Rhodes-Conway and Guequierre Propose Forgiving $1.6 Million Debt Plus Interest Owed to City by Financially Successful Nonprofit

Key Points

• Mayor Satya Rhodes-Conway and Alder John Guequierre (District 19) propose forgiving $1.6 million in debt, plus accrued interest, owed by Madison Ice, Inc. on the land contracts for Hartmeyer Ice Arena and Madison Ice Arena.
  

• Their proposal includes giving Hartmeyer Ice Arena and Madison Ice Arena, which together encompass seven acres, to Madison Ice, Inc. and a new organization, the East Madison Ice Collective.
  

• This proposal comes just two weeks after voters approved a referendum to permanently raise property taxes to balance future budgets.
  

• Madison Ice, Inc. purchased Hartmeyer Ice Arena and Madison Ice Arena in 2004 using land contracts but has been in default since 2021, allowing the city to reclaim the properties.
  

• While operating the arenas, Madison Ice, Inc. has generated a surplus of $1,528,158.

Madison Ice Arena, on the left, is located on the west side of Madison. It was built in 1974 and has two rinks, a full-size main rink, and a smaller-size studio rink. Hartmeyer Ice Arena, on the right, is located on the north side of Madison and was built in 1960 to host the UW men's hockey team. Photos courtesy of Madison Ice, Inc.

Barely two weeks after city leaders persuaded voters to approve a permanent property tax levy increase to help balance future city budgets, Mayor Satya Rhodes-Conway and Alder John P. Guequierre, District 19, are sponsoring a resolution to forgive over $1.6 million in debt plus the accrued interest to the city by Madison Ice, Inc. for the land contracts on Madison Ice Arena (MIA) and Hartmeyer Ice Arena (Hartmeyer). In addition to forgiving the debt, the resolution includes gifting the arenas, including seven acres of prime real estate, to Madison Ice, Inc. and a new organization, East Madison Ice Collective, formed to own and operate Hartmeyer. This resolution raises serious questions about fiscal responsibility, transparency, and whether this proposal best serves the public interest.

Fiscal Concerns: Does This Make Financial Sense?

At its core, the resolution proposes a multi-million-dollar subsidy to Madison Ice, Inc., a nonprofit that appears to be thriving financially. According to the resolution, “although the ice arenas generate enough income to maintain staffing and operations, they will not generate enough revenue to repay the City’s outstanding debt, as well as pay for needed future capital improvements” (Legistar ID number 86169). However, the organization’s federal tax returns and the financial information they provided to the city show a cumulative surplus of $1,528,158 while operating the arenas. This financial surplus directly contradicts the resolution's claim that Madison Ice, Inc. cannot repay its debts or afford necessary capital improvements.

The resolution further states: “The inability to make payments on this debt was related to the inability to use the ice arenas, and generate income, as a result of the Pandemic.” However, this explanation conflicts with Madison Ice, Inc.’s financial performance. The last few years, even during the height of the pandemic, were among the most lucrative for the organization. In the most recent six years, Madison Ice, Inc. has generated a surplus of $846,910.

Madison Ice, Inc. Surpluses 2019 to 2024

Madison Ice, Inc. has generated $1.53 million in surpluses (revenues less expenses) while operating Madison Ice Arena and Hartmeyer Ice Arena, and $846,910 in surpluses in the last six years. Results are for fiscal years ending April 30. Source: Madison Ice, Inc. federal tax returns (Form 990) and financial information they provided to the city.

With over $1.53 million in total surpluses from operating the arenas and no evidence of financial distress requiring such extraordinary assistance, why should taxpayers shoulder this burden? If Madison Ice has ceased payments on its obligations since 2021, the city already has the legal right to reclaim the properties under the terms of the land contracts. Why isn’t this option being exercised?

Political Timing and Credibility

The timing of this resolution—just two weeks after the property tax referendum—adds to its controversy. Many residents might reasonably ask why city leaders are prioritizing debt forgiveness and giving away millions of dollars of real estate for a nonprofit providing recreational and competitive sports over addressing the city’s growing structural deficit and basic needs.

Favoritism and Transparency: A Public Trust Issue

Forgiving over $1.6 million in debt and giving away seven acres of prime real estate raises the question: Is this the best use of taxpayer funds? Could these funds and the property be put to better use addressing basic needs, and pressing city priorities, such as housing, public transit, or infrastructure improvements? The stakes and lack of financial evaluation highlight the need for an open, transparent, and competitive process.

It begs the question: How does the average citizen secure such favorable terms for defaulting on debts? If a financially healthy nonprofit can default without penalty, have its multi-million dollar debt forgiven, and then be handed seven acres of prime real estate, what message does this send? It suggests that not only can the city’s agreements be disregarded without consequence, but such disregard will be rewarded.

According to public records, there is no evidence the city has even notified Madison Ice, Inc. of their default, and the council was just notified of this delinquency. This oversight points to a larger issue of lax enforcement and governance.

To understand the rationale behind this resolution, I reached out to Mayor Satya Rhodes-Conway’s office for a comment on the proposal, including questions about its alignment with the city’s goals for housing, infill development, and the property tax base. I also asked what due diligence had been conducted to justify financial assistance to what appears to be a financially thriving organization. The mayor declined to comment.

Reimagining Redevelopment: Integrating Community Programs with Highest and Best Use

Redevelopment doesn’t need to be a binary choice between the programs provided by Madison Ice, Inc. and the highest and best use of the property—it can and should achieve both. A thoughtfully designed plan could include an upgraded athletic facility alongside additional features that maximize the value of the property for the broader community. By incorporating an athletic facility into a mixed-use redevelopment, the city could ensure that community programs continue to thrive while simultaneously unlocking the potential for greater economic, recreational, and social benefits.

This approach requires innovative solutions that serve the public good while balancing fiscal responsibility. Redevelopment can enhance community access to recreational opportunities while integrating complementary uses, such as housing, retail, or green spaces, that address other community needs. This way, the city can support existing programs while responsibly managing public resources.

For example:

1. Reclaim the Properties: The city can repossess the ice rinks and issue a new Request for Proposals (RFP) to find the best-qualified operators willing to maintain these programs and ensure the city gets the best terms.
   

2. Temporary Operations: Allow Madison Ice to continue operating the arenas temporarily under strict financial supervision while the city makes long-term plans for the properties.
   

3. Mixed-Use Redevelopment: Redevelop the sites to include housing or other appropriate uses, which aligns with the city's goals for density and transit-oriented development. The ground floor could house a new, improved recreational facility, retaining the community programs while maximizing property tax revenue.
   

4. 4.    Hartmeyer’s Redevelopment Potential: Hartmeyer’s location in particular offers significant opportunities. Situated near the city’s Bus Rapid Transit (BRT) corridor, redeveloping this site into a mixed-use development with housing and commercial spaces could address Madison's housing shortage and generate revenue through the sale of development rights and increased property taxes.
   

A Thoughtful Counterpoint: Alder Amani Latimer-Burris Weighs In

Alder Armani Latimer-Burris, District 12, where Hartmeyer is located, expressed thoughtful reservations about the resolution, highlighting the need for transparency and comprehensive evaluation of the properties’ future uses. While she acknowledged the importance of the programs offered at Hartmeyer, she emphasized that this issue “requires community input” and a process that is “thoughtful and transparent” to ensure decisions are made “with accountability and integrity.”

“This is especially critical,” she noted, “considering the situation, what has transpired up to this point, the value of the property, the speed of the proposed transaction, our budgetary restraints, and a whole host of other questions and issues.” Her focus on engaging diverse perspectives and examining the broader picture stands in stark contrast to the urgency shown by the resolution’s sponsors.

Alder Latimer-Burris’s call for community involvement serves as a reminder that public trust hinges on transparency, deliberation, and a genuine effort to balance competing priorities. Her perspective reinforces the need to carefully evaluate all options for the properties before moving forward.

Alder Guequierre’s Perspective: Exploring All Options

As a sponsor of the resolution, Alder John Guequierre of District 19, where MIA is located, provided additional context regarding his position. While his sponsorship means he supports the resolution, he emphasized that this support is rooted in a desire to ensure a thorough discussion of the matter. Guequierre acknowledged that his initial reaction upon learning of the proposal was to “explore grabbing the properties for the opportunity to increase our housing stock.” This aligns with concerns raised by others about whether the current use of these public assets represents their highest and best use.

Guequierre stated that his decision to sponsor the resolution came only after receiving sufficient financial data to conclude that the two arenas could operate as financially viable, independent entities. However, he also recognized that there are still unanswered questions, noting, “I’m touring the D19 arena next week with their board president and have many more questions.”

In his response, Alder Guequierre appeared open to reconsidering the current proposal if further evaluation proved necessary. He acknowledged that Alder Amani Latimer-Burris has expressed interest in exploring a longer evaluation period, commenting, “Perhaps that will be the best path.” His openness to extending the timeline suggests a willingness to balance the urgency of the resolution with a more deliberate assessment of its implications.

Guequierre’s comments reflect both a pragmatic approach to understanding the financial and operational aspects of the arenas and a recognition of the broader implications for the city. While he currently supports the resolution as a sponsor, his acknowledgment of the need for public input and the possibility of alternative solutions adds an important dimension to the debate.

The Need for Transparency and Competitive Bidding

The resolution to forgive Madison Ice, Inc.’s debt and give them MIA at no cost, while giving Hartmeyer to the new group at no cost, is set to move through the Common Council with alarming speed. Adding to the concerns, it has recently come to light that the purchasers have been in default on their obligations for three years—a fact that the Council and the public are only now learning. Despite this, a decision on the forgiveness of the debt and the transfer of these properties is expected to occur within two weeks, without an open process or competitive bidding.

Compounding the issue, city staff selected the new group to receive Hartmeyer without an open process. This lack of transparency raises serious questions about fairness and accountability. Without an open RFP and competitive bidding process, there is no assurance that the terms and conditions of the transfer are the most favorable or that the selected operators are the most capable of managing these valuable assets for the public good. Such a process would allow other qualified owners and operators to submit proposals, ensuring accountability, transparency, and the highest benefit to taxpayers and the community.

According to the current timeline, the resolution will be introduced to the Council on November 26, referred to the Finance Committee on December 2, and brought back to the full Council for a vote on December 10, just two weeks after its introduction. This tight schedule raises significant concerns about whether there is adequate time for a thorough evaluation of the proposal, meaningful public input, a transparent decision-making process, and an open process that allows other potential owners or operators to submit proposals.

Given the complexity and far-reaching implications of this resolution—including its significant financial impact, questions of fairness, the purchasers’ default history, and alternative uses for the properties—such an expedited schedule seems insufficient for ensuring accountability and sound governance. Moving forward with such haste risks undermining public trust and forfeiting an opportunity to fully explore and evaluate all potential options for these valuable community assets.

The Need for a Deliberate Approach

Rather than rushing to a decision, the city should consider extending the timeline to allow for:

1. Public Engagement: Hosting opportunities for residents and stakeholders to weigh in on the future of these valuable public assets.
   

2. A Comprehensive Review: Fully assessing who is best qualified to operate the properties, Madison Ice, Inc.’s financial position, the feasibility of alternative uses for the properties, which can include a recreational facility.
   

3. Transparent Deliberation: Allowing time for open discussions at committee and council meetings to address outstanding questions and concerns.

With significant questions about due diligence, financial justification, and the lack of community input and transparency, this resolution demands more than a quick review. Handing over valuable public assets in a sweetheart deal to a purchaser that has been in default for three years raises serious concerns about fairness and accountability. The city has a fiduciary duty to its residents to conduct an open, competitive process to ensure the best terms and conditions and to find the most qualified operators for these facilities moving forward. A deliberate and transparent approach will ensure that any decision made is in the best interest of the public and aligns with the city’s long-term goals.

Important Questions To Ask Your Alder and the Mayor

The resolution to forgive Madison Ice, Inc.’s debt and give away seven acres of prime real estate raises numerous questions about fairness, transparency, and public accountability. To ensure city officials are making decisions in the public interest, here are important questions you can ask your alder and the mayor that the public has a right to know:

• What due diligence has the city conducted to verify Madison Ice, Inc.’s claim that it cannot repay its debts and fund needed improvements?
  

• Is this financial assistance the best use of taxpayer’s money?
  

• Why has the process to determine what to do about the land contracts in default and the future use of these properties been handled behind closed doors since Madison Ice, Inc. defaulted in 2021? Shouldn’t the council and appropriate committees have been involved earlier to ensure an open, transparent, and inclusive process?
  

• Before we “give away the store” to Madison Ice, Inc. and a new entity, is there any reason not to have an open and competitive process to ensure we get the most qualitied owner/operator and the best terms and conditions?
  

• Since Madison Ice, Inc. has not made payments since 2021, has the city delivered the formal notice of default under the contract? If not, why, and when will this notice be delivered?
  

• What other options exist for these properties that best serve the public interest?
  

• Why forgive the debt and give away the properties, instead of issuing a Request for Proposals (RFP) so we find the best owner/operator and receive the best price, terms, and conditions?
  

• What are these properties worth based on their current use, and their highest and best use?
  

• fIf redeveloped to the maximum density allowed with conditional use permits, how many housing units could be built on these properties?
  

A Duty to Ensure Public Assets Best Serve the Public Interest

Despite repeated questions about the justification for this resolution, the mayor’s office declined to directly address the concerns raised. Dylan Brogan, the mayor’s public information officer, stated: "The resolution was introduced yesterday, and the Finance Committee and Common Council will deliberate the item in the coming weeks. The public will have multiple opportunities to provide testimony."

While opportunities for public testimony are important, this response does little to address the broader questions of transparency, due diligence, and whether the resolution aligns with the city’s long-term goals. The lack of a substantive explanation highlights the urgent need for greater accountability in how public resources are managed and how decisions of this magnitude are made.

Now is the time for Madison’s residents to make their voices heard. If this is important to you, contact city officials and attend public meetings to urge rejection of the current proposal, and demand a transparent, open, and competitive process that prioritizes the public’s best interest. City leaders must ensure that decisions regarding these valuable community assets align with principles of fairness, fiscal responsibility, and accountability.

Madison’s leaders have a responsibility to act in the public’s interest—ensuring that every taxpayer dollar is spent wisely, and every city asset is leveraged to its fullest potential.

This is a developing story, and I plan to post on it again with important new information and analysis.

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

© Alex Saloutos 2024.