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State contractors say it will cost almost $6.5 million to renovate a run-down, historic hospital building on the Mendota Mental Health Institute campus — twice as much as what a Madison affordable housing developer projected.

But the contractors, hired May 27 by the Department of Administration for $2,730, didn’t talk to Madison developer Gary Gorman or Catholic Charities of Madison, the ultimate tenant.

Last summer Gorman proposed using about $3.4 million in affordable housing and historic preservation tax credits and traditional financing to rehab the old Wisconsin Memorial Hospital for Catholic Charities of Madison as a home for Hope Haven-Rebos United, which provides drug and alcohol treatment.

Health Services Department spokesman Seth Boffeli said the state’s major concern is potential cost overruns. “What happens if it actually costs a lot more than $3.4 million?” Boffeli said. “Who would be on the hook for that?”

But Brian Cain, president of Catholic Charities of Madison, Thursday questioned the state’s angst. “What is the state’s risk?” Cain said. “It’s Gorman’s risk or potentially Catholic Charities’ risk if there are cost overruns, not the state’s. And, anyway, how could they be in a worse position than they are now?”

The state was set to spend $541,000 this spring to tear down the old Wisconsin Memorial Hospital, built in 1922 and listed on the National Register of Historic Places. .

Told the old hospital, empty and deteriorating for 15 years, was a firetrap, the state Building Commission approved razing it in January 2008. Gorman submitted his proposal later that year. In May, Gov. Jim Doyle halted the demolition. On May 27, the state Department of Administration hired three independent contractors to study the cost of renovation.

“The state hasn’t made a decision to demolish or to rebuild,” Boffeli said Thursday. “We had our doubts (about Gorman’s proposal). This independent analysis seems to back up some of those doubts.”

Thursday Gorman said a cost analysis was a waste of time and money until Catholic Charities decided what it needed in the building. “The people that the agency hired to come up with costs had not even talked to the end user (Catholic Charities) about what they need, want, or are willing to pay for,” Gorman said. “That is like asking the cost of a car without knowing whether it is a Yugo or a Rolls Royce.”

The contractors, on retainer with DOA, allow $1,800 for each mop basin, $1,400 for each laundry tub and $1,500 for each of 76 tank-type toilets.

Boffeli acknowledged those estimates may be high, but he said Gorman underestimated construction costs. For example, Boffeli said, the new report includes $300,000 for asbestos removal, “but there is no cost allowance in Gorman’s proposal for asbestos removal.”

Timeline

  • Built in 1922, the building was last used as a veterans hospital.
  • January 2008, the state Building Commission approved razing the old Wisconsin Memorial Hospital.
  • October 2008, Gary Gorman submits a proposal to spend $3.4 million to renovate the building in response to a request from the Department of Health Services.
  • In April, Gov. Jim Doyle halts the demolition pending re-evaluation.
  • In May, the state Department of Administration hires three independent contractors to study the cost of renovation.
  • In June, the contractors report the cost of the project would be double what Gorman projected.