Janesville49.2°

City will have to pay more for innovation center

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JAMES P. LEUTE
July 23, 2011
— Higher than expected construction and excavation costs could more than double the city’s investment in a proposed business incubator on the south side.

City administrators will ask the Janesville City Council on Monday to approve spending an additional $562,000 to build the “Janesville Innovation Center,” a 22,000-square-foot manufacturing facility on city-owned land at the intersection of Beloit Avenue and Venture Drive.


The innovation center would offer a physical business front, conference rooms and other amenities for entrepreneurs with minimal space needs. The spaces would be small, something that’s difficult to find for manufacturing.


Adjustable walls would move as the businesses grow, and, in theory, companies would leave after a couple of years, opening space for other fledgling businesses.


Initially, the city planned to contribute $400,000—25 percent—to the $1.6 million project, with a $1.2 million grant from the U.S. Economic Development Administration covering the remainder.


The city’s application for the grant was submitted and approved in 2010, but the cost assumptions now are outdated. In addition, engineers found four feet of silt on the site that would increase excavation costs.


The bottom line is that the project’s total cost has risen to $2.26 million. Because the federal grant would not increase beyond the $1.2 million originally promised, the city’s portion of the tab would jump to $962,000, about 44 percent of the project’s cost.


That leaves the city with three options:


n Drop the project.


n Withdraw it and reapply for a new grant in a federal program that now requires a 50 percent match from the city.


n Proceed with the proposed project despite the increased costs.


Economic Development Manager Vic Grassman will recommend the third option when the council meets Monday.


It would require more money, he said, but the city’s costs still would be less than if it withdrew its application and reapplied for a 50 percent grant on a $2.2 million project.


Grassman said the area’s tax increment financing district has sufficient cash flow to cover the extra expense.


“I think the incubator will give Janesville a leg up with entrepreneurs and become the third leg of an economic development stool that already includes business retention and recruitment,” Grassman said.


He anticipates renting about 70 percent of the building.


“I would think it would probably be for three or four tenants,” he said. “You never want to have an incubator 100 percent filled because then no one can expand.”


Grassman said lease rates would be calculated after the project is built and when the city knows how much it would need to cover operating costs.


ON THE AGENDA


The Janesville City Council will meet at 7 p.m. Monday in City Hall, 18 N. Jackson St.


Items on the agenda include:


-- Discussion and action on a proposed code of conduct for the city council, its commissions, committees and boards.


-- A public hearing and action on a proposed ordinance prohibiting the possession of firearms in municipal buildings, with the exception of law enforcement officers.



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