Madison could deliver $1 million to fix design problems stalling South Side grocery (2024)

Building design problems have delayed the opening of a much-awaited grocery store on Madison’s South Side, and the city may deliver another $1 million to fix the problems, which could get Maurer’s Urban Market open perhaps late this year.

The 24,000-square-foot grocery store was slated to open by the end of 2023 or early 2024, in the $42 million six-story, mixed-use redevelopment on what had been long-vacant city land at 815 Cedar St., formerly 1402 S. Park St.

Rule Enterprises, of Milwaukee, and nonprofit Movin’ Out, of Madison, recently completed construction of 150 units of lower-cost housing and parking at the project, called Fourteen02 Park. If the extra $1 million is approved, the city now estimates the new grocery will open in late 2024 or early 2025.

“This is the final piece of the puzzle to deliver on the promise of a new full-service grocery store for South Madison,” Mayor Satya Rhodes-Conway said in a statement. “I want to thank our partners, alders and the hard-working city staff who made this project possible. This is an important investment in South Madison.”

The city, which has strongly maintained it is committed to ensuring healthy food access for all residents, has made investments to do so on the South Side. It dedicated $4.6 million to purchase the Fourteen02 Park grocery condominium space in 2021 and another $2.9 million for grocery tenant improvements in 2023.

But Rule Enterprises/Movin’ Out had to finalize its building design in order to get financing at a point in time when there was no specific grocer for the project, and some of the decisions the developer made have turned out to be problematic, city officials said. Originally, the city thought Luna’s Groceries would be the grocer, but Luna’s stepped away. Then, the city began to work with Maurer’s.

The city and Maurer’s have identified more problems that need to be resolved, totaling about $1 million, according to a memo from city staff to City Council members. They include:

The city will not comment on how Rule Enterprises/Movin’ Out could have misjudged the needs of the grocery, said Dan Rolfs, the city’s real estate development manager.

In the meantime, a Pick ’n Save grocery that’s been scheduled to close has remained open next door at 1312 S. Park St. to make sure there’s no gap in grocery service for the area. The city believes the commitment still exists.

“We remain committed to serving our customers and the community and will continue to provide quality products and services for the foreseeable future,” said Emilie Williamson, division corporate affairs manager for Roundy’s, which operates the Pick ’n Save.

City Economic Development Division staff propose to provide the roughly $1 million to Maurer’s as an addition to the previously approved $2.9 million tenant allowance, allowing the grocer to proceed with final design and construction of the store. The city would then seek to recover as much as possible from the developer, the memo to City Council members says.

“The city is in active, constructive negotiations with the Movin’ Out/Rule Enterprises development team to address these additional costs,” Rolfs said.

A resolution for the extra $1 million will be introduced to the City Council on April 16, considered by the Finance Committee on May 6 and returned to the Council for a decision on May 7, Rolfs said.

“While the delays have been frustrating, the good news is we’re in the home stretch with the finish line clearly in sight,” said Ald. Tag Evers, 13th District, who represents the site.

“The community is anxiously awaiting the completion of this essential neighborhood project,” added South Side Ald. Isadore Knox Jr., 14th District.

When the city approved the initial $2.9 million tenant improvement allowance, staff estimated it would take 10 years for those costs to be repaid through lease payments. If the city can’t recover any of the new $1 million in costs from the developer, the entire $3.9 million would be repaid through lease payments in about 13 years, the memo says.

For a time, the city had hoped that Luna’s, which operates a small store at 2010 Red Arrow Trail on the Southwest Side, would open a second, much bigger, full-service store in the redevelopment.

In August 2021, the City Council agreed to spend $4.6 million for the 24,000-square-foot grocery in the redevelopment to eventually replace the aging Pick ’n Save next door. But in October 2021, the city and Luna’s agreed the site was not a good fit for the grocer, and Luna’s stepped away from the project while the city sought to find a new operator to take over the space. In September 2022, the city identified Maurer’s as the grocer for the project.