#03 Enter a TIF Development Agreement with Fab-Masters, Inc. (File Res. #2012-890)
Economic Development Department Memorandum
February 27, 2012
TO: City Council
FROM: Vic Grassman, Economic Development Director
SUBJECT: Action on a Proposed Resolution Authorizing the City Manager to
Enter into a TIF Development Agreement in the amount of $28,030
with Fab-Masters Inc. for a Development within ½ Mile of TIF #26
(File Res. No. 2012-890)
Executive Summary
Fab-Masters, Inc. currently located at 1111 West Racine St., Janesville, WI will
be moving by the end of March 2012 to leased space at 901 Joliet St., Janesville,
WI. This metal fabrication and welded products company is currently seeing a
significant increase in sales and needs the larger space to meet customer
demand. Their current facility on Racine Street is 18,000 SF and is land locked.
The facility at 901 Joliet has 28,030 SF on fifteen acres thus there is significant
room for expansion. The company is planning to sign a five year lease with an
option to purchase and investing several hundred thousand dollars in new
equipment.
Fab-Masters currently has sixteen employees and with this move and expansion
they will be creating an additional twelve full time jobs within three years. These
new positions will have salaries in the $14.00/hr range plus access to health
insurance benefits.
City Manager’s Recommendation
The City Manager concurs with the recommendation.
Economic Development Director’s
I would like to recommend a forgivable TIF loan of $28,030 to be offered to this
company. This is based on the following:
This recommendation is based on the Council’s TIF guidelines of offering
$1.00 in forgivable TIf loans per square foot leased.
This move will allow the company to not only increase its sales but add
twelve new jobs within three years.
This company started in Janesville in 1995 and this will be its fourth
expansion within the city. Supporting local manufacturer expansions is
an important element of an economic development program.
Analysis
The address 901 Joliet is located in TIF 30. However due to a lack of tax
increment, the recommendation is to take the $28,030 out of TIF 26 which has a
boundary .41 miles from the above address. The ability to assist projects within
½ mile of TIF 26’s boundary was provided for in Amendment #2, in 2009. This
forgivable TIF loan will have a minimal financial impact on TIF 26’s finances.
With or without this forgivable loan the TIF district is expected to breakeven in
th
2021 (19 year) and is projected to have a $683,440 surplus in 2025, its last
legal year of existence.
Since this is a leasing situation the building at 901 Joliet cannot be used as
collateral. The owner’s of the company are willing to sign personal guarantees to
provide repayment if an unforeseeable default occurs.
cc: Eric Levitt
Jacob Winzenz
Resolution 2012-890
A Resolution Approving a TIF 26 Development Loan Agreement and Promissory Note
With Fab-Masters, Inc. for $28,030
WHEREAS, the Common Council of the City of Janesville created Tax Incremental Finance
District No. 26 in accord with Wisconsin’s Tax Increment Financing Laws, Wis. Stats. Sec.
66.1105 and other applicable statutes, as from time to time amended or renumbered, in order to
stimulate the development and redevelopment of industrially zoned properties; retain and
increase employment; construct, renovate and expand industrial facilities; and otherwise provide
for the overall economic health, welfare, vitality, and good of the community; and
WHEREAS, the Project Plan for TIF District 26 includes industrial and manufacturing
development and redevelopment, improvements, facility construction, expansion, and
renovation, job retention and creation, and related financing, incentives, payments, loans, and
actions that effectuate and/or facilitate these public purposes and goals within the designated
TIF geographic area and as amended in 2009 to include projects within ½ mile of its borders;
and
WHEREAS, Fab-Masters, Inc. is a metal fabricator and welded products manufacturer
conducting its principal business at 1111 W. Racine St., Janesville, Wisconsin, County of Rock,
State of Wisconsin, has tentatively signed a five (5) year lease with option to purchase at 901
Joliet St., Janesville, WI (“Facility’), contingent upon City and state incentives. Fab-Masters
intends to create 12 new jobs within three years and is planning to relocate occurring by March
31 with production to resume soon thereafter. Job estimates include 5 new jobs in Year 1, 3 in
Year 2 and 4 in year 3. Manufacturing salaries range from $13.75 to $14.00 /hr. plus benefits.
Capital investment at the above facility is estimated at $425,000 over the three year period; and
Fab-Masters currently employees over 16 persons with all in Wisconsin; and
WHEREAS, Fab-Masters promises to upgrade and renovate operate the Facility, create and
maintain new employment at its Janesville Facility, and otherwise benefit and add value to the
City, TIF District, and the City’s tax base, and has requested forgivable TIF 26 loan in the
amount of Twenty-Eight Thousand, Thirty dollars and00/100 ($28,030), upon the terms, in the
manner, and otherwise in consideration of a standard Janesville TIF economic development
forgivable loan, the terms and provisions of which are reiterated and incorporated herein by
reference as if fully set forth verbatim, with TIF 26 projected to break-even in Year 19 (2021)
and by its final year (2025) it is expected to have a positive balance of $683,440; and
WHEREAS, there are currently sufficient positive fund balances in the TIF District 26
improvement and overall project accounts, and these expenditures fall within the allowable time
and scope for said Development Agreement and expenditures; and
WHEREAS, the Common Council hereby find that the City Administration will negotiate the TIF
Development Loan Agreement and Promissory Note with Fab-Masters upon terms, conditions,
promises, obligations, provisions, and purposes, consistent with the best interest of and benefit
to the City, all applicable laws, and Common Council industrial and economic development
policies, goals, objectives, and directives.
NOW, THEREFORE, BE IT RESOLVED, by the Common Council of the City of Janesville that:
1. Each and every of the above recitals are reiterated and incorporated herein by reference
as if fully set forth verbatim; and
2. The City’s standard Fab-Masters Development Loan Agreement and Promissory Note
once finalized are also reiterated and incorporated herein by reference as if fully set forth
verbatim; and
3. The Fab-Masters TIF 26 Development Loan Agreement and Promissory Note, and all
expenditures, terms, conditions, promises, obligations, and provisions set forth therein are
hereby found to be in the best interest of, and for the benefit of, the City, and, therefore, are
hereby both authorized and approved, as from time to time amended by the City Manager; and
4. The City Manager and/or his designee(s) is/are hereby authorized to execute, enter into,
and effectuate the TIF 26 Development Loan Agreement and Promissory Note with Fab-Masters
on behalf of the City of Janesville; and
BE IT FURTHER RESOLVED, that the City Manager and/or his designee(s), on behalf of the
City of Janesville, is/are hereby authorized to administratively negotiate, draft, execute, review,
enter in, modify, amend, record, file, and otherwise effectuate the above agreements and
promissory note, and/or to make and enter into any and all other agreements, contracts,
documents, papers, and forms, and/or to take whatever other actions that the City Manager
and/or his designee(s) may, from time to time and at any time, determine necessary and/or
desirable to effectuate the above transactions, agreements, and/or above all the intent and/or
purposes of this Resolution.
ADOPTED:
Motion by:
Second by:
APPROVED:
Councilmember Aye Nay Pass Absent
Dongarra-Adams
Liebert
Eric J. Levitt, City Manager
McDonald
Rashkin
ATTEST:
Steeber
Voskuil
Jean Ann Wulf, City Clerk-Treasurer
APPROVED AS TO FORM:
Wald Klimczyk, City Attorney
Proposed by: Economic Development Director
Prepared by: City Attorney