Ruedebusch Commercial Investments Inc. will not let a scarcity of tenants stall plans for a 200-acre business park in Verona.
“The thought is there should be enough pent-up demand for this kind of development in the area,” said Tom Jilot, chief financial officer for the Madison-based developer, which teamed up with property owner David Reinke for the project. “The west side of Madison doesn’t really have industrial land anymore, and we want companies to build in the area.”
So does the city of Verona, which went in circles for years with Reinke about land usage. Reinke pushed for major commercial developments before agreeing with the city earlier this year to a mixed-use commercial, office and industrial park.
“There’s not a lot of 30-, 40- or 50-acre stuff out here, and not a lot of room for heavy manufacturing, but we’d like to see some lighter manufacturing companies come to the city,” said Verona Alderman Ken Harwood.
But Bruce Sylvester, the city’s director of planning and development, said Verona is taking a risk with the business park. The land is in a tax-incremental financing district, and Sylvester said the city will pay for road, water and sewer-line projects in the first phase of development.
In a TIF district, municipalities can borrow money to promote new development through street and utility construction, environmental remediation, or loans and grants to private projects. The subsequent developments are then expected to generate the money to repay the city’s investment.
“We’re putting a lot of faith in Ruedebusch,” Sylvester said. “We are aware of communications with some interested companies, but we haven’t heard of any tenants yet.
“Still, they’re putting their money where their mouth is and moving forward.”
Jilot said once the roads and utilities are in, it will be a matter of time.
“People aren’t building as much as before, and we might have a situation where companies buy land on the site, but then wait for a bit more economic stability before they build,” he said. “It might take three years before we really start to see this mature.”
Wisconsin still has a strong manufacturing reputation, said Tom Still, president of the Wisconsin Technology Council, but the country’s economic collapse impaired developments and investments, and there is not the same interest from industrial developers.
“I think some companies are beginning to look ahead,” he said. “But it’s certainly a challenging time to start a park like that. I don’t think anyone believes they’ll be able to build a business park and fill it the next day.”
Jilot said the park still needs many city approvals, but Ruedebusch wants to get work going by spring 2010.
“From a building standpoint, there’s always a high risk involved in these kinds of projects,” he said. “You’d like to finish the infrastructure work and hit the ground with a rate of 50 percent pre-leased occupancy.”