WEDA Wire – June 14, 2023

Hello Team Wisconsin!

It is wonderful to finally enjoy long sunny days and warm weather, but that’s not the only thing that’s heating up in Wisconsin. At the Capitol, lawmakers are in the middle of putting together the state budget (which will impact economic development across the state) and key development projects are underway all over Wisconsin!

Let me catch you up on what we’ve been up to at WEDA… Last month, WEDA hit the road to attend the Wisconsin Rural Prosperity Summit. It was marvelous to learn about projects and initiatives around the state, celebrate with award winners, and network with all the “Up North” community champions.

WEDA was also in beautiful Green Bay, where approximately 50 economic developers and people in related fields gathered for the Wisconsin Basic Economic Development Course, which was taught by 13 subject matter experts –many possessing the coveted IEDC Certified Economic Developer credential. Personally and professionally, producing this course was very rewarding. It is quite exhilarating being in a room with all that passion for community prosperity!

While in Green Bay, we also convened approximately 30 bankers for a roundtable discussion of community revitalization and sustainability. Feedback from both these events really gave me confidence that WEDA is providing value through its professional development and networking.

Our CRA Network Project Advisor, David Kircher also recently exhibited and networked at the Annual Lenders Conference. And our CRA Network has more in store… We will be in Fitchburg for an Affordable Housing Bankers Roundtable July 25^th and in Wausau on Sept. 27^th for a Community Revitalization and Stabilization event.

WEDA was also recently in Kenosha County, providing our ED 101 course for local officials. ED 101 provides elected officials, boards, and community members with foundational economic development knowledge so that they feel confident in marketing their communities and analyzing prospective projects for ROI. We hope to also provide the course for local officials in Middleton and Kewaunee County later this year.

We are currently all hands-on deck planning the WEDA Fall Best Practices Conference to be held in Wausau September 27 – 29^th. During the conference, we will also be celebrating economic development in Wisconsin at the 10^th Annual Community and Economic Development Awards (CEDA) on Sept. 28^th. Don’t miss the opportunity to nominate your hometown’s economic development success stories.

Why Join WEDA? By joining WEDA you can leverage key resources and training, impact state policies and build an extensive professional network of industry leaders and economic development professionals who share the same mission—growing Wisconsin! Our members are professionals from every area of economic and community development and related industries like architectural and design firms; bankers; community chambers; planners; construction services companies; consultants; engineering companies; mechanical electrical and plumbing contractors; Regional Planning Commissions; regional economic development organizations; residential commercial and retail developers; commercial real estate people; utility companies; workforce development professionals; city county and state officials; universities, and technical colleges. If your work is in one of these professions, you should join too! We want to welcome you to the WEDA family! Join here today!

By WEDC Secretary and CEO Missy Hughes

For many startup owners, access to capital is a lifeline that can determine the success or failure of their business.

While Wisconsin entrepreneurs have long had access to initial capital or “angel investments,” it is more difficult for firms to access larger investments needed to grow. In the last few months, rising interest rates and tightening credit have also made it more challenging for start-ups to secure the funding they need to grow.

That’s why the recent announcement from the U.S. Treasury Department provides a groundbreaking opportunity. Wisconsin is receiving $50 million in federal State Small Business Credit Initiative funds to establish the Wisconsin Investment Fund, a new venture capital fund under the direction of the Wisconsin Economic Development Corporation (WEDC).

Using a fund of funds model, the aim of the Wisconsin Investment Fund is to provide later-stage investments to help Wisconsin startup businesses attract the capital they need to scale up. Sourcing these dollars in Wisconsin increases the odds they continue growing here.

The federal funding gives us the opportunity to build this fund and put the infrastructure in place to lean into local funds and private sector expertise.

Funding from local sources is critical because startup companies often locate near their biggest investors. This means that the more Wisconsin investors, including WEDC, can help lead later stage and larger funding rounds, the more likely our state will hold on to promising startups as they are ready to scale.

The Wisconsin Investment Fund, in partnering with other funds, will, at a minimum, double the amount of capital available here in Wisconsin, allowing those businesses to stay here, grow here, and keep that capital working here.

It’s time for our state to take that critical next step.

Missy Hughes is the Secretary and CEO of the Wisconsin Economic Development Corporation, the state’s leading economic development organization.

First Ring Industrial Redevelopment Enterprise, Inc. (FIRE), a West Allis-based Community Development Entity (CDE) recently announced today it has funded $13 million in New Markets Tax Credits (NMTC) to Belle City Square Holdings, LLC. The allocation supports the redevelopment sponsored by J. Jeffers & Co. that will preserve four historic buildings for a creative studio space, private office space, and inclusive coffee shop at 2100 Northwestern Avenue, Racine, WI.

The $23.9 million, 32,000 sq. ft. project is part of the larger Belle City Square development and will create 80 indirect and direct jobs, serve community organization, and retain quality and accessible jobs in a severely distressed area. The buildings will be LEED certified, and the project will recycle seven tons of materials. A focal point of the project will be the Inclusive Bean, a coffee shop partnering with Sonnenberg Schools, to provide employment opportunities for students that have special needs.

Jeffers and Co., the sponsor of the development is a real estate firm that focuses on developments that enhance neighborhoods and create value. “We are excited to continue our transformation of this truly catalytic project for the City of Racine. Our first three phases brought a range of residential uses, from much needed affordable housing to market rate units, through a combination of historic rehabilitation and architecturally sensitive new construction. This next phase brings the commercial component into our LIVE WORK PLAY community vision,” says Joshua Jeffers, CEO of J. Jeffers & Co.

“The project meets the mission and core values of FIRE,” said John Stibal, President of FIRE. Stibal added further, “the City of Racine, especially Mayor Cory Mason, and J. Jeffers and Co., are great partners, in launching a catalytic redevelopment that can leverage the economic power of the NMTC program to bring change and opportunity to a distressed neighborhood.”

Belle City Square, when fully completed, will offer 400+ multi-family units and 200K+ SF of commercial/retail space on the 13-acre parcel. Four hundred thousand square feet of the total development will be historic rehabilitation and adaptive reuse with an additional 400k SF of new construction, fully reimagining this blighted complex, once home to Horlick Malted Milk Company. Anchoring the new neighborhood center through this project is 55,000 square feet of shared workspace that will provide flexible, below-market lease rates to emerging, scaling and mature enterprises across business sectors. Additional activation includes high-quality, accessible space reserved for nonprofit business development support providers, a cooperative workforce development program serving the local building trades, a coffee shop providing employment opportunities across the neurodiversity spectrum, and the retention of existing light manufacturing operations.

Governed by a comprehensive Community Benefits Agreement, the project is anticipated to create 200 construction jobs and 179 full-time equivalent jobs over a 7-year time horizon. At least 90 percent of jobs will exceed the Massachusetts Institute of Technology living wage threshold for Racine County and at least 95 percent will be accessible to individuals with no more than a high school degree or equivalent.

This phase of the BCS development totals 134K SF and features a complex capital stack with various incentives and loans, including:

• FIRE is providing $13M of New Market Tax Credit allocation to the project.
• The National Trust Community Investment Corporation (NTCIC) is providing an additional $8M of NMTC allocation to the project.
• US Bank is purchasing the New Markets Tax Credits, as well as the Historic Tax Credits.
• Bremer Bank is providing the construction financing for the project.
• Lincoln Savings Bank is providing a Historic Tax Credit Bridge loan to finance the project until the Historic Tax Credit Equity is contributed.
• The project is also utilizing incentives provided by the City of Racine to finance the project.
• Jeffers & Co. has entered into a development agreement with the City of Racine outlining tax-increment financing for the project over 24 years, as well as a  storm water grant.
• Untamed Equity is providing up-front TIF monetization to help finance the project.

“We are truly grateful to all of our partners that have helped support our vision and worked in true collaboration with us to make this phase and our continued progress possible at BCS” states Jeffers.

The NMTC program, established by Congress in December 2000, permits individual and corporate taxpayers to receive a credit against federal income taxes for making qualified equity investments in investment vehicles known as Community Development Entity (CDEs). The credit provided to the investor totals 39 percent of the cost of the investment and is claimed over a seven-year period. Substantially all the taxpayer’s investment must in turn be used by the CDE to make qualified investments in low-income communities.

Headquartered in West Allis, WI, First-ring Industrial Redevelopment Enterprise, Inc. (FIRE) was formed in 2007 to attract tax credit and other funding incentives for projects that can demonstrate significant and measurable community impact. The company provides below-market rates and terms for equity-equivalent, senior, and subordinate loans products in healthcare, education, commercial, mixed-use, and industrial projects located in highly distressed communities throughout its four-county service region. FIRE is an equal opportunity provider.

For more information about Belle City Square, visit: bellecitysqaure.com. For more information about J. Jeffers & Co., visit jjeffers.com.

Despite the warmer weather, lawmakers are doing heavy lifting in the State Capitol, as they continue work to reshape Gov. Tony Evers’ 2023-25 biennial state budget bill, the $104 billion two-year spending plan for the state Evers introduced in mid-February. They are also debating numerous stand-alone bills that could improve the economic development climate in Wisconsin.

But most of the activity under the Capitol Dome is focused on passing the state budget bill by the end of the current fiscal year (June 30). Over the last several weeks, the legislature’s budget-writing committee has taken significant action to overhaul the governor’s initial budget proposal.

The first action the Joint Finance Committee (JFC) took on the budget bill was to remove over 500 items from the Evers budget. Among the items removed was a proposal to significantly reduce the state’s Manufacturing and Agriculture Tax Credit, which would have resulted in a $650 million tax increase on manufacturers. WEDA applauds the committee’s effort to preserve the credit, which allows manufacturers to remain competitive and reinvest in their communities.

Other economic development related items removed from the Evers budget by lawmakers include:

• $40 million GPR in one-time funding for WEDC to support continued economic recovery efforts throughout Wisconsin.
• $200 million GPR to continue the Workforce Innovation Grant Program.
• $25 million GPR annually to continue the Main Street Bounceback Grant program.
• Creation of a venture capital program with $75 million in one-time GPR funding.

Listed below is an overview of other action taken by the Joint Finance Committee, broken down by state agency, that may be of interest to WEDA members:

Department of Workforce Development

The Joint Finance Committee recently took up budget items related to the Wisconsin Department of Workforce Development and voted to approve the following provisions of interest to WEDA members:

• Local Youth Apprenticeship Grants– Provided $7,000,000 GPR over the biennium in additional funding to for grants for local youth apprenticeship. As a result, total funding for local youth apprenticeship grants would be $19,000,000 GPR over the two-year budget cycle.
• Career and Technical Education Incentive Grants– Provided $3,000,000 GPR over the biennium in additional funding for career and technical education (CTE) incentive grant payments to school districts. As a result, total funding for the CTE incentive grants program would be $16,000,000 GPR over the two-year budget cycle.
• Fast Forward– Decreases by $1,000,000 GPR annually funding for DWD’s Fast Forward program. As a result, total funding for Fast Forward would be $10,500,000 over the two-year budget cycle.

CLICK HERE to review the approved budget motion.

Wisconsin Economic Development Corporation (WEDC)

On May 25, the 16-member Joint Finance Committee took up budget issues related to the Wisconsin Economic Development Corporation (WEDC). Among several other actions, the Committee voted to require WEDC to dedicate funds and implement a statewide talent attraction program. One of WEDA’s top state budget/legislative priorities for the current session is to secure $5 million in funding for statewide talent action efforts focused on military veterans. While the motion approved by the Committee was a bit different than WEDA’s initial talent attraction proposal, we were pleased with the committee’s action to approve the following:

• Require WEDC to expend at least $4,000,000 from its existing state appropriations during the 2023-25 biennium for talent attraction and retention initiatives.
• Specify that WEDC, in consultation with the Department of Veterans Affairs, must expend at least $2,000,000 of this funding during the biennium on efforts to attract and retain veterans to Wisconsin’s workforce.
• Require WEDC to evaluate its talent attraction and retention initiatives, including program outcomes and the number of veterans discharged that choose Wisconsin for their first move, and report its findings to the Legislature.

The Committee also increased WEDC’s base budget over the biennium, providing additional funding that can be used to fund the talent attraction campaign.

CLICK HERE to review approved budget motion.

Department of Transportation

The Joint Finance Committee approved spending an additional $1.55 billion on transportation projects over the two-year budget cycle – compared to the $1.4 billion proposed by Gov Evers – bringing the total 2023-25 transportation budget to roughly $8 billion.

CLICK HERE to review approved budget motion.

Legislature Passes Workforce Housing Proposals Supported by WEDA

One of WEDA’s current legislative priorities is to help address Wisconsin’s housing shortage through policies that encourage the development of much-needed affordable housing for Wisconsin workers and families. Lawmakers understand the importance of this issue as well and recently passed a number of housing-related bills supported by WEDA.

The Assembly passed the following two housing bills that are still under consideration by the Senate

• AB 39 (RE: Low-Income Housing Tax Credit Program) – Under current law, WHEDA can allocate up to $42 million in annual tax credits to spur the development of low-to-moderate income housing. This legislation would Increase the allowable amount of annual tax credits allocated by WHEDA to $100 million. The bill also requires WHEDA, if possible, to allocate at least 35% of the tax credits for housing projects in rural areas. Read bill overview HERE.
• AB 96 (RE: PAYGO TIF Bill) – This legislation would authorize municipalities that have exceeded the state’s 12% TIF limit to create a new TIF district, as long as it is a developer-financed TIF district (or PAYGO TIF). The bill would also allow certain towns adjacent to a city to create a PAYGO TIF for the purpose of constructing housing-related infrastructure. In addition, an amendment was attached to the bill that would increase the amount of residential development permitted in a “mixed-use” TIF district from 35% to 100% of the district if the residential development that exceeds 35% is used for workforce housing. Read bill overview HERE.

In addition, both the Assembly and Senate passed the following three workforce housing revolving loan fund bills:

• AB 264 (RE: Housing infrastructure revolving loan fund) – Establishes a revolving loan fund under the jurisdiction of WHEDA to fund infrastructure for workforce housing and senior housing development. Read bill overview HERE.
• AB 265 (RE: Main Street housing rehabilitation revolving loan fund) – Establishes a Main Street housing rehabilitation revolving loan fund under the control of WHEDA to provide loans to property owners for the rehabilitation of second and third story apartments over main level businesses. Read bill overview HERE.
• AB 268 (RE: Commercial-to-housing conversion revolving loan fund) – Establishes a commercial-to-housing conversion revolving loan fund under the jurisdiction of WHEDA to award loans to developers for the conversion of vacant commercial buildings to new residential developments consisting of workforce or senior housing. Read bill overview HERE.

WEDA will continue to advocate for these important initiatives that expand or create tools to help encourage housing development in communities throughout the state.

Key Assembly Committee Considers Data Center Tax Incentive Bill

The Assembly Ways and Means Committee recently held a public hearing on Assembly Bill 302, legislation that would create a sales and use tax exemption for equipment or software used by eligible data centers for the processing, storage, retrieval, or communication of data. This important economic development legislation, which is supported by WEDA, would provide critical tax incentives to encourage hyperscale data center investment in Wisconsin.

In addition to the significant economic impact of data center development, a strong data center market can help attract a high-tech talent pool to the Badger State that could support numerous industries. Without tax incentives, the development of large-scale data centers is unlikely to occur in Wisconsin, especially in rural parts of the state. Fortunately, AB 302 will make Wisconsin a much more attractive location for large data center projects.

WEDA would like to thank WEDA Board Member Jenny Kuderer-Radcliffe (Dairyland Power Cooperative) for testifying in favor of the bill on behalf of WEDA (and Dairyland). Jenny did a tremendous job representing WEDA and educating lawmakers on the economic development benefits of the bill. You can read Jenny’s testimony HERE. Click HERE to review WEDA’s testimony.

By State Representative Rick Gundrum 

In the new 2023-24 legislative session, I have the honor of chairing the Assembly Committee on Jobs, Economy and Small Business Development. Strong economic development is the key toward a more prosperous Wisconsin. The committee began the new session by holding informational hearings to learn what we as legislators can do to help business leaders in this state. These are the top four issues that came from those hearings:

• Reduce regulatory burdens – Wisconsin continues to have some of the most restrictive regulations for businesses in the country.  Every dollar spent by a business on expensive, complicated and burdensome regulations is a dollar that can’t be spent on increasing wages, expanding workforce or growing business.
• Defend the Manufacturing and Agriculture Tax Credit – Many  businesses  rely on the MAC for their financial health. It was a mistake for Governor Tony Evers to limit the manufacturing portion of the MAC in his budget proposal. Tax credits are necessary to help with economic growth in all sectors of Wisconsin’s economy.
• Repeal Wisconsin’s personal property tax – This antiquated tax has been on the books way too long. Removal of this unfair tax will eliminate financial burdens on job creators and spur economic growth.
• Make investments in infrastructure – A more prosperous Wisconsin depends on a safe, robust, and reliable transportation infrastructure.  Continued investment is necessary.

The Wisconsin Legislature has already started addressing some of these concerns, and we will continue to focus on workforce development policy solutions to help reduce the labor shortage and meet the needs of our business community.

We keep the state in a strong fiscal position by keeping Wisconsinites employed and expanding the workforce and not hindering Wisconsin businesses.  The key toward a more prosperous Wisconsin is state government agencies working together supporting private sector businesses.

Representative Rick Gundrum (R-Slinger) represents the 58th Assembly District and serves as the Chairman of the Assembly Committee on Jobs, Economy and Small Business Development.

Kathy Heady, Academy Manager

The WEDA Academy held its first webinar of 2023 on April 12, Stretching Your Community Marketing Dollars. A big thank you to course instructors – Melissa Meschke, EDP, Economic Development Outreach Manager, Institute for Business & Entrepreneurship, University of Wisconsin System; Blake Opal – Wahoske, Executive Director, Wausau River District, Inc.; Tricia Rathermel, President & CEO, and Andrea Aurigue, Communications & Research Manager, Greater Oshkosh EDC who shared their wealth of knowledge on this topic.  We were also joined by Scott Champion, Vice President, Marketing & Brand Strategy, WEDC, who highlight available marketing resources from the corporation.

On the afternoon of August 9, the Academy will be hosting the webinar, An Economic Developer’s Introduction to Municipal Engineering.  Engineers from Vierbicher will be providing an introduction to municipal engineering concepts and terms with a focus on aspects that impact the work of the economic developer.  Best practices and community examples will be highlighted.  Topics will also include a discussion of the role of the economic developer, the importance of realistic project timing, and preparing in advance for potential projects.

The Academy is planning two additional programs for 2023.  On September 27, just prior to the WEDA Best Practices Conference in Wausau, the Academy will be hosting an in-person comprehensive session on Tax Increment Financing (TIF).   TIF experts from Ehlers and Vierbicher will serve as instructors for this program.  Are you looking to take your TIF skills to the next level?  This program will cover topics including best practices, case studies, and determining an appropriate level of assistance.  Participants will have an opportunity to build their skills by working through scenarios with other attendees.  The final Academy webinar for 2023 will be Industrial & Business Park Development on November 8.  Let me know if you have recommendations for speakers or are aware of any excellent community examples that we can feature.  I will be working on program details later this summer.

I hope that you will be able to join us for one or more of these exciting and affordable educational opportunities. As a reminder, be sure to look for approved credits/points for continuing education/recertification on the course registration information.

Please reach out to me at kheady@weda.org if you have any questions or ideas for WEDA Academy programming.

Wisconsin Economic Development Institute Releases Report on Childcare and its Impact on Workforce and the Economy

Two-Page Report Fact Sheet

A new report from the Wisconsin Economic Development Institute, Childcare in Wisconsin and its Impact on Workforce and the Economy, shows the scarcity and high cost of quality childcare in Wisconsin is making it increasingly difficult for parents trying to enter, re-enter, or remain in the workforce. The report also clearly illustrates that the state’s childcare access crisis is a top concern for the business community. In fact, 80% of Wisconsin employers believe the economy is impacted by the availability of affordable, high-quality childcare. In addition, 73% of businesses believe that without greater access to childcare, Wisconsin employers will face workforce shortages now and in the future.

The detailed report, commissioned by WEDI, was prepared by Baker Tilly who gathered and subsequently analyzed all relevant recent research and surveys on childcare and its impact on the workforce and economy of Wisconsin. Both statewide and locally gathered data were utilized. Alongside data collection, informational interviews of important stakeholders were conducted. Data for the report was collected between October 2022 and February 2023.

“Employers across Wisconsin are facing unprecedented hiring challenges, as many workers are choosing to remain out of the workforce, and the WEDI report clearly illustrates one key factor is the lack of employee access to childcare,” said Mary Perry, WEDI Board member and President and CEO of the Wisconsin Economic Development Association (WEDA). “While childcare remains an important family issue, it is also a critical business issue. It plays a major role in employment decisions made by families, and as a result has a significant impact on employers and business productivity.”

The report, which highlights Wisconsin’s childcare challenges and speaks to the need for program and policy solutions, reveals that the childcare crisis is affecting the ability of businesses to recruit and retain employees. For example, 58% of Wisconsin employers said that decreased access to quality childcare resulted in difficulty hiring new employees, workers reducing their hours, and employees using more paid and unpaid leave.

Report Highlights:

• Approximately 4 out of 5 Wisconsin employers say the state economy is impacted by a parent’s access to affordable, high-quality childcare.
• Two-thirds of employers say childcare is a way to retain valuable employees.
• The long-term economic impact of Wisconsin’s childcare crisis is estimated at $4.2 to $6.4 billion.
• A typical family with an infant and a 4-year-old spends 1/3 of their annual income on childcare.
• In 2022, in the 10-county West Central Wisconsin area, 90% of centers had a wait list with a total of 4,304 children on the wait list.
• In rural Northern Wisconsin, the 14-county area has gone from 283 regulated childcare programs in 2016 to 184 in 2022 – a 34% reduction in just six years.
• 80% of residents in rural Wisconsin live in childcare deserts.
• There are more than three children under age 5 for every ONE licensed childcare slot.
• 75% of Wisconsin employers say the state economy is impacted by a parent’s ability to find affordable, high-quality childcare.
• 21.6% of employers in Chippewa and Eau Claire Counties report they have had employees leave their job due to a lack of childcare.
• In a survey of Rock County businesses, nearly 50% of respondents rated the importance of childcare as Important-to-Very Important for their employee recruitment and retention efforts.

The Wisconsin Economic Development Institute, Inc. (WEDI) is a non-profit, non-partisan foundation established under the Wisconsin Economic Development Association (WEDA) to conduct research and education designed to increase the effectiveness of economic development efforts. WEDI aims to:

• Provide policymakers, organizations, and the public with critical information to help address and improve economic conditions.

• Provide policy research material, industry publications, and educational services, training, and programming to promote economic development.

• Identify and offer ideas and resources to address gaps in economic growth and prosperity.

• Offer stakeholders and the public a clearinghouse of economic development information.