The one item on the Warsaw Common Council’s agenda Friday was for a resolution regarding the lease of the third shell building at the Warsaw Tech Park.
Community and Economic Development Director Jeremy Skinner explained, “We’ve incentivized the first two shell buildings. This is the third shell building and this is kind of the incentive package that we’re working on with West Hill (Development) for that building.”
The Warsaw Redevelopment Commission started the process at their November meeting, he said, and they will hold a public hearing on it at their next meeting Monday. The Building Corporation will approved a lease - that the city council was asked to approve in form Friday - with West Hill at their 11:30 a.m. meeting Tuesday.
The city council would have been asked to approve the lease resolution Monday at their meeting after the Redevelopment Commission’s meeting, but the council’s meeting was moved back to Friday. Skinner said the change in order of the process wouldn’t affect it.
“So the Redevelopment Commission approved the first phase at their last commission meeting, and what you’re asked to approve tonight is the resolution approving the form of the lease agreement between West Hill and the Redevelopment Commission,” Skinner said. “So you’re, in essence, approving what the Redevelopment Commission will ultimately sign as a lease between West Hill and the Redevelopment Commission.”
The lease agreement is for 24 months and will be covering the approximately unoccupied 70,000 square feet of the existing third shell building at the Warsaw Tech Park. The lease rate is for $42,000 per month, not to exceed $1 million over the 24 months of the lease.
“It is pro-rated so that as that building is leased up, that lease rate would change. So if they were to lease 30,000 square feet tomorrow, that would drop down to leasing only 40,000 square feet, which would adjust the dollar amount of the lease,” Skinner continued.
It is hoped that the remaining space of the third shell building will be leased out quicker than two years. However, the commission’s leasing of the unused portion of the building will help with the caring costs of the building until it can be leased out to a company.
Mayor Joe Thallemer said having that space in that shell building that is ready to be finished off “is a huge advantage from an economic development standpoint. And, obviously, the development company is carrying the costs of that and they’re asking the city to participate in that. We’ve done this in the past. As Jeremy mentioned, if we get at least a portion or all of it sooner, then obviously our obligation goes away.”
Councilwoman Diane Quance asked where the money for the lease was going to come from. Skinner said it is coming from the Northern TIF (tax increment financing) district.
Councilman Mike Klondaris, who also sits on the Redevelopment Commission, said people need to know the money wasn’t coming out of the general taxes and property taxes.
“This strategy has worked for us in the past, and we have to make these investments to attract businesses. If we want to continue to grow, we have to invest in ourselves,” he stated.
Skinner said this will be the third shell building, with the first one occupied by Patrick Industries, the second one by Medartis and a portion of the third by Mentor Media.
“We’ve been successful in doing this. It puts us in front of a lot of companies that are looking to grow, whether they be locally or somewhere in the state of Indiana or outside of the state. It’s a great marketing tool, but at the same time it also creates value in our park,” he said.
The council should keep in mind, Skinner said, that West Hill made a $12 million investment in a building “so the $1 million that we’re making in this investment still pales in comparison to the amount of money that they’ve invested in the Tech Park. And that’s one building.”
He said West Hill has built three shell buildings.
“The total investment in our Tech Park to date has been around $50 million in assessed value, so we have significant growth out there and want to keep the momentum moving forward,” Skinner stated.
Klondaris said, “Another way to perhaps look at this for the general public that might not understand these things is that the past two investments, the money that we put in out there, is really funding this portion of helping out West Hill. In other words, it’s a self-fulfilling prophecy, if you will. It’s paying for itself as we go, and as we attract more and more, we can afford to put in more and more for more buildings.”
Skinner stated the third shell building is by far the largest of the three shell buildings they’ve done. The first one was around 50,000 square feet, the second building was over 60,000 square feet and the third one is 100,000 square feet.
“This is by far the largest investment we’ve made in the Tech Park,” he said.
Councilman and Mayor-elect Jeff Grose said they were “great opportunities” for the city. “We can’t just wait. You have to be very progressive,” he said.
Thallemer stated, “I think this just shows kind of our M.O. as we develop the Tech Park and it’s worked. So, one at a time in a way we’re able to attract innovate start-ups, expanding companies, cater to the industry and still be open for business for someone coming from out of state, or in the case of Mentor Media, out of the country. We’ve got a home, we’ve got an address for them that they can see. It’s been a great strategy.”
He said there will definitely be a great return on the investment.
Klondaris made a motion to approve the resolution, Grose seconded it and the motion passed 6-0. Councilman Jerry Frush was absent.
West Hill Development includes Dan Robinson, of Robinson Construction, and Cary Groninger, of G & G Excavating & Hauling.