JANESVILLE — The Janesville City Council on Tuesday agreed to spend $860,000 in TIF incentives to aid a development group in renovating the former Helgesen building, a project city staff says is located in the "heart of the downtown."
SARA Investments of Madison has formed 101 Milwaukee Street LLC to buy and renovate the six-story office building in TIF No. 23.
The city will reimburse $500,000 to the developers after the renovation project is complete. The completion date is Dec. 31.
In addition, the city will loan the investors $360,000 at 4.25 percent interest for 10 years to help finance the renovation. If annual property taxes exceed the amount guaranteed by the investor, then the excess property tax revenue will be used to pay the debt on the loan.
The investors agree to guarantee property tax payments ranging from about $72,000 in 2010 to $80,000 in 2022.
"The revitalization of the downtown has been one of the council's top priorities," said Doug Venable, director of economic development.
"The property at 101 E. Milwaukee St. anchors the Main and Milwaukee intersection and is a key activity generator in the heart of the downtown," Venable said.
The city also is building a $4.4 million parking ramp near the building to serve that part of downtown and the office building.
"Given the downturn in both the local and national economy, it is exciting to have a private developer willing to purchase an underperforming downtown property and to invest several million dollars to create class 'A' office space," Venable said.
Market rates in downtown Janesville do not support the $4.5 million project, which is the reason for the TIF incentives, Venable said.
101 Milwaukee Street LLC bought the six-story, 52,400 square-foot office building for $950,000 and is spending $3.6 million to renovate the property. The office building has not had a major renovation since it was built in the early 1970s and is 70 percent vacant. The company is replacing the heating and air conditioning system, the single-pane windows with energy-efficient, two-panel glazing, and the roof; installing accessible bathrooms on each floor and fire sprinklers; and replacing all interior walls and finishes.
"Staff feels that without TIF incentives, the renovation project would not occur and the building would likely continue to lose tenants and property value," Venable said.