Madison Catholic Diocese significantly alters plan to convert headquarters into housing

June 08, 2014 5:30 am  •  By Doug Erickson | Wisconsin State Journal

Officials with the Madison Catholic Diocese are moving forward with plans to redevelop the Bishop O’Connor Catholic Pastoral Center, their historic headquarters, though the plan has changed significantly from the one announced last fall.

The new concept calls for a mixed-use development, not solely rental housing. The diocese will keep all of its offices at the site — not vacate the premises as originally planned — co-existing with 54 apartments.

In another big change, diocesan officials said they now assume the building will remain tax-exempt. Last fall, they said the redeveloped building would pay property taxes.

The site is on Madison’s Far West Side at 702 S. High Point Road.

The apartments and other housing amenities are now expected to take up about two-thirds of the building instead of the whole thing. The housing will be marketed more pointedly to empty-nesters and those 50 and older, including those looking for housing with religious amenities.

The old plan would have stripped the building of its religious uses — the chapel was to have become a lounge, for instance. Now the chapel will remain and continue to host diocesan functions such as the weekday noon Mass.

As with the previous proposal, Gorman & Company Inc., a real estate development company with deep connections to the diocese, will execute the plan under a long-term lease agreement with the diocese, said Monsignor James Bartylla, the diocese’s second in command. The company will secure financing, design the housing, oversee construction and manage the property, he said.

Ted Matkom, who oversees Gorman’s Wisconsin projects, said he anticipates construction starting in November, with a total project cost of about $16 million. Occupancy likely will begin in late 2015, he said.

Matkom said the changes in the proposal came about after his company got more into the details of the process.

Initially, the plan called for about 90 apartments. But some areas of the building did not lend themselves to an easy conversion into living space, upping construction costs. “The inefficiencies would have put the rents at the very top of the Madison market,” he said.

Also, the company kept butting up against a desire — their own and that of others — to retain what makes the building so treasured to so many: its Catholic identity. “We decided, why not capitalize on the iconic history of the building while also helping the diocese by allowing it to stay here?” Matkom said.

There’s a financial benefit to the project by taking that approach, he said. Even though the diocese will remain the owner of the property, it will pay office rent to a new limited-liability company that will be formed to redevelop the building, thus anchoring the project’s economic stability, he said. The diocese will be a partner in the new company.

“To complete the loop, the great part is that the diocese’s rent will be reimbursed from the cash flow generated by the apartments,” Matkom said.

The financial arrangement is complicated, Bartylla said, but another way to look at it is that the diocese will be leasing the property to Gorman while also being a tenant of the project and benefiting from the income it generates.

As for the property remaining tax-exempt, Matkom said his company assumes the project will qualify under existing state statutes covering “affordable benevolent apartments.” The apartments will rent for market rates.

In addition to Bishop Robert Morlino and his staff remaining at the O’Connor Center, all affiliated Catholic organizations currently there also will stay put, including Catholic Charities, the Catholic Herald newspaper and Relevant Radio, a Catholic station.

Those and other diocesan uses take up only about 36 percent of the 232,000-square-foot building. Increasing the diocese’s cash flow by finding a way to use underutilized areas was the initial impetus for the redevelopment project.

As with the previous proposal, outside organizations that use the site as a conference center and meeting space still will need to find another home, Bartylla said.

Diocesan staff members were told Friday morning they will be staying at the O’Connor Center. “There were a lot of happy faces at that meeting,” said Brent King, diocesan spokesman.

The O’Connor Center was first known as Holy Name Seminary, opening to students in 1964. The seminary closed in 1995.

On Friday, Monsignor Mike Burke, pastor of St. Maria Goretti Catholic Church in Madison and the last rector to serve the seminary, said he was thrilled that religious functions would remain at the center.

“This has always been sacred space — there’s a sense of peace people get when they walk in these doors,” he said of the center. “Preserving the tradition of this building is going to create tremendous positive energy in the diocese.”