Category Archives: City of Galesburg

City of Galesburg, PeoriaNEXT

PeoriaNEXT incubates another government sponge

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PeoriaNEXT Innovation Center, the organization that brought you Firefly Energy, has incubated another start-up company that can’t start up without taxpayer-supplied venture capital. It’s called Intellihot, and fortunately for Peoria taxpayers, it’s getting its combined $1,015,000 in direct lending and commercial loan guarantees from the taxpayers of Galesburg.

The Galesburg City Council unanimously approved a $675,000 loan (at 3% for 10 years) plus a guarantee they would cover 20% of a $1.7 million bank loan (that works out to $340,000). The editors of the Galesburg Register-Mail are also unanimous in their approval of the council’s action. It’s not hard to see why. Intellihot promises to “create 45 jobs paying $25 an hour [in the next two years] and plans to develop a 30,000 square feet facility in the Sustainable Business Center, which is located in old Carhartt building on West Main. The company hopes to employ 144 workers here within four years.”

Intellihot is a company started by two former Caterpillar engineers. So why are they planning to manufacture their tankless water heaters in Galesburg instead of Peoria? According to Paul Gordon’s column on Sunday:

There is a facility already available in Galesburg that will be a sustainable and green incubator for manufacturing products. […]

“Finances, of course, were a very important factor, as was the skills of Galesburg workers. But having the sustainable, green manufacturing incubator ready was key because we have some time lines we have to meet. We have to get some things done to move this forward or someone else will,” [Sridhar Deivasigamani, president of the company] said.

What is this “green incubator” that Galesburg has? The Galesburg newspaper explains:

The [former Carhartt] building offers 80,000 square feet of manufacturing/warehouse space, as well as 8,000 square feet of offices. According to a news release from the [Sustainable Business Center], “Incubation services will be offered to new, green businesses at below market lease rates. Services will include receptionist, copy, fax and conference room. Staff will be available to help draft business plans and to mentor and work with new businesses.”

Carhartt is a Michigan-based manufacturer of “premium workwear” that closed its distribution center in Galesburg last August. However, instead of selling the building and abandoning Galesburg altogether, Carhartt’s majority owners (Mark and Gretchen Garth) donated the building to their family foundation, HumanLinks, and have been turning it into the Sustainable Business Center. WQAD reported in June: “Using green technology, it hopes to eventually replace some 200 jobs that were lost here.”

Bottom line, Intellihot is getting “below-market lease rates” on their manufacturing space and over $1 million in financial backing from Galesburg, and that’s why they’re going to build their product there instead of Peoria.

I wish Intellihot and the taxpayers of Galesburg the best of luck. Peoria’s foray into venture capital for another PeoriaNEXT start-up company didn’t work out so well. Perhaps Galesburg will fare better. Still, I miss the good old days when entrepreneurs used exclusively private financing to start up new companies instead of relying on public tax dollars.

Amtrak, City of Galesburg, City of Peoria

How about a Peoria-Quad Cities Amtrak route?

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Amtrak LogoWhile I was on hiatus, there was an interesting editorial in the Galesburg Register-Mail suggesting a Galesburg-Peoria commuter train. John Pulliam is their business writer at the Galesburg paper (the equivalent of the Journal Star’s Paul Gordon), and he makes some good points:

Ever since Maytag and Butler abandoned the Burg, many people have been paying big bucks to commute to Alcoa and John Deere in the Quad Cities and Caterpillar in Peoria. Driving that far every day is expensive, tiring and causes you to need a new car about twice a month. Why not take the train? (Because there isn’t one.) […]

Not only could a commuter line take Galesburg workers to Peoria, but Peoria’s nearest Amtrak service is Galesburg and Normal. Not good for a metro area of about 350,000 people. I know Peorians would rather have a direct route to Chicago, but the commuter train could bring them to Galesburg, where they could catch Amtrak to Chicago and many other destinations.

I agree. But why stop there? Let’s extend it on to Normal, or even Champaign. We need a good east-west train route in Illinois.

Pulliam suggests using the BNSF rail line between Galesburg and Peoria. I wonder how amenable BNSF would be to letting Amtrak use their line and how much it would cost to upgrade it to passenger rail standards. Maybe one of my rail-enthusiast friends can give me the low-down on whether any of this wishful thinking would really be feasible.