Landing trainmaker could have hurt city

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Friday, November 12, 2010
— Sometimes, the best deal might be the one you don't make.

That could be the case for a Janesville developer and a city administration that tried to lure Talgo, a Spanish train maker that ultimately selected a Milwaukee facility for production of train sets.

With the election of Scott Walker as governor, the state's position in a national high-speed rail network is uncertain, perhaps even unlikely.

As a result, Talgo is talking about punching its ticket out of Wisconsin, a scenario that conjures up a couple of "what ifs."

What if Talgo had selected Janesville, and what if the train maker decided to leave after only a few months of production? The answer is that a local developer would have lost a tenant and jobs, and taxpayers would have been on the hook for months of lease payments on vacant space that could have topped $500,000.

Talgo came to Wisconsin to build trains for the high-speed Hiawatha extension from Milwaukee to Madison. It also intended to use its Milwaukee plant to build train sets to serve networks in other parts of the country.

Walker, however, has promised to stop the federally financed $810 million high-speed rail line between Madison and Milwaukee. Instead, he wants the cash diverted to road and bridge projects around the state. Federal officials have said that is not an option.

"If Wisconsin is losing its enthusiasm for its rail program and others are not, we could go to Illinois and manufacture world-class trains there," Talgo spokeswoman Nora Friend told the Milwaukee Journal Sentinel on Wednesday. "We will consider very seriously states that want to grow their rail program."

For the time being, she said, Talgo has no plans to move and hopes it can stay in Milwaukee, where it plans to have 40 workers by the end of this month and as many as 125 next year.

In Janesville, Talgo looked at two sites: the former LSI building at 2929 Venture Drive and the former Gilman/ThyssenKrupp factory at 305 W. Delavan Drive.

Jeff Helgesen owns the former LSI building that he remodeled and renamed the Helgesen Industrial Center.

At the time, Talgo wanted an 18-month lease for about 100,000 square feet of Helgesen's 700,000-square-foot building. The company also sought an escape clause after 14 months.

Helgesen said Talgo needed $375,000 worth of improvements. That was not an investment he was willing to make for such a short lease.

But in what leaders at the time said was an aggressive gamble, the city was prepared to guarantee lease payments if Talgo left within five years.

Helgesen said the Talgo project is an example of one that needs to be thoroughly vetted from a number of different perspectives. In this case, he said, it could be that a change in a political position results in a deal gone bad.

"I am just so grateful that this did not work out in Janesville," he said. "Grateful on behalf of myself, the city and the taxpayers."

Last updated: 3:36 pm Thursday, December 13, 2012

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