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.