Building Commission waives bidding procedures for Hill Farms project (UPDATE)

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Wisconsin officials on Wednesday waived bidding requirements for what is likely to become the largest government-building project in the state’s history.

Members of Wisconsin’s Building Commission voted to allow the state to pay no more than about $195.3 million for a roughly 600,000-square-foot building following the completion of the structure by private developers at the state’s Hill Farms site on Madison’s west side. State officials have been negotiating since February with a joint venture formed between C.D Smith Construction and Gilbane over plans to replace two Hill Farms buildings that now house the Wisconsin Department of Transportation.

Cullen Werwie, a spokesman for the state’s Department of Administration, said those talks are close to being final. As part of them, Smith Gilbane has agreed to pay about $13 million for 14 unused acres at the Hill Farms site, as well as the Badger Road office building, which houses the state’s Department of Employee Trust Funds on Madison’s south side.

The money from the sales will help to lower the total cost of the Hill Farms replacement project, Werwie said. The developers also have plans to build a hotel, office buildings, senior housing and community space at the Hill Farms site, Werwie said.

Werwie said state officials considered several alternative plans, including building the Hill Farms replacement at another site. Still another option would have been to keep the current buildings.

If state officials had gone that way, estimates held that the Hill Farms structures would need $34 million worth of repairs over the next several years. A total renovation of the buildings, which date to 1964, would cost $142 million.

State Sen. Jerry Petrowski, a Republican from Marathon and a member of the Building Commission, said, “To renovate the old building, the cost was substantial. And then we would still have a 51-year-old building.”

Rather than solicit bids for the Hill Farms replacement, state officials selected Smith Gilbane after issuing a request for proposals. Smith Gilbane consists of C.D. Smith Construction of Fond du Lac; Gilbane of Providence, R.I.; Hammel, Green and Abrahamson Inc. of Minneapolis; and the architecture and engineering firm Smith Group JJR LLC of Detroit.

Along with the Hill Farms replacement building, the Building Commission’s vote Wednesday will allow the state to buy a nearby 1,700-stall parking garage that is also to be built by the development team. The project’s maximum price tag — which includes about $190.3 million for construction and equipment and $5 million set aside to cover any cost overruns — is likely to make it the most expensive of its type in state history.

(Gov. Scott Walker signed a bill Wednesday that would authorize $250 in public financing for the construction of a new arena for the Milwaukee Bucks. But money for that project is to come not only from the state, but also Milwaukee city and county, as well as a newly formed entertainment district.)

According to Building Commission documents, the state will not purchase the Hill Farms replacement building until the project is complete. The main structure is expected to take two years to build and the nearby parking garage one year.

Following the completion, employees from the state’s Department of Administration, the Public Service Commission and various other agencies will move into the replacement building. The Department of Transportation will continue to have its headquarters at the site.

The Smith Gilbane development team was among four whose members sat down with state officials in December to be interviewed about their plans for the Hill Farms project. The other teams were led by McCaffery Interests Inc., of Chicago; M.A. Mortenson Co., of Minneapolis; and T. Wall Enterprises LLC, of Middleton.

The groups that made it to the final selection round had, in turn, been chosen from among six development teams that had submitted responses to the request for Hill Farms proposals by the Nov. 7 deadline set by the state. To enter final negotiations, respondents had to put together a list of companies they would contract with, provide information about past work on state and public projects, and list any other current or future commitments.

The ability to obtain loans also weighed heavily in the final reckoning. According to the request for proposals, no company was considered unless it could furnish evidence of obtaining financing for a project worth $300 million or more within the past five years and of the ability to get financing now for a project worth $250 million or more.

Moreover, no developer was considered for the Hill Farms project unless it had sent representatives on a mandatory tour of the current buildings.

That tour, which took place in October, became a source of controversy, largely because it was held only weeks before responses to the state’s request for Hill Farms proposals were due. Many observers wondered how developers could devise plans for so large a project in so little time.

Even so, the state is not proceeding in an unprecedented way with the Hill Farms project. Officials have similarly eschewed bidding procedures and instead issued requests for proposals for the construction of the Risser Justice Center and buildings put up for the Department of Administration, the Department of Agriculture Trade and Consumer Protection and the Department of Revenue. Follow @TDR_WLJDan