A new, multimillion-dollar library will be constructed on the corner of Henry Street and West Washington Avenue starting late next year.?

According to William Kunkler, executive vice president of the developer Fiore Companies, the new mixed-use building will also include a 250-room hotel, retail space and structured parking. The projected end date for construction is sometime in early 2012.

“Most of us understand that the public library system is a very important civic institution,” Kunkler said in an e-mail. “The Central Library is also a symbol that represents the value our community places on literacy, knowledge and even democracy.”

Earlier this year, a city subcommittee vetted out three options for the construction of the new library. One option entailed renovating the existing Madison Central Library, while two developers submitted proposals for the construction of a new library.

The city subcommittee evaluated the proposals on a variety of merits such as cost, architecture and the amount of tax revenue it would generate for the city.

The proposal from Fiore-Irgens, a joint effort from Fiore Companies and Irgens Development Partners, won in the subcommittee’s decision, which was then recommended to the Madison Public Library Board.

The board selected the Fiore-Irgens proposal, the option that comes with the heftiest price tag — more than $43 million.

The selection of this particular proposal has raised questions as to whether the city can afford such an expensive venture, especially in these stagnant economic times.

“The big issue remaining is the price tag of $43 million, which is a huge number,” said Tripp Widder, Madison Public Library Board chairman.

According to the previous evaluation by the city subcommittee, a funding gap of more than $13 million remains after all public and private fundraising is taken into account.

Widder said he remains confident the board made the right decision to choose the Fiore-Irgens proposal and it is worth the somewhat risky investment.?

He added the existing library is in “sad shape,” and significant money needs to be spent.

“In the view of the library board, we think that a new facility really symbolizes what Madison stands for,” Widder said. “Even though there are tough economic times right now, this is really a 50-year decision and times will get better.”

Kunkler added Madison has the financial strength for the library and this is the most advantageous time to start such a project.

“Long-term borrowing rates are still at 50-year lows, construction prices are depressed and the Obama administration is doing everything in its power to facilitate local economic activity,” Kunkler said.? “This all translates into substantial cost savings for city taxpayers.?My question is ‘How can we not?'”

Widder also said new market tax credits, a federal program designed to help communities undertake such projects as this, could be used to offset some of the cost.