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A Walker's Point warehouse will be converted into a research lab and offices for water technology business start-ups, a project that could spur development of a nearby business park that targets water-tech companies.

Plans to convert the seven-story warehouse at 223 W. Pittsburgh Ave. will be announced Friday by the Milwaukee Water Council, a nonprofit trade group.

The 98,000-square-foot building will house an incubator for water technology start-ups. Business incubators typically provide less expensive rent for small firms, which share labs and other facilities.

This incubator's shared facilities will include a water flow lab provided by Badger Meter Inc., which businesses and University of Wisconsin-Milwaukee researchers can use to run tests to help convert ideas into products.

Both Badger Meter, which makes water meters, and A.O. Smith Corp., which makes water heaters, plan to have research operations at the buildings, said Rich Meeusen, Badger Meter chief executive and water council co-chairman. The council also will have an office in the building, which is expected to house tenants with about 125 employees.

By providing a place where water-tech companies can collaborate on projects, Milwaukee can better compete with other cities seeking to develop water industry hubs, Meeusen said.

There are other such incubators, but none that provides a flow lab, he said.

Normally, a company must send a prototype to a flow lab where tests are run, and the results come back within a month, Meeusen said. With the Milwaukee facility, those results will be available immediately.

"I think that's what really sets us apart," Meeusen said.

Other businesses are close to signing leases at the building, which is being sold to investors whose names haven't yet been disclosed. Once 60% of the space is leased, renovations will begin, Meeusen said.

That work, financed mainly by the private sector, is expected to begin in 2012, with completion by 2013. The facility will be developed by HKS Holdings LLC, with Kahler Slater serving as the architect. KBS Construction is the general contractor.

The building will house part of UWM's new School of Freshwater Sciences.

UWM also is raising private funds to build a new facility for the school's headquarters, and its engineering-focused applied research, university spokesman Tom Luljak said. But it could be another two to three years before that building is developed.

Meanwhile, the business incubator will help grow Milwaukee's water industry, Meeusen said.

That includes attracting companies to a water tech business park, planned for the Reed Street Yards site just west of the business incubator.

That business park is planned by developers Peter Moede and General Capital Group for 17 acres bordered by S. 6th St., S. 3rd St., the Menomonee River canal and W. Florida St.

Aside from the UWM water school headquarters, no other projects have been announced for the business park.

The Common Council and Mayor Tom Barrett in 2009 approved spending $6.4 million to build streets and other public improvements at the business park. That money will be repaid by property taxes generated by the business park.

That park could house water-tech companies that outgrow their space at the incubator, Meeusen said.

The Pittsburgh Ave. facility is within the same tax incremental financing district that includes the business park site. So property taxes generated by the improved portion of the building will be used to help pay down the city's costs of developing the business park. Work on the park's streets and other public improvements hasn't started yet.

The incubator facility will not use city funds.

Its owners plan to help finance the renovations with federal New Market Tax Credits, which are given for developments in lower income areas, and with historic preservation tax credits, which are provided for buildings restored according to federal standards. The warehouse was built in 1906.

The project is being supported by the Richard and Ethel Herzfeld Foundation.

Also, the incubator's backers are hoping to obtain state funds to help pay for the rent for business start-ups that cannot otherwise afford to locate at the facility, Meeusen said.

Meanwhile, UWM is proceeding with plans to build the main facilities for its School of Freshwater Sciences.

The university will spend $50 million in state money to expand and remodel its Great Lakes WATER Institute, which overlooks the harbor at 600 E. Greenfield Ave. Construction of the facility, which will house ecological research, is scheduled to start in May 2012, with substantial completion planned for December 2013.

The graduate-level water school is led by David Garman, a water technology scientist and entrepreneur from Australia. who takes over as the school's dean later this month.