Hospital revival costs demo contractor a job

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Paul Snyder
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A late-inning rally to save Wisconsin Memorial Hospital in Madison left Champion Environmental Services Inc. with a state demolition contract but nothing to tear down.

“It’s a little disappointing, sure, because it’s a nice job,” said Terry O’Rourke, vice president of the Gilberts, Ill.-based contractor. “But it’s the state’s decision. It’s out of our hands. We’re fortunate in that we’ve got other projects, because this might have been a make-or-break job for another company.”

Champion last year submitted the low bid to demolish the 89-year-old hospital on the Mendota Mental Health Institute campus. The Wisconsin Historical Society in 2007 recommended demolition as the most cost-effective solution for the vacant building, and the state Building Commission in January 2008 approved spending $541,000 to take the structure down.

Champion’s $198,000 bid came in far below the initial estimate and the contract was finalized, although the state never gave the contractor a green light.

Oregon-based Gorman & Co. Inc. last summer proposed saving the building — at no cost to taxpayers — and leasing it to Catholic Charities of Madison for drug and alcohol treatment.

Gorman’s plan would use an estimated $3.4 million in tax credits for affordable housing and historic preservation.

But the state Department of Health Services last year was unsure if Gorman & Co. would be able to get the promised tax credits, said spokeswoman Stephanie Marquis.

“We were concerned about rehab costs and believed the costs were overstated,” she said. “We were worried about who would pay overruns if those came about, and also the fact that (the Wisconsin Housing and Economic Development Authority) actually stipulates it won’t provide tax breaks if a building is used as transitional housing.”

Gary Gorman, president and CEO of Gorman & Co., said any concerns about cost overruns reflect a “fundamental misunderstanding” of his proposal.

“We would not propose they sell us the building,” he said. “But we would set up a long-term lease. The risk and reward associated with the project would be completely in the private sector.”

Gorman said he is still uncertain about how much it would cost to renovate the hospital.

“It’s still a very preliminary conversation,” he said. “The fundamental question is: Does the state want to save the building or not? And right now, it’s saying it does.”

Gov. Jim Doyle last week officially cancelled demolition and directed DHS to review the possibility of saving the building.

Marquis said if renovation cannot be done without costing taxpayers, the state likely will rebid the demolition contract.

“The cost to taxpayers has been a big factor since the beginning, and the first determination was that demolishing the building seems to be the most cost-effective solution,” she said. “We always try to be very responsible stewards for the state.”

But that does not mean Champion will return with its $198,000 bid, O’Rourke said.

“I don’t know whether we would try again,” he said. “It would mean a reassessment if and when that happens and looking at what other work is out there and what other work we’re doing. You’ve always got to be out looking for the next job.”

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