they stated. Yet, this recommendation was ignored.

The consultants also warned of the financial risks associated with the First Street location, stating that "A Madison Public Market with the public goal of anchoring a blighted area would have more modest goals and a different financial model and would most likely require ongoing public subsidy." In contrast, a site in or near the central business district would be "significantly more financially viable."

The report even predicted failure if the market were placed at Union Corners or the Mautz Paint site, both of which have similar characteristics to the current First Street location: "As currently envisioned, the Madison Public Market would have a significantly higher likelihood of failure if located at either the Mautz Paint site or Union Corners." Despite these clear warnings, the common council and mayor chose to push forward, making it highly likely the market will require a long-term public subsidy to survive.

A Penny Wise and Pound Foolish Decision Regarding the Construction Bids.

Another layer of fiscal irresponsibility can be seen in how city hall dealt with higher-than-expected construction bids. The low bid for renovation of the Fleet Services Garage was $1.64 million more than the city budgeted. Instead of taking time to reevaluate the project, and issue a Request for Proposal (RFP) based on the consultant’s recommendations for a mixed-use project, the council pushed forward, approving the additional funding before the construction bids expired the next week.

This hasty decision was penny wise and pound foolish. It not only locked the city into a project already criticized by the professional subject matter experts for its location, but it did so without taking the time to ensure the financial model was sound. As the consultant recommended, developing a mixed-use project with the public market as an anchor tenant would have been a more fiscally responsible approach—one that could have spurred housing development, increased tax revenue, and reduced the need for long-term subsidies.

Unaddressed Issues in Land Use and Finances

The resolution approving the final round of funding for the public market highlighted three goals for the project: “supporting food based entrepreneurship, especially among historically disadvantaged business owners; providing affordable, healthy food options; and, providing a public, year-round gathering place for all Madisonians.” (Legistar ID no. 80106.) While admirable, the city’s goals for the project overlooked two critical aspects of the project that were raised by the city’s consultant: land use and financial viability. By ignoring the consultant’s recommendation to incorporate the market into a mixed-use development and opting for a stand-alone facility on the site of the Fleet Services Garage, and locating it outside the central business district in an area with very little pedestrian traffic, city hall’s decision will have an adverse impact on the market’s success.

The city’s consultants were clear—the public market would be more successful as part of a larger mixed-use development in the central business district. City hall’s failure to follow the consultant’s recommendations regarding the First Street site exacerbates their fiscal irresponsibility.

Who’s Responsible?

If you are concerned about the common council and mayor’s handling of this project, drop them a line and let them know what you think about it. After they were briefed on the issues with the location and project concept, the alders who voted to approve the final round of funding for the project, which enabled it to move forward in its current form, were Michael E. Verveer, Regina M. Vidaver, Marsha A. Rummel, Nasra Wehelie, MGR Govindarajan, Nikki Conklin, Yannette Figueroa Cole, Amani Latimer Burris, Tag Evers, Dina Nina Martinez-Rutherford, Sabrina V. Madison, Charles Myadze, Kristen Slack, Barbara Harrington-McKinney, and John W. Duncan. Mayor Satya V. Rhodes-Conway also signed the resolution.

Alders Derek Field, Jael Currie, and Isadore Knox Jr. voted no. Alder Juliana R. Bennett was absent, and Alder Bill Tishler was excused.

It’s time to hold our elected officials accountable.

It’s time to hold our elected officials accountable, and voting "No" on the property tax referendum is the best way to do it until they’re up for reelection. Why should we give them more of our hard-earned money when they have mismanaged what we’ve already entrusted them with? The public market debacle is just one example of their fiscal irresponsibility. Despite tens of millions of dollars in lost revenue and 300 units of badly needed housing left unbuilt, they now ask for more money.

Renovation of the Fleet Services Garage may have started, but stopping now and going back to the drawing board could still save taxpayers millions. This project is part of a long-term pattern of poor financial management by this administration. For a list of other financial irregularities, see my previous blog post, Premature and Unjustified: Madison's Referendum to Permanently Increase Property Taxes.

Voting "No" sends a clear message to city hall: Madison deserves a government that is fiscally responsible and accountable to the public.

Of course, this is just one person’s opinion on why to vote "No". As I said when we started this conversation, you be the judge.

If you enjoy this content, please like and share. For questions and media inquiries, email asaloutos@tds.net or call (608) 345-9009.

© Alex Saloutos 2024.