End of an Era?

We recently received notice from the Wisconsin Department of Administration (DOA) about their desire to end the revolving loan fund program. Specifically, this is the loan program funded by Community Development Block Grants, which come from the Federal Government and are passed through the State of Wisconsin. Currently there is a 30-day comment period with the DOA.

In Grant County, there are 5 such revolving loan fund programs that will be affected. I oversee the County’s RLF and assist several of the 4 cities/villages, which have them as well. This will be a major set back in the world of economic development. We have few economic development “tools” to use. This was one of the most widely used tools in our county. To date, we have processed and administered a total of $3,313,995. In loans, this includes 9 CDBG direct loans (which come from the State through the county and to the business) and 44 revolving loans from the county, for a total of 53 loans that we have administered. This is only Grant County’s revolving loan program and does not include any of the 4 cities and villages that have RLFs, as well. For each of these loans, there is a job creation requirement. Therefore, with each loan, jobs were created. In many cases, new buildings were constructed, which means new property taxes for our cities, villages, towns, county, K12 schools and technical college. These loans were for a variety of businesses from entrepreneurial startups to well established, multi-generational companies. Small service-based businesses to larger manufacturing companies, cheese plants to dairy farms, auto and truck mechanical shops to logistics companies, and seed processors to chiropractors were funded. It’s a widely varied group of businesses for which I am very proud.

The reasoning I am hearing from the State is that there are too many funds just sitting in bank accounts across the state not being used. Grant County’s RLF has a cap of $750,000, which means I can never have more than $750,000 in cash on hand in the checking account. Currently, I have just over $300,000, which includes funds that have been approved for a new cold storage warehouse in Muscoda for $100,000. Never has Grant County had over $400,000 in cash on hand. We just received a loan payoff of just over $100,000 to move our account to the $300,000 range. What is so frustrating to me is that we have used the tool/program effectively. We have always tried to make these dollars work for the county to foster economic development. Now it appears that it will be ending.

That’s not to say I will not be offering my opinion to the Wisconsin DOA on this. I will be stating many of the things I have stated in this article. My office is constantly being contacted by other municipalities and other RLF administrators as a resource on how to manage a program. Even a former Division Administrator recommended to Racine County that they contact my office on how to administer revolving loans. We know how to use the tool and I will be making sure the world knows this.

But as I fight to keep this tool in the toolbox, I continue to try to create and put more tools in the box. Recently, I met with Senator Testin, who invited a handful of economic developers from around the state to brainstorm on a new rural economic development initiative. My first suggestion was funding for a new revolving loan fund program.

Photonic Cleaning Technology, a Platteville business, has received a Phase II Small Business Innovation Grant for $750,000. Way to go Jim Hamilton and company! Last year Jim talked with me about a revolving loan for his business. We also discussed this grant application, which was being submitted when I met with Jim to sign his approved RLF loan paperwork.

This grant from the government is no small task. I have written phase I applications and they are not only difficult to write but also very competitive to get. That was phase I, which are smaller dollar amounts. Phase II and Phase III are the big dollars awards. Photonic Cleaning Technology was the only Wisconsin-based company to receive this grant this year. The award will help the business work with NASA as it uses their “First Contact” cleaning product on future space probes and technology. Some of the technology includes instrumentation that will be used to identify new planets within the galaxy. The First Contact product is able to completely clean optic and sensor equipment without damaging the lenses or device. Jim Hamilton, aside from his Photonic Cleaning Technology business, is also a professor at the University of Wisconsin – Platteville.

If this phase goes well, First Contact will then be eligible for a phase III grant. The sky is the limit, or even beyond in this case.

Great Job to Photonic Cleaning Technology!!!

A housing study of the region will be completed over the next several months. Southwestern Wisconsin Regional Planning Commission is spearheading this study for the southwest Wisconsin region. My office will be assisting with much of the work here in Grant County. Why is the study needed? Housing is critical to our economy. Workforce shortage is the number one challenge I am hearing from businesses. Lack of housing for that workforce is also a challenge. It is hoped that with a completed housing study, we can demonstrate to our housing developers and construction businesses that there is a need for housing and specifically, what type of housing is needed.

The “type” of housing needed is much more complex than just the simple need of housing. Much of the talk coming from the State and Federal government is about “worker housing”, or housing targeted to those 18 – 60 year-olds who comprise the majority of the workforce. What about elderly or retirement housing? There is certainly a big need for this, too. Our demographics show an aging population with a high percentage increase in retirement age individuals over the next decade or so. We will need housing to address this change in our population.

What is affordable housing? Now, that is a question with a variety of answers. I am hearing comments that would range from $140,000 to $220,000. I think the intent would be the housing desired by the mean range of those in the workforce. There is demand for higher income housing, as well as lower income housing, but the real focus would seem to be on housing that would fall in between.

My hope is that the study will show a need for housing for those in retirement. This type of housing would include apartments or townhouses, which would be attractive to a population who want independent living within our area. It would also help create worker housing by allowing those living in larger, multi-bedroom homes to downsize to smaller, more convenient housing. Those larger, multi-bedroom homes would become great starter or second-homes for families to purchase and live in. Therefore, by creating retirements housing, we would add more housing for the working class. We are simply moving people from one housing type to another but we are addressing a problem. We would still need worker housing, but the building of retirement age housing would be part of the solution.

The recent recession leaned heavily toward the creation of the housing shortage. We essentially had near zero new housing construction in the county during the recession. Residents’ incomes were flat and there was a lot on anxiety that kept people from building new houses, kept developers from creating sub-divisions, and kept retirees from building or selling and relocating because the values of their current homes softened. Who would buy their house in a recession? The housing contractor industry in the region also took a hit then, too. Who would build the houses now? The interest in housing developers and contractors to build “spec houses” has certainly declined.

The hope is that that study will demonstrate the need for new housing.

We are also seeing new incentive programs for housing now. A new workforce housing TIF, tax increment financing, is in the works and hopefully will be approved later this year. This will help municipalities with the development of new housing.

In the meantime, my office will be working with the Regional Planning Commission on surveying and gathering information for the study. But – I am not waiting for the study. I am working to develop programs and funding to foster or incentivize new housing development in the county. Housing is needed and we need to develop the plan to support it.