One million-square-foot warehouse would create 550 jobs in Janesville, city says

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Neil Johnson
September 9, 2015

JANESVILLE—Dollar General proposes to build a 1 million-square-foot retail distribution center on Janesville's south side that could be the largest public-private industrial development in the city in decades.

City Economic Development Director Gale Price said the warehouse and distribution mega-center could open in early 2017 and would employ as many as 550 people, about 445 of which would be warehouse handlers, within three years.

Officials from the Goodlettsville, Tennessee-based discount retailer told city officials that a distribution center in Janesville would act as a regional hub and would help the company with its plans to add hundreds of new stores across the region in the next two years.

“The Janesville center would essentially serve their entire Midwestern distribution needs,” Price said. 

The distribution center is planned on 124 acres of city-owned property along County G south of Highway 11, in a farm field where corn now grows.

The building itself, which would be metal with a concrete floor, would cover 23 acres, the equivalent of 17 football fields, Price and Public Works Director Paul Woodard said Wednesday. That's five or six times the size of other distribution outlets in Janesville.

Dollar General also has provided evidence that the jobs it would bring in would offer “competitive” pay for workers.

Concrete-paved truck lanes and bay areas would cover most of the remaining acreage, preliminary project designs show.

Price said the project's overall cost would be $70 million to $75 million.

The development would be financed in part by what is likely the largest tax increment financing deal the city has offered for a single industrial property, Price said.

City staff proposes that the city council approve as early as Monday an $11.5 million tax increment finance proposal that Price indicated would include $4.25 million in land value, along with job-creation incentives that had not yet been released earlier Wednesday.

Under city rules, staff is allowed to approve industrial site plans administratively.

Price said the project, when completed, would have a property tax value of about $40 million for the building and $25 million for personal property.

He said Dollar General has 12 other distribution centers and a 13th under construction in Texas.

Price said no local developers are involved in the project. The company is building the distribution center itself and had approached the city on available land and a potential deal in February.

“That's the beauty of this one. It's the client coming directly to us to put together this deal,” Price said.

A large national broker was involved in negotiations between the city and Dollar General, Price said.

Under the proposed deal, the city would sell the land to Dollar General for $1, a “typical TIF” property transfer that could close in October, Price said. Construction could start soon and would be complete sometime in early 2017.

The deal requires Dollar General to have the facility built and fully running by July 2017, although Price and Woodard said the company indicated an earlier finish date.

“They've indicated they're interested in moving as fast with construction as possible. For them, time is money,” Price said.

The project would require state Department of Natural Resources approval for stormwater runoff, Woodard said. Plans show a pre-treatment lagoon and retention pond system that would trap water along the east side of the complex.

Woodard and Price said the land around the development site is flat, which makes dealing with runoff easier.

Woodard added that Dollar General would handle much of the utility work, including its own pump house, although the city would run a water main along the east side of the property.

The city would have to add a 1,000-foot extension to Innovation Drive, a partially built access road south of Highway 11, to run the road along the full expanse of the property, Woodard said.

When the warehouse is finished, it will provide as many as 550 jobs under a job creation proposal built into the city's incentives, Price said.

The range of pay for those jobs was not clear, but Price said the jobs would be equivalent to about 440 “living wage” jobs.

Another warehouse employer, Castle Metals, plans to move into a warehouse a developer is building on Janesville's east side. The company initially would employ about 60 people.

Castle had advertised it would pay entry-level wages of $16.50 an hour, which is significantly more than the average wage of $10.50 to $12 an hour for Janesville warehouse handlers, according to federal wage data released in July.

Price and Deputy City Manager Ryan McCue said Dollar General had provided wage and pay models showing its pay is “competitive” in Janesville's labor market, with wages for all workers averaging about $15.50 an hour.

“We know from Dollar General that none of the warehouse handlers would make less than $13 an hour,” Price said.

The city has owned the property as part of its Beloit Avenue TIF district since 2004, Price said. That year, economic development officials tried to woo a distribution center that home improvement giant Lowe's would have operated, but the deal never came together, Price said. Lowe's built the warehouse in Rockford, Illinois, instead.

The governor-appointed Wisconsin Economic Development Corporation trumpeted Dollar General's plan in a news release Wednesday. The agency said it is supporting the project through as much as $5.5 million in state tax credits.

The WEDC estimates that construction of the distribution center will help bring in $13 million in additional income taxes.  

Dollar General has been in talks with state and municipal officials in two other states in addition to Janesville.

The WEDC said Dollar General decided on Janesville because of its proximity to a major Interstate and because the city offered affordable infrastructure services to build and maintain the large facility.

City Manager Mark Freitag on Wednesday called the project "a win for the city" and a "true group effort" between the city's economic development and public works departments, state officials and Dollar General.

A few warehouse properties of up to 750,000 square feet have been built in Janesville, but the proposed Dollar General Center would dwarf them all. Many are only 100,000 square feet to 200,000 square feet.

Dollar General also would build and operate a maintenance facility on site to service its own fleet, according to plans.

The distribution center would have up to 200 semitrailer trucks loading and unloading each day, and it would route trucks on and off Interstate 90/39 via County G to Highway 11, city officials said.

Woodard said lane expansions and improvements underway now to County G and Highway 11 would be enough to handle the additional traffic from the distribution center.

“Those improvements were made based on general traffic patterns and predictions for traffic provided to the state from local studies,” Woodard said.

The state's plan to expand lanes on Interstate 90/39 faces the specter of funding and project delays. But one project tied to the expansion, the Highway 11/Avalon Road interchange replacement, is going forward this fall as scheduled. That interchange would route traffic from the Dollar General warehouse.

The warehouse would run two shifts a day with a two-hour break in between. One shift would start at 5:30 to 6 a.m. and wrap up with a break in traffic in and out of the facility. The second shift would begin working about 5:30 to 6:30 p.m. and run until 2:30 to 3:30 a.m., Price said.

Dollar General said it would not comment on its proposal or plans until after the city council acts on the TIF proposal.

The publicly traded company is reported to have $10 billion in assets and employs 109,000 people, according to the WEDC.

Dollar General has 12,000 stores in 43 states, according to the company's website.

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