After two years of on and off negotiations, Mayor Dave Cieslewicz announced the first steps toward development of the Capitol East District to create jobs and raise property values in the area.

Cieslewicz said Madison plans to purchase the Don Miller car dealership on East Washington Avenue at a press conference Monday morning.

Ald. Bridget Maniaci, District 2, said the project would provide jobs and housing along the East Washington Avenue corridor to young people who want to stay in Madison.

The 7.7-acre parcel is located at the 800 block of E Washington Ave., and will cost $4.7 million, which Cieslewicz said is a good price for taxpayers.

“[This project] gives us the opportunity to redevelop important parcels,” Cieslewicz said. “It is a tremendous opportunity for redevelopment of the city.”

Greater Williamson Area Business Association spokesperson and Ground Zero coffee shop owner Lindsey Lee said the redevelopment is part of a “great new narrative” for Madison. He added it is a significant investment in the private sector.

“The neighbors are excited about building a new corridor where people live, work and play,” Lee said.

The parcels in the area that will be developed are large and expensive, making developers reluctant to enter the area, Cieslewicz said.

Cieslewicz said the city hopes to acquire the parcels and divide them to be more manageable and appealing to developers.

“We hope to acquire parcels and cut them into smaller, more digestible pieces and really kick start the development of this section,” Cieslewicz said.

John McKegney, chief financial officer for Don Miller, said the dealership would relocate so the dealership maintains all of its current jobs.

The proceeds from the sale of the parcel will go to building a new facility and transferring all employees, while creating construction jobs during relocation, McKegney added.

The recent reduction of property values in the city has many citizens concerned, yielding a lower tax base for the 2011 city budget, Cieslewicz said. He added the purchase should help the city regain a significant tax base.

Madison Gas and Electric Chairman, President and CEO Gary Wolter said the purchase should not go to waste.

“[This] opportunity to build the tax base is one we don’t want to squander,” Wolter said.

While plans for the future of the parcel remain largely unknown, Cieslewicz said the city has a rough idea of the businesses that would ideally redevelop in the area.

Wolter said while the corridor has been historically industrial, this is an opportunity to reinvent the whole area.

“We have to do it with care, do it right,” Wolter said. “This will determine how it will look for the next 100 years.”

Cieslewicz alluded to taller buildings, with business ranging from entrepreneurial start-ups to maturing businesses.

Additionally, the Madison Center for Sustainability has expressed interest in development in the area with a federal grant from the U.S. Department of Housing and Urban Development.

While officials said there will be increased housing development in the area, Maniaci said this development will follow the commercial additions.

Wolter added that the project would create jobs, housing, retail, recreation and transportation opportunities.