Developer sees data center in vacant Badgerow Building
By Dave Dreeszen Journal business editor(c) 2007 Sioux City Journal | Posted: Friday, December 14, 2007
SIOUX CITY -- Bruce DeBolt envisions a high-tech future for the historic Badgerow Building.
Data processing centers are at the core of his investment group's $10 million-plus plan to bring the vacant 12-story structure in downtown Sioux City back to life. DeBolt believes a renovated Badgerow, with its ample space and access to cheap electricity, robust fiber optic cable and high-quality local workforce, would attract corporate data centers from high-cost locations on the East and West coasts. In addition, the group hopes to fill the Badgerow with restaurants, professional offices and other businesses.
DeBolt, managing partner of San Diego-based Mako One Corp., is scheduled to outline his group's multi-use vision for the Badgerow at a City Council meeting Monday. Representatives of Mako and the city have hammered out a proposed development agreement in which the city would provide $2 million in loans, phased in over two years, according to a staff report filed online late Thursday with the council agenda. The presentation will be part of the council's study session Monday, and no vote will be taken.
The loans, which would be funded with Tax Increment Financing dollars, would be forgiven once Mako reached certain conditions, such as an occupancy rate of 40 percent or more.
Also, Mako would agree to a minimum property tax assessment of $10 million by 2011. Through increased tax collections, the city would see a positive return on its investment within seven to eight years, according to the staff report.
Marty Dougherty, the city's economic development director, declined Thursday to discuss the proposal before the council Monday study session.
Mako also plans to apply for historic-preservation tax credits to help fund the project, but without the city TIF funding, the massive project would not be feasible, DeBolt said.
"The costs would just get too high,'' he said. "Historic properties are always more expensive to rehabilitate than a traditional property.''
The 1933 building, listed on the National Register of Historic Places, has been vacant since the city declared it unfit for occupancy more than three years ago. Since acquiring the Badgerow for $450,000 earlier this year, Mako has been spending more of its own money stabilizing the long-neglected structure, concentrating on repairs to make it again safe for occupation.
Water, electrical and gas service have been restored, and one of the two steam boilers has been restarted. Trash, broken glass and other debris has been removed, and damage cause by vandalism has been repaired.
More than 20 feet of standing water, which filled the building's elevator pits after the previous owners shut down the sump pumps, has been drained.
Data center demands
DeBolt said metro Sioux City's growing economy attracted Mako to the Badgerow, the city's tallest structure. In particular, he cited BPI's expansion in South Sioux City, Hyperion Energy's proposed oil refinery in Union County, S.D., and Northwest Airlines' new 300-employee reservations center in the former JCPenney building, which is just across the street from the Badgerow.
The Sioux City area's low electricity rates hold the key to attracting data centers, said DeBolt, who has nearly 20 years of experience in the computer industry. Industry surveys, he said, show that more than half of existing data centers nationwide will become obsolete in the next 12 to 18 months due to heavier, more energy intensive computer hardware designs.
"Data center demand is up and is expected to continue to be up for some time to come,'' he said. "There is tremendous pressure on IT managers to manage their costs. Places with competitive power rates have a distinct advantage. The Midwest has some of the most competitive power rates in the country.''
DeBolt pointed to Google's recent decision to build a $450 million data center in Council Bluffs, Iowa, which, like Sioux City, receives its electric service from MidAmerican Energy Co. "Certainly, Google is not coming to Iowa because of its tropical climate,'' he said.
Badgerow, with its solid concrete construction, would easily support the high floor loading of today's computer hardware, DeBolt said. Mako's plan calls for data centers on the building's fifth, sixth and seventh floors. The top five floors, which offer the most scenic views, would be set aside for general offices and IT personnel support.
The third and fourth floors are envisioned as a business incubator center. Ideas for the second floor range from a child care center to a white-tablecloth dinner club.
The first floor, which was most recently home to a sushi restaurant, would be marketed as a deli or sandwich shop, catering to downtown workers.
With the installation of new ceiling tiles, carpeting and other improvements, the first-floor space is getting close to the point where it could be shown to prospective tenants, said Ritch LeGrand, president and CEO of NAI LeGrand & Co.
Mako has retained LeGrand's commercial real estate firm and local architect Dale McKinney. LeGrand, who handled the sale of the building to Mako, said he agreed to market the property because of he has a "soft spot'' for historically significant buildings such as the Badgerow. Considered the city's premiere example of art deco architecture in the city, it's best known for a row of American Indian silhouettes along the rooftop.
"This one, to me, is the single most important building in Sioux City," LeGrand said. "It's got so much history behind it. To not have it taken care of and utilized the way it should be is a crime, in my mind.''
Data processing centers are at the core of his investment group's $10 million-plus plan to bring the vacant 12-story structure in downtown Sioux City back to life. DeBolt believes a renovated Badgerow, with its ample space and access to cheap electricity, robust fiber optic cable and high-quality local workforce, would attract corporate data centers from high-cost locations on the East and West coasts. In addition, the group hopes to fill the Badgerow with restaurants, professional offices and other businesses.
DeBolt, managing partner of San Diego-based Mako One Corp., is scheduled to outline his group's multi-use vision for the Badgerow at a City Council meeting Monday. Representatives of Mako and the city have hammered out a proposed development agreement in which the city would provide $2 million in loans, phased in over two years, according to a staff report filed online late Thursday with the council agenda. The presentation will be part of the council's study session Monday, and no vote will be taken.
The loans, which would be funded with Tax Increment Financing dollars, would be forgiven once Mako reached certain conditions, such as an occupancy rate of 40 percent or more.
Also, Mako would agree to a minimum property tax assessment of $10 million by 2011. Through increased tax collections, the city would see a positive return on its investment within seven to eight years, according to the staff report.
Marty Dougherty, the city's economic development director, declined Thursday to discuss the proposal before the council Monday study session.
Mako also plans to apply for historic-preservation tax credits to help fund the project, but without the city TIF funding, the massive project would not be feasible, DeBolt said.
"The costs would just get too high,'' he said. "Historic properties are always more expensive to rehabilitate than a traditional property.''
The 1933 building, listed on the National Register of Historic Places, has been vacant since the city declared it unfit for occupancy more than three years ago. Since acquiring the Badgerow for $450,000 earlier this year, Mako has been spending more of its own money stabilizing the long-neglected structure, concentrating on repairs to make it again safe for occupation.
Water, electrical and gas service have been restored, and one of the two steam boilers has been restarted. Trash, broken glass and other debris has been removed, and damage cause by vandalism has been repaired.
More than 20 feet of standing water, which filled the building's elevator pits after the previous owners shut down the sump pumps, has been drained.
Data center demands
DeBolt said metro Sioux City's growing economy attracted Mako to the Badgerow, the city's tallest structure. In particular, he cited BPI's expansion in South Sioux City, Hyperion Energy's proposed oil refinery in Union County, S.D., and Northwest Airlines' new 300-employee reservations center in the former JCPenney building, which is just across the street from the Badgerow.
The Sioux City area's low electricity rates hold the key to attracting data centers, said DeBolt, who has nearly 20 years of experience in the computer industry. Industry surveys, he said, show that more than half of existing data centers nationwide will become obsolete in the next 12 to 18 months due to heavier, more energy intensive computer hardware designs.
"Data center demand is up and is expected to continue to be up for some time to come,'' he said. "There is tremendous pressure on IT managers to manage their costs. Places with competitive power rates have a distinct advantage. The Midwest has some of the most competitive power rates in the country.''
DeBolt pointed to Google's recent decision to build a $450 million data center in Council Bluffs, Iowa, which, like Sioux City, receives its electric service from MidAmerican Energy Co. "Certainly, Google is not coming to Iowa because of its tropical climate,'' he said.
Badgerow, with its solid concrete construction, would easily support the high floor loading of today's computer hardware, DeBolt said. Mako's plan calls for data centers on the building's fifth, sixth and seventh floors. The top five floors, which offer the most scenic views, would be set aside for general offices and IT personnel support.
The third and fourth floors are envisioned as a business incubator center. Ideas for the second floor range from a child care center to a white-tablecloth dinner club.
The first floor, which was most recently home to a sushi restaurant, would be marketed as a deli or sandwich shop, catering to downtown workers.
With the installation of new ceiling tiles, carpeting and other improvements, the first-floor space is getting close to the point where it could be shown to prospective tenants, said Ritch LeGrand, president and CEO of NAI LeGrand & Co.
Mako has retained LeGrand's commercial real estate firm and local architect Dale McKinney. LeGrand, who handled the sale of the building to Mako, said he agreed to market the property because of he has a "soft spot'' for historically significant buildings such as the Badgerow. Considered the city's premiere example of art deco architecture in the city, it's best known for a row of American Indian silhouettes along the rooftop.
"This one, to me, is the single most important building in Sioux City," LeGrand said. "It's got so much history behind it. To not have it taken care of and utilized the way it should be is a crime, in my mind.''
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Hardtime96 wrote on Dec 17, 2007 1:45 PM:
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