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Loans OK’d for Smith Bros. remake PDF Print E-mail
Written by MARK JAEGER   
Wednesday, 21 July 2010 14:40

County, Port endorse funding to make building ready for Franklin Energy

The financial tools are in place to get the second floor of the Smith Bros. Marketplace building in downtown Port Washington ready to become the new home of Franklin Energy.

Earlier this month, the Ozaukee County Board voted 27-1 to approve a $50,000 revolving fund loan to LDC-728 Milwaukee, an affiliate holding company of Lighthouse Development, owner of the former restaurant at the corner of Grand Avenue and Franklin Street.

Building owners Thomas DeMuth and Brett Grasse told county officials the loan will be used to purchase furniture, fixtures and equipment for Franklin Energy, which recently signed a 90-month lease to occupy 11,000 square feet on the top floor of the building.

In June, the Port Washington Common Council unanimously approved a $125,000 revolving loan to the building owners for the same purpose.

An additional $200,000 in private funding was secured from M&I Bank as a condition of the revolving loans.

In a business plan submitted with their county loan request, the owners said they have had difficulty finding tenants since acquiring the building in 2007.

“The plan for the Smith Bros. property is to take a property which was tired and operated inefficiently and restore it to its original luster. The property needs to become part of the urban fabric of Port Washington,” the plan said.

An analysis prepared by Southeastern Wisconsin Regional Planning Commission said the building owners have been operating the Smith Bros. Marketplace at a deficit for the past three years. During that time, the only tenant has been a corner coffee shop.

The lease of the office space to Franklin Energy is expected to turn a profit for the building owners beginning in 2011.

The analysis noted that collateral offered to secure the loan includes cash and equity in a mixed-use building the partners own on Brady Street in Milwaukee.

City of Port Washington officials hope the relocation of Franklin Energy signals a turnaround for the downtown business district.

City officials intent on keeping a growing company in the community, lobbied to get Franklin Energy to move into the vacant space.

As an incentive, the city approved a three-year lease for the company’s current building — the former St. John’s Church on Foster
Street — which will be converted into the city’s senior center. The city has the option to buy that building for $550,000 once the initial lease expires.

When renovation of the second-floor office space in the Smith Bros. building is complete this summer, Franklin Energy is expected to relocate 40 workers to the site, a workforce which is expected to eventually grow to 50.

The new positions will include entry level and executive positions, with salaries ranging from $25,000 to $75,000.

Company officials said the office space could be reconfigured in the future to accommodate significantly more workers.

Kathleen Schilling, executive director of Ozaukee Economic Development, said the opportunity to retain the growing business made the county interested in the revolving loan request.

“We’re very excited to be part of this process. Franklin Energy is one of the fast-growing companies in the state, and they were looking at their options to move their corporate headquarters somewhere in the Midwest,” Schilling said.

In conversations with Franklin Energy founder and CEO Paul Schueller, Schilling said it was clear he was committed to Port.

“Keeping the corporate offices in Port Washington is a win for Port and a win for Ozaukee County,” she said.

Schilling said moving the company headquarters to the downtown should provide needed stability in the business district.

“Retail business and tourism are good to have, but they are seasonal. Corporate offices should mean year-round business for Port, with workers needing to stop for lunch, fill up their gas tanks and maybe do a little shopping on a daily basis,” she said.

Schilling said having the corporate offices on the second floor of the building is likely to stimulate interest in the available restaurant space on the lower level.

The building owners said as many as 30 prospective restaurant owners had previously looked at the space but none were willing to commit to a lease.

Schilling said the loan reinforces OED’s commitment to job retention as a cornerstone of economic development.

“It is always more productive to make efforts to retain existing businesses than it is to attract businesses from the outside,” she said.

Neither revolving fund loan involves local tax dollars. They tap pools of money made available to the county and city from the state’s Community Block Grant Program.

TWO REVOLVING LOANS will provide the owners of the former Smith Bros. restaurant building in Port Washington with the capital to convert the second floor into office space for Franklin Energy. The move will bring as many as 50 office workers to the city’s downtown. Lower photo, Ron Bolz worked on stud walls for the future office space. The area is expected to be ready for occupancy later this summer. Photos by Sam Arendt

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