MADISON, Wis. -- Madison city officials said that they will proceed with revamping the downtown library after failing to make a deal with the project's erstwhile developer.

City officials announced on Thursday that instead of starting from scratch and building a new $37 million building to house Madison's central library, the city will instead revamp the existing structure.

Officials from the project's developers, the Fiore Companies and Irgens Development Group, met with Madison Mayor Dave Cieslewicz on Thursday afternoon to work out the financials in a way that worked for both sides, but in the end, it was decided the project would likely go over budget and that starting from scratch wasn't an option.

"I want to say that I think Fiore-Irgens has tried hard to make this project work," said Cieslewicz. "But at the end of the day, we just couldn't come together on the numbers."

A study the city conducted said the shell of the building could be completed for about $20 million, but Fiore-Irgens officials felt it would be closer to $24 million. Fiore previously said it could build the library’s shell for $23.9 million, whereas a city study said the work could be done for closer to $20 million.

The mayor said the impasse led to the breakdown in negotiations -- with the city unable to pay more and the developer unable to build the project for less.

Bill Kunkler, executive vice president for the Fiore Companies, disagreed.

"The mayor asked us to look at whether we could reduce the price of the shell," said Kunkler. "We did look, and we weren’t able to reduce it further from when we had reduced it in August."

As such, city officials will move to renovate the Central Library as a public works project.

"We're hoping it won't delay it by much," said Cieslewicz.

Librarians said on Thursday that the current structure is insufficient and grossly outdated.

"The heating systems, the cooling systems, the garage doors, the leaking windows, the elevators -- a lot of the mechanical systems are no longer up to par," said Carol Froistad, who heads up the library's reference department.

A remodeling of the current Central Library will likely save city leaders some money up front, but ultimately the city's coffers will lose out on the tax revenue that would have been generated by Fiore's proposed redevelopment of the existing library site, in a project that might have included retail and office space, as well as another downtown hotel.

"I'm disappointed, but I'm pleased they're still going to go ahead and try to give Madison a good library," Froistad said.

Stay tuned to WISC-TV and Channel 3000 for continuing coverage.