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Janesville City Council to consider $227,500 loan to Grainger

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JAMES P. LEUTE
April 9, 2010
— Convinced that Grainger has a strong future in Janesville, the city is prepared to reward the distributor’s commitment with a forgivable loan tied to the creation of 130 new jobs over the next three years.

The city council will take up the $227,500 loan Monday.


Founded in 1977 as Lab Safety Supply, the company was sold to the Chicago-based Grainger in 1992. Up until 2001, Lab Safety in Janesville was a distributor of safety and laboratory products.


But the facility has since become the distribution, service and support home for a wide variety of brands and catalogs. The Janesville operation has changed its name to GHC Specialty Brands.


The company has been restructuring, which has led to local speculation about its future in Janesville. In February, company officials said the restructuring means about 50 warehouse positions have or will be eliminated through transfers, early retirements and layoffs.


As of early March, the company had 865 full- and part-time employees in Janesville. As the restructuring wraps up by the end of June, the company is expected to have 840 workers.


If the council agrees, the city will use that employment level as a baseline for a 10-year loan at 7 percent interest that’s tied to job creation over the next three years.


Grainger will commit to 16 new jobs in 2010, 62 new jobs in 2011 and 52 new positions in 2012. The company projects that 115 of the positions will pay about $14 per hour, while the balance will range from $26 to $50 per hour.


Given the fact that Grainger will have cut about 50 jobs in Janesville by June 30, a debate could surface about whether the city’s deal with the company is for 130 jobs or a net of 80 positions when the 50 job cuts are factored in.


“We’ve certainly talked about that,” said Vic Grassman, the Janesville’s economic development director. “But as a city, we have to compete for jobs. We’ve been meeting with Grainger since last fall because we had some concerns.


“They have been open, honest and matter of fact with us and sincere in their numbers and their needs. At some point, you have to trust that.”


Grainger has indicated that 90 percent of the jobs will be filled locally.


As part of its ongoing efforts to help new and existing businesses create jobs, the city valued each job created at Grainger at $1,750. While the resulting $227,500 loan is forgivable, the city can call it if the company doesn’t meet or maintain its hiring goals.


Grassman said the loan would be made from the city’s tax incremental finance District 14, which at the end of last year had a balance of more than $1 million.


He said the loan would provide Grainger with working capital and generate new jobs in Janesville.


Grassman said it also would send a dual message to Janesville residents: Grainger—the focus of negative speculation in recent months—is growing and hiring, and the city is proactive in its efforts to create and retain jobs in Janesville.


“We think this is a win-win situation for Grainger and the community,” he said.


It’s also likely Grainger will receive separate tax credits from the state’s Development Opportunity Zone program. The program offers tax credits to businesses that locate or expand in designated zones.


Janesville was designated as such a zone in the 2009 state budget.


Grainger spokeswoman Kelly France said the company on Monday expects to finalize the TIF agreement with the city and the opportunity zone tax credits with the state.


Tony Hozeny, a spokesman for the state Department of Commerce, said Thursday that he wouldn’t comment on specific opportunity zone tax credits until they come to fruition.


“We have a talented team in Janesville, and that facility plays an important role in our larger network,” France said. “We are excited to partner with the community and about the job opportunities that will develop.”


ON THE AGENDA

The Janesville City Council meets at 7 p.m. Monday in City Hall, 18 N. Jackson St. Items on the agenda include:


-- A public hearing and action on the 2010 new sidewalk and sidewalk repair program.


-- Action on a Leisure Services Advisory Commission and Plan Commission recommendation to approve Monterey Park as the site for a proposed skatepark. In December, the city promised to give the park $50,000 if organizers raise $250,000 by the end of this year.


-- Review and approval of a $10,000 economic development grant to Sidekicks Saloon, 3502 Milton Ave. The grant, which basically is a refund of a liquor license fee, would help the owner with plans for an outdoor seating area.


-- Authorization to include up to $240,000 in the city’s 2010 borrowing for odor mitigation efforts at the city’s landfill. Odor problems developed in late 2009, and while the city has taken steps to alleviate the problem, the odors persist at a level that’s unacceptable to the public and regulators. New improvements are expected to cost $190,000, but staff has asked for an additional $50,000 for contingencies.



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