Economic Development Blog

The Wisconsin Economic Development Corporation (WEDC) and the Milwaukee Water Council announced the launch of the Global Freshwater Seed Accelerator program – a first-of-its-kind accelerator for water technology startups.

Photo – thewatercouncil.com

Based in Milwaukee, the accelerator will be managed by the Milwaukee Water Council and funded by WEDC.

It will provide grants of $50,000 each to six water technology startups with commercialization potential.

The six-month accelerator program begins Sept 1, 2013. Selected startups will receive:-

-  Space in the Water Council Technology Building aka the “Global Water Center” in downtown Milwaukee;

- Business model and operations training through the University of Wisconsin-Whitewater’s Institute for Water Business;

- Access to faculty and students with the University of Wisconsin-Milwaukee’s (UWM) School for Freshwater Sciences; and

- Mentorship from dozens of area water technology experts, and access to investment capital funding sources.

“The seed accelerator program will bring global inventor-entrepreneurs to our Milwaukee water center, where they will find local expertise, resources and support to get their company started,” said Rich Meeusen, co-chair of Milwaukee Water Council and chairman, president and CEO of Badger Meter. “We expect that when they experience firsthand the value of locating in the global center of the industry, they will opt to permanently establish their company in Wisconsin.”

Startups will be selected based on multiple criteria, including commercialization potential, compatibility with existing companies, and long-term interest in growing in Milwaukee.

The grants provided will fund startup costs, including lab supplies, research and product development expenses, and professional services.

The startups will also have the ability to work with international water technology leaders located in the building, including A. O. Smith, Badger Meter, Grundfos Pumps, Sloan Valve and Veolia Water.

The Global Water Center is also being used by the City of Milwaukee as a catalyst to jumpstart redevelopment of the adjacent 17-acre Reed Street Yards property into a water technology business park.

Wisconsin Governor Scott Walker announced a near $100 million investment of new state funds, with a total investment of $132 million, in workforce development aimed at equipping workers with the skills they need to find jobs

Workforce development (photo – usgs.gov)

“Our goal is to help our state and our workers become among the most prosperous and innovative in the country,” said Governor Walker. “My workforce development plan is a multi-faceted approach providing flexible solutions from up-to-date labor market information to getting people on food stamps employment training. The plan is designed to help workers get the skills necessary for jobs available across the state today.”

The plan calls for passage of legislation (passage of LRB—1162) to fund a labor market information system, $15 million in workforce training grants, and the creation of the Office of Skills Development (OSD) under the State Department of Workforce Development (DWD).

Working with the Wisconsin Economic Development Corporation (WEDC), the Technical College System, and other businesses and economic development agencies, the new OSD will adjust training grants to current and changing workers’ skill needs and emerging skill clusters, providing workers with a responsive and flexible training resource.

The Governor stressed that the plan went above and beyond traditional educational investments, and called for worker training grants in areas of immediate need, including items like training for healthcare-related jobs in rural and high poverty areas.

The rural health care part of the plan includes creation of the Graduate Medical Education Consortium Funding Pool. The state will invest $4 million for grants to aid rural hospitals in building infrastructure and increasing volume in order for them to obtain national accreditation. The $4 million investment requires a 50/50 match by applicants.

This investment will allow rural hospitals to pool their resources and apply for accreditation as a consortium saving them vital time and money, while allowing them to draw medical residents to rural areas in need.

“My workforce development package provides a hand up to those who are able to work—not simply a hand out,” added Gov. Walker.

All put together, these workforce development initiatives in Wisconsin will require $132 million, including $96 million of state taxpayer resources.

Wisconsin Governor Scott Walker announced that the next budget includes key economic development initiatives which span across several state agencies including the Wisconsin Economic Development Corporation (WEDC), the Wisconsin Department of Veterans Affairs, and the Wisconsin Department of Tourism.

WEDC (photo – state.wi.us)

“Continually improving our economic environment will foster small business growth and encourage the creation of new businesses,” said Governor Walker. “The majority of jobs created in Wisconsin will come from small businesses or employers who are just getting started. The initiatives contained in my budget proposal will support entrepreneurship and innovation.”

Highlights from the proposed initiatives:-

Seed Accelerator and Capital Catalyst Programs: Investing nearly $6 million in Seed Accelerator and Capital Catalyst Programs at the WEDC. These programs support high-potential entrepreneurs and businesses as they start and grow;

WEDC Marketing Program: Providing $10.9 million over the biennium to support WEDC’s marketing program promoting Wisconsin as a great place to do business. WEDC marketing focuses on attracting businesses, promoting investment opportunities in Wisconsin, and changing the negative perceptions that may still exist about doing business in Wisconsin.

VETransfer Grant: Providing an additional $500,000 grant to VETransfer through the Department of Veterans Affairs’ Veterans Trust Fund, including $300,000 for seed funding for veteran-owned startups. VETransfer is a business accelerator for U.S. Veterans looking to start their own businesses.

Economic Development Tax Credit: Additional $75 million in available credits under the Economic Development Tax Credit program. This tax credit is aimed at encouraging businesses to make capital investments, expand and retain jobs, invest in job training, and locate or retain their corporate headquarters in Wisconsin.

Angel Investment Tax Credit: Lifting the cap on this tax credit program focused on encouraging private investment in start-up companies. The budget removes the maximum cap, which is currently set at $47.5 million, but retains the annual limit·

Tourism Marketing: Expanding the Department of Tourism’s effective marketing campaign by allowing the department to keep over $1 million in funds previously contained in a budget lapse. The Department will use $100,000 each year to support efforts to attract international visitors to Wisconsin. Another $75,000 per year for grants has been allocated to programs aimed at attracting national meetings, conventions, and sporting events.

The Wisconsin Economic Development Corporation (WEDC) has teamed up with the Whitewater Community Development Authority (CDA) to provide early stage capital to area entrepreneurs.

WEDC (photo – state.wi.us)

WEDC is providing a $150,000 “Capital Catalyst” matching grant to the CDA, which will chip in with a dollar for dollar match of the award.

This funding will be used to provide grants to new-start companies and to assist the emerging businesses selected.

“This partnership between the Wisconsin Economic Development Corporation and the Whitewater Community Development Authority is an innovative model to advance aspiring entrepreneurs to successful business operation and job creation,” said WI Governor Scott Walker.

During the Governor’s visit to the Whitewater Innovation Center, the CDA presented two startups – Date Check Pro and Got Apps, the first $10,000 grants from the fund to assist the companies in their business development.

“We are honored and privileged to partner with the State of Wisconsin and the WEDC on this very innovative and necessary tool to enhance economic development and job creation in Whitewater and the state,” said Jeffery Knight, chairman of the Whitewater CDA. “Date Check Pro and Got Apps, Inc. are two prime examples on how this fund has created opportunities locally and will only expand as we implement the program in its entirety.”

The CDA is the economic development organization for the City of Whitewater. The CDA will create an investment committee which will establish criteria for awarding grants and an application process, and oversee the administration of the seed funds.

They will focus on providing grants and assistance in the fields of advanced manufacturing, agriculture/food processing, information systems/software, medical device, and renewable/green energy.

“We are fortunate in Whitewater to have such a proactive, visionary CDA and a strong, collaborative relationship between the City and University,” said Cameron Clapper, city manager for the City of Whitewater. “This program is the direct result of those collaborative efforts and the backing of the WEDC. Without the support of the WEDC, I don’t think we could have moved this program so far so fast.”

WEDC’s Capital Catalyst program provides grants to regional organizations or communities to leverage matching funds to provide seed funding for start-up and emerging companies. This is the second investment made by WEDC in a regional fund. The first was made in October 2012 to the Innovation Fund of Western Wisconsin in Eau Claire.

“This investment by WEDC and the Whitewater Community Development Authority will help fill a gap of much needed seed capital for entrepreneurs in the area,” said Lisa Johnson, vice president of Entrepreneurship and Innovation for WEDC.

An independent audit of the Wisconsin Economic Development Corporation’s (WEDC) financial statements by Schenck SC has been presented to the WEDC Audit Committee.

WEDC (photo – commerce.state.wi.us)

WEDC commissioned the independent audit after a furor caused by their failure to track millions of dollars in loans.

“This audit illustrates the extraordinary steps WEDC’s current management has taken to be transparent and forthcoming about challenges the organization faces and past mistakes,” said Reed Hall, secretary and interim CEO of WEDC.

Schenck audited the financial statements of the governmental activities and the major fund of the WEDC, as of and for the year ended June 30, 2012. The audit identified two material weaknesses and two significant deficiencies, with corresponding recommendations in internal control over financial reporting.

The key paragraph in the audit is on page 8, where the schedule of findings and responses is listed. The paragraph in question says – “At the start-up of the Corporation, the majority of the resources were dedicated to the development of economic development programs. In addition, the departure and reassignment of many of the previous Wisconsin Department of Commerce employees resulted in a number of open financial positions for a period of time. The gap in employment for these financial positions played a significant role in the lack of, and accuracy, of financial transactions and internal control procedures.”

That is a reference to the formation of the WEDC in July 2011, when the former Wisconsin Dept. of Commerce staffed by 300 workers was replaced by the WEDC staff of 50. The number of WEDC staffers has since been increased from 50 to 90.

The audit recommended the establishment of an effective and efficient control system for receipt and deposit of collections and other revenues; disbursement of program loan and grant payments; and development and distribution of financial reports.

“This audit is consistent with previous management communications surrounding the challenges within our financial documentation and controls. WEDC has already started addressing the recommendations Schenck included in its audit,” Hall added.

Hall said WEDC has started providing the WEDC board a monthly management report that includes at least an income statement, balance sheet, statement of cash flows, statement of fund balances, and loan portfolio aging report.

Hall also said WEDC is analyzing and drafting detailed procedural and internal control plans for all loan activity. He said monthly reconciliations are being completed on a timely basis and reviewed by the Controller, and reports will be developed in the separate loan management software to quickly and accurately reconcile between systems.

Read the full draft of the WEDC Audit by Schenck SC – Download (pdf)

After barely a year of existence, the public-private Wisconsin Economic Development Corporation (WEDC) is in the throes of an existential crisis, accused of spending $10 million without legal authority, topped off by the WEDC CEO announcing his resignation and a board member threatening to quit.

WEDC (Photo – wi.us)

The U.S. Housing and Urban Development Department (HUD) has been complaining for over a year about how the WEDC and Wisconsin’s Community Development Block Grant (CDBG) program are spending federal funds without clear lines of authority.

It finally came to a head with a strongly worded letter from HUD to the WI Department of Administration (DOA) Secretary Mike Huebsch.

The problem apparently dates back to the dissolution of the Department of Commerce and the creation of the WEDC in 2011. The process was hasty and funds were transferred without a formal written agreement. When WI Gov. Walker announced $9.6 million in CDBG funding to four communities, the WEDC had no right to hand out any funds.

So HUD ordered a separate monitoring program for WEDC activities, and that monitoring report shows even more serious problems. WEDC staff apparently skipped or skimmed over the underwriting process and went straight to approval. The report mentions $1 million given to Morgan Aircraft in Sheboygan and $390,000 to Gilman USA LLC without proper underwriting.

In another case, WEDC agreed to provide a $3 million forgivable loan to metal fabricator Kapco in return for an agreement to create 152 jobs, which makes it $20,000 per job. This is twice the $10,000 limit under state policy. Also, forgivable loans need some extraordinary circumstances, and none were specified in this case.

An even bigger concern involves $8.6 million in CDBG funds withdrawn by a WEDC controller on his last day on the job on Dec 27, 2011 to pay for projects for 2011. The withdrawal was made without approval from the DOA, which is supposed to oversee the CDBG program run by the WEDC. Even the WEDC CEO Paul Jadin did not know that the transfer had been made or why it was made.

It’s fair to say these are all at least serious issues of mismanagement, if not fraud. But the cover-up is always worse than the crime. To be specific, the hapless WEDC board composed of a mix of prominent business leaders and Wisconsin lawmakers from both parties had no idea what was going on and were kept in the dark by their own WEDC staff and by the DOA.

HUD sent a letter in May 2012 and then the latest one in August 2012, and DOA secretary Mike Huebsch responded to HUD on Sept 12, 2012. Eight days later, the WEDC board met but was not informed of the HUD issue. WEDC chief operating officer Ryan Murray said he was just following DOA’s lead in not informing the WEDC board.

The fallout over the problems detailed by HUD and the subsequent cover-up is just gathering steam. For starters, Paul Jadin, WECD chief executive officer, announced his resignation last week, ostensibly because he’s taking up a job offer with another economic development agency. Now businessman Paul Radspinner, a member of the WEDC board, has written to Gov. Walker and threatened to quit. DOA Secretary Huebsch has since apologized and Gov. Walker himself held a conference call with the WEDC board members to calm things down.

But the worst is yet to come, with HUD awaiting a state report on how the funds were spent. There’s going to be a lot more apologizing and resigning to be done before this one goes away and Wisconsin’s main economic development agency gets back on track.

Back in Jan 2012, Wisconsin managed to land a new Kestrel Aircraft Corporation plant with 600 jobs that was supposed to be built in Brunswick, Maine. To add insult to injury, Kestrel decided to move their headquarters from Brunswick to Superior, WI.

Photo credit – Office of the Governor, Wisconsin

At that time, the Wisconsin Economic Development Corporation (WEDC) had put together a very attractive incentives package including $18 million in tax credits and a $2 million loan.

The Wisconsin Housing and Economic Development Authority (WHEDA) had furthermore agreed to work with Kestrel to secure $30 million in federal New Markets Tax Credits (NMTC).

Kestrel was qualified for the credits as an eligible business seeking to make an investment in a federally-designated low-income area.

That promise now stands fulfilled with WI Gov. Scott Walker’s announcement that WHEDA and the Wisconsin Community Development Legacy Fund (WCDLF) have completed a $30 million NMTC allocation to the Kestrel Aircraft Corporation.

“I am thrilled that WHEDA is able to utilize its economic development and job creation tools to help Kestrel revolutionize aviation right here inWisconsin,” said WHEDA executive director Wyman Winston.

“This is a significant step and valuable economic development tool in supporting Kestrel Aircraft’s move to establish its manufacturing and headquarters in Superior,” said Paul Jadin, CEO of the WEDC.

“Attracting this visionary entrepreneur to relocate with the potential to create 600 new jobs is incredible news for the city of Superior and the entire state of Wisconsin,” said Governor Scott Walker. “In putting together an aggressive package, Wisconsin has decisively demonstrated its commitment to job creation and boosting our state economy.”

“We thank all of the private/public partnerships that reached out on all levels and depth to solidify and welcome Kestrel as our newest corporate citizen,” said Superior Mayor Bruce Hagen. “The economic ripple effect will be very promising in growing the community, along with the introduction of complementary businesses and industries.”

The city of Superior has provided Kestrel with a $2.4 million loan, in addition to providing two parcels of land for development and $1.125 million in tax incremental financing (TIF). Douglas County has provided an $800,000 loan.

www.trademarkia.com/

Tourism has been a monumental driver for economic development in the region of Walworth County, Wisconsin but industrial development is now a strong driving force.

Due to the collaboration between the private sector and the city of Whitewater, significant investment has been made in the business park which is ultimately conducted by Universal Electronics. The business park also has an innovation center which is also at nearly 80 percent occupancy. There are also a myriad of businesses which are subtly growing near the Interstate 43. A company called Provisur Technologies is an example of economic growth despite many of the staffing challenges. A Plant Manager for Provisur Technologies whose name is Robin Hancock states that having direct access to an Interstate would ultimately benefit the company.

One of the biggest challenges for Provisur Technologies is a staffing issue. Locating skilled fabricators and welders is a challenge for Provisur. Plant Manager Hancock had to rely on a welding school in Oklahoma to get skilled welders and he would ultimately enjoy getting workers that are local. Hancock finally states that the company has seen growth of approximately 200 percent with approximately $40 million dollars in sales and the continued growth is going to rely on acquiring more skilled workers.

The Technical College of Gateway has also vowed to assist Provisur Technologies as they have created an intense 40 hour class that focuses on welding. Gateway is also working closely with the Economic Development Alliance and the County Job Center as they plan particular programs for the needs of the region. An Executive Director for the Development Alliance states that the location of businesses to the Interstate determines whether economic development progresses. There are also 2 significant industries that are benefiting from the ideal location called Birds Eye and Better By Design.

Overall, the development of industries is going to play an important factor in economic development in Walworth County.

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