Legislative Audit Bureau: WEDC Still Fails at Basic Tasks

Wisconsin’s Legislative Audit Bureau, as required by state law, has “completed a biennial financial audit of the Wisconsin Economic Development Corporation (WEDC) and a program evaluation audit of WEDC’s economic development programs.”

Perhaps the politician-publisher of the Banner, who has hawked these programs so many times, and is himself the recipient of a WEDC award, will trouble himself to read the audit in full and respond through his publication. This isn’t, to be sure, the first disappointing audit for the WEDC. (I’ve a dedicated category for that agency).

To be serious in one’s views is to defend them competently (or at least make an effort to do so).

The summary and full audit are embedded below.

Consider, among others, these key findings:

WEDC did not contractually require grant and loan recipients to submit information sufficiently detailed to allow it to determine the extent to which jobs were actually created or retained.

The potentially uncollectable balance of loans with repayments 90 days or more past due increased from $1.3 million on December 31, 2014, to $11.0 million on December 31, 2016.

WEDC did not collect sufficiently detailed information from tax credit recipients about their existing employees. Collecting such information will help WEDC determine in future years the extent to which recipients actually created or retained contractually required jobs. In addition, WEDC did not comply with statutes because it did not annually verify jobs-related information submitted by recipients on the extent to which contractually required results were achieved.

WEDC indicated that 192 awards it had made since July 2011 ended through September 2016, including 24 awards (12.5 percent) that WEDC indicated had an expected result of job creation or retention. Thirteen of the 24 awards ended before the contractually specified completion dates and, as a result, the recipients were no longer contractually required to create 183 jobs and retain 1,082 jobs. Eight of the 24 awards reached their contractually specified completion dates.

WEDC cannot be certain about the numbers of jobs created or retained as a result of its awards. Additional actions need to be taken to improve the accuracy of the numbers that WEDC reports in its online data regarding jobs that were created or retained as a result of the awards it made.

Legislative Audit Bureau Brief on WEDC, May 2017:

Download (PDF, 166KB)

Legislative Audit Bureau Full Audit on WEDC, May 2017:

Download (PDF, 1.46MB)

Far Less Than 10.7%

Whitewater’s residents may have recently read (3.7.17) another City of Whitewater press release from the Wisconsin Economic Development Corporation (WEDC) – this time concerning more public spending on selected businesses.  (For remarks on a prior release, please see The Simplest Condition for a ‘Shovel-Ready’ Site is an Empty Lot.)

There are few better ways to argue against WEDC’s approach than by publishing press releases in full from that organization and its boosters.  (I have done so again with the latest release, at the bottom of this post.)

1. A tiny fraction of the award. On its face, there is something sadly desperate in saying Whitewater received only 10.7% of something: of the $700,000 awarded, 89.3% went elsewhere.

2. Tens of millions in public money has poured into Whitewater (state money, federal money, adding into the mix municipal bond debt) over the last decade. Even excluding the vast public sums supporting our local campus, this $75,000 is small compared to prior public spending in the city. If it’s 10.7% of the current totals, it’s far less than 1% of all that’s already come Whitewater’s way.

3. Alternative uses. These public funds are meant to be spurs to business development, but far greater sums have produced only paltry results – just about any allocation would be better than still more of the same.

4. ‘Technology-based, early stage companies.’ All of this is meant to awe and impress, but a level-headed person should be neither awed nor impressed. Public policy is more than a manufactured, unrealistic sense of astonishment.

Butterflies are amazing (truly); public allocations are practical decisions among many alternatives.

The best opportunity for a critic of these spending programs would be for the municipal government to put the full releases on giant billboards around the city. The more one hears of this, the less realistic it is.

Admittedly, we’d not be any richer for a billboard campaign…unless becoming an example of an unsound municipal economic policy somehow, itself, proved lucrative.

WEDC press release follows:

Wisconsin Economic Development Corporation Press Release: Organizations in Milwaukee, Oshkosh, Whitewater to match state’s investment in technology-based early-stage companies

MADISON, WI. March 7, 2017 – Three economic development organizations have been awarded a total of $700,000 in matching grants from the Wisconsin Economic Development Corporation (WEDC) to be used to provide seed funding for technology-based startups and early-stage companies.

The Milwaukee Development Corporation has received a $500,000 grant under WEDC’s Capital Catalyst Program for the creation of a $1 million seed fund to support companies in advanced manufacturing and other technology sectors. The fund will target seed-stage ventures, including graduates of local accelerator programs such as The BREW, WERCBench Labs, FaBCAP and Gener8tor to provide additional capital for activities leading to investment readiness or revenue generation.

The fund also aims to support growth-focused projects of existing tech companies, as well as other eligible seed-stage businesses with technologies outside the scope of existing area accelerators. The Milwaukee Development Corporation is the operating entity of the Milwaukee 7 economic development organization, which in January received a $60,000 Entrepreneurship Support Grant from WEDC to support its efforts to increase collaboration and develop common strategies to optimize Milwaukee’s entrepreneurship climate.

“Finding and filling gaps in funding for these growing companies – especially those in our most promising cluster industries – is critical to the success of individual businesses and the entire Milwaukee 7 Region,” said Pat O’Brien, Milwaukee 7 executive director. “We are grateful to WEDC for recognizing this need and providing a needed boost to these efforts.”

The Greater Oshkosh Economic Development Corporation has been awarded a $125,000 Capital Catalyst grant to fund a $250,000 program that will provide seed capital to local technology-based businesses likely to scale and grow to benefit the area workforce and economy. The seed fund will focus on sectors including aviation/aerospace, advanced manufacturing, information systems, agriculture/food processing and medical devices.

“This fund is the first of its kind in Winnebago County, the I-41 Corridor and northeastern Wisconsin,” said Jason White, CEO of the Greater Oshkosh Economic Development Corporation. “Greater Oshkosh’s economic development success is predicated on helping our existing businesses grow and showing our entrepreneurs that they are well-supported here in the Fox Valley.”

The Whitewater Community Development Authority has received a $75,000 grant for a seed fund that will provide a diversified portfolio of micro-investments and grants aimed at increasing the number of startups in the city and supporting emerging growth companies.

This marks that the fourth year that WEDC has awarded Capital Catalyst grants to the organization, which has provided capital to 21 technology-based companies to date. Those businesses have successfully raised $4.9 million in additional capital, have achieved over $2.4 million in revenue and employ more than 100 workers.

“I’d like to thank WEDC for this additional investment, which will help ensure that Whitewater continues to be a hotbed of entrepreneurial spirit,” said Jeff Knight, chairman of the Whitewater Community Development Authority. “The many startups that this program has already assisted is truly amazing. We’ve supported many new innovative businesses that would not have had a chance to get started without this very timely help.”

“These three organizations are playing a critical role in facilitating the development of high-growth business ventures in their communities,” said Aaron Hagar, WEDC’s vice president of entrepreneurship and innovation. “The Capital Catalyst Program has a proven track record of results, and we’re looking forward to continued success as we collaborate with these organizations to support next-generation companies.”

Since its inception in 2012, the Capital Catalyst Program has helped organizations and communities provide $3.5 million in seed funding to more than 100 businesses statewide that employ nearly 500 full-time workers. Those companies have generated $127 million in additional investment and revenue.

The program provides matching grants to seed funds managed by local communities or other organizations dedicated to stimulating entrepreneurship. These funds provide grants, loans and/or investments in startups or early-stage, innovative small businesses that operate in their region. Loan repayments and returns on investment stay within the fund to assist additional startups and create a supportive environment for entrepreneurs.

The Capital Catalyst Program is one component of WEDC’s suite of entrepreneurship resources, which includes support for startup accelerators, investor tax credits and technology loans. In addition, WEDC supports and engages an existing statewide network of partners that offers business training, mentorship and financing to aspiring entrepreneurs.

###
About the Wisconsin Economic Development Corporation The Wisconsin Economic Development Corporation (WEDC) leads economic development efforts for the state by advancing and maximizing opportunities in Wisconsin for businesses, communities and people to thrive in a globally competitive environment. Working with more than 600 regional and local partners, WEDC develops and delivers solutions representative of a highly responsive and coordinated economic development network. Visit www.inwisconsin.com or follow WEDC on Twitter @_InWisconsin to learn more.

Via http://www.whitewater-wi.gov/residents/recent-news/3270-wedc-awards-700-000-in-grants-to-support-local-efforts-to-provide-seed-funding-for-startups.

The Simplest Condition for a ‘Shovel-Ready’ Site is an Empty Lot

Whitewater’s residents may have recently read (just yesterday) a City of Whitewater press release about a Wisconsin Economic Development Corporation (WEDC) designation for the city’s thirty-five empty acres of tech park land.

I’ve reproduced the release in full at the bottom of this post. A few key points:

1. The simplest condition for a “shovel ready” site is a vacant lot. Whitewater has (at least) thirty-five acres of vacant lot space. The city doesn’t need a ‘certified in Wisconsin’ designation to meet that condition; she only needs lots of empty space.

2. Millions upon millions of state money for businesses in this city, over so many years, and still here we are with another I-feel-it-this-time program.

3. The announcement is old news. The WEDC announced this program on December 15th, and a story about it ran in a local paper on December 16th. If this news were really so important, the municipal government wouldn’t have waited 75 days from the WEDC announcement date. (One should be fair: conservatively, it’s only been 74 days from the newspaper story.)

4. Now that the city’s raised the subject, how has Whitewater performed with the many grants and loans she’s already distributed, all these many years? Before actual performance, has the city been in compliance with even the weak standards the state has imposed on these programs?

There must be some way to determine that: what’s a five-letter word for an official inspection of an individual’s or organization’s accounts?

(If Whitewater ever came across something like that, surely they’d let the community know in full, promptly, as these are publicly-paid officials, extending publicly-funded grants and loans, and they’ve a publicly-fund funded website on which they could post that information.)

5. Where are those other “elite” locations the City of Whitewater press release mentions? Here they are: Beaver Dam, Beloit, Chippewa Falls, DeForest, Fitchburg, Green Bay, Howard, Janesville, Menomonie, Prescott, Stevens Point, Verona, West Bend, Westport and Wisconsin Rapids.

All black-tie locations, I’m sure.

6. Why is it so hard to speak in simple language (without describing everything in grandiose terms)? Whitewater has a high school and a university – is there no one in all the city who can teach officials to speak or write plainly?

City of Whitewater press release follows:

A Whitewater Site Joins the Elite List of Certified in Wisconsin Locations

Whitewater, Wis. February 28th, 2017 – The Whitewater University Technology Park joins 15 other locations statewide as a Certified in Wisconsin® site, allowing businesses and developers to have many questions answered and possible delays prevented prior to purchasing land for their growing companies.

The Certified in Wisconsin Program, offered in partnership by the Wisconsin Economic Development Corporation (WEDC) and Deloitte Consulting was created in 2012 in hopes to make the process easier in purchasing industrial “shovel ready” properties, 20 acres or larger in the state of Wisconsin. It has since seen 17 development projects completed or underway on 10 of the 16 sites, expecting to create more than 1,600 jobs and generate more than $315 million in capital investment when completed.

A site classified as Certified answers a wide range of concerns such as utility and infrastructure capacity, zoning property rights, environmental and geological factors, transportation access, and that the site is ready for industrial development. This information is already compiled and confirmed, allowing the decision process to be easier and less stressful for those in the market to build on a timeline.

The 35-acre site in Whitewater is located less than one mile from the University of Wisconsin-Whitewater. The new park will help to cultivate successful businesses and research by collaborating closely with UW-Whitewater and the City, serving as a foundation for a diversified and robust regional economy.

Lt. Governor, Rebecca Kleefisch and UW-W Chancellor Beverly Kopper have both spoken on behalf of the new site and discussed the positive opportunities that a partnership may burgeon between the university and the newly certified Whitewater University Technology Park.

“I know that property managers searching for industrial land want to minimize their risks,” says Whitewater Community Development Authority Chairman, Jeffery Knight. “They can be assured that when they look at Whitewater there is certainty, and what they get is the best the state has to offer”.

Whitewater will also have an ad in the Site Selection Magazine with details about the site and be included in the state database which allows site selectors to search for desired sites that meet their criteria in a fast and simple fashion.

To learn more about the Whitewater University Technology Park and other “shovel-ready” Wisconsin destinations, visit www.inwisconsin.com.

Via http://www.whitewater-wi.gov/residents/recent-news/3265-a-whitewater-site-joins-the-elite-list-of-certified-in-wisconsin-locations.

‘WEDC has been a disaster from the get-go’

After years of defending the Wisconsin Economic Development Corporation, one newspaper (out of several in the area) finally concedes the obvious:  ‘WEDC has been a disaster from the get-go.’

See, from 11.28.15, http://www.gazettextra.com/20151128/our_views_consider_two_steps_for_salvaging_state8217s_job_creation_agency, subscription req’d.

Yes, it has been a disaster, as politicized intervention in the economy, to the benefit of one’s well-fed, white-collar executive friends, will prove to be.

Only eighteen months ago, when it should have been clear to a properly read man or woman that WEDC was conceptually wrong, Whitewater’s leading officials touted a second round of WEDC funding as though it were manna from God:

“For us to have gone through that first cycle so quickly means a lot of jobs and new entrepreneur start-ups here in Whitewater, including here in the Innovation Center,” he said. “This is a recognition of a great success story. They have invested in us a second time. Our job now is to drive that to even greater success.”

– Jeff Knight, Whitewater CDA Chairman

“I am selfish,” he said. “The reason I am selfish is that I want Whitewater to be a better city and our university to be a better place. Part of what we do is try to make this a better place to live, work, play and learn. I think that is very important. For the university, my selfish thing is that I want to keep the professors here, and keep our graduates here, and whatever we can do to make that happen, we need to do.”

– Richard Telfer, Chancellor, UW-Whitewater

It feels a bit like déjà vu to be standing here before you all today,” Clapper continued. “It’s been a little over a year since our first event; today, we are celebrating the start of round two and the first grants of that round….”

“In the physical sciences, a catalyst is defined as any substance that works to accelerate a chemical reaction,” Clapper explained. “Without the help of a catalyst, the amount of energy needed to spark a particular reaction is much greater. When a catalyst is present, the energy required for the reaction is reduced, making the reaction happen more efficiently. Without the help of a catalyst, chemical reactions might never occur or take a significantly longer period of time to react.

– Cameron Clapper, Whitewater City Manager

See, from 6.9.14,
http://www.dailyunion.com/news/article_c8e49416-efe6-11e3-b1b0-0017a43b2370.html.

Knight speaks in empty platitudes, Telfer should have stopped after his first three words, and Clapper’s idea of chemistry is more like alchemy.

From the beginning, this was an empty ideology, a Third-World-style cronyism.

Whitewater deserves better.

Boo! Scariest Things in Whitewater, 2015



Here’s the ninth annual FREE WHITEWATER list of the scariest things in Whitewater for 2015. The 2007, 2008, 2009, 2010, 2011, 2012, 2013, and 2014 editions are available for comparison.

The list runs in reverse order, from mildly frightening to truly scary.

10. The Coming Ferret Invasion. Alternative title: The Unprepared Will Be Doomed.  Earlier this year, I predicted that Whitewater would experience a massive invasion of ferrets.  Why?  Because I correctly guessed that New York City would not lift its ban on ferret ownership in that city.  In consequence, the aggrieved, hidden ferrets of the Big Apple are sure to decamp for ferret another location.

Whitewater, of course.

In my estimation, they were supposed to be here by mid-October, but perhaps they’re walking more slowly than I’d calculated.

In any event, there’s a way to protect ordinary, decent residents from the rodent takeover.  (It’s mistaken to say that this website does not offer solutions to problems.  It often does.  I would also
remind officials of Whitewater that the easiest way to avoid problems is not to take actions that cause problems.)

Here’s how to protect Whitewater against thousands of invading ferrets.  First, find a city official who has time on his hands.  That’s the easy part. Second, station that official miles from Whitewater, in a rural location between here and the ferrets’ path.  Third, as these small, voracious mammals approach, it will be the official’s job to associate a picture with food, happiness, etc., in the ferrets’ minds. That way, they will seek the location in the picture, and avoid residents’ homes and businesses.  The entire advancing horde will congregate only at the location depicted in the photograph.

I’ve just the place in mind:

WWMB

Problem solved.

9. Key People.  I heard a presentation recently where the presenter tried to reassure others that she would seek the input of key people.  There are no key people – at least not in a way that makes it worth using the term.  There are only key ideas.  All the rest is an attempt at flattery or an expression of insecurity.

A group of supposedly key people is no match for one ordinary man or woman with a key idea.

8. One’s Own Words.  They must be scary; one hears them so seldom.  There are a few who think that somehow they’re better off relying on poorly written and poorly read publications than speaking and writing on their own.   That’s a mistake.  Servile papers and websites will not prove enough, anymore; the readership dynamic in this city shifted irreversibly against their publications.

(Actual traffic measurements of various publications are nothing like how insiders or publishers want to portray them; realistic measurements show how far insiders’ publications have declined or stagnated, and how much others have gained.  One can be very confident about the future in this regard.)

Talented people – including many officials individually – are simply throwing away their opportunities when they rely on publications markedly inferior to their own abilities.

7. Potholes.  They must be scary, because we’re avoiding them, and spending more on big projects than we’d need for simple street repair.

6. Gaps.  The greatest republic in human history (ours) grew in liberty and prosperity though careful examination of projects and ideas.  We did not develop word-class technologies by believing ‘close is good enough’ on engineering or fiscal projects.  When, however, someone asks that American standards be applied to Whitewater’s projects, officials whine that identifying gaps is unfair, nitpicking, etc.

In what society do they think they live, for goodness’ sake?

America is great, in significant part, because she – unlike foul Third World autocracies, for example – expects high standards from her leaders and their proposals.

5. Open Government & Temporary Amnesia. Every public body has a website, on which they publish every big boast, but somehow these same officials can’t seem to remember how to post key public documents prominently.  They seem to forget, but only temporarily and selectively.

4. WEDC money.  Not just worthless – it is – but worse: a diversion of resources from far greater needs.  The many poor in this city get nothing from this money.

warg

 

3. Data.  Presenting scores in a realistic context is harder for Whitewater’s school administrators than facing a pack of savage wargs.

2. Filth, Scum, and the Flimsy Scheme to Bring Them to the City.  I’ve a series about this, in WHEN GREEN TURNS BROWN.  There’s a burn-the-village-to-save it quality to waste importation as a means of revenue.  (And yet, the sadness here is that the entire digester-energy project was unnecessary, and the obloquy it brings being wholly deserved for being unforced.)

1. The Ethical Indifference of Act Utilitarianism. Some of the large public institutions of this city show time and again that they care more about their reputations – and that means the reputations of their leaders – than the health and safety of their ordinary members.

The worst example of this has been the repeated downplaying of violent assaults against women on campus while touting accomplishments that cannot, ethically, matter as much as those injuries. These have been self-protective, morally empty, and ultimately futile attempts at diversion and subject-changing.

A climate like this has invited and will invite further tragedies; the worst of this, sadly, surely is not over.

Other officials who allow subject-changing are, themselves, culpable of a supportive wrong.  See, An Open Note to Leaders of the Municipal Government, the School District, and UW-Whitewater.  It’s right and fair that officials who aid in diversionary conversations should be called out directly & specifically when they make that attempt.

For it all, we’ll get to a better city, consigning these ways to the dustbin.

There’s the 2015 list.  We’re more than able to overcome these problems, for a stronger community.

Best wishes to all for a Happy Halloween.

Business v. Free Markets

Over at Cato, David Boaz writes about The Divide between Pro-Market and Pro-Business. (I’ve also linked to Boaz’s post at my libertarian website, Daily Adams.)

Boaz observes that, too often, business (especially big business) is an opponent of free markets:

In 2014 big business opposed several of the most free-market members of Congress, and even a Ron Paul-aligned Georgia legislator who opposed taxpayer funding for the Atlanta Braves.

The U.S. chamber jumped into a Republican primary in Grand Rapids, Mich., to try to take down Rep. Justin Amash, probably the most pro-free-enterprise and most libertarian member of Congress. Free-market groups, including the Club for Growth, Freedomworks and Americans for Prosperity, strongly backed Mr. Amash.

And now the chamber plans to spend up to $100 million on the 2016 campaign. Roll Call, a Capitol Hill newspaper, reports, “Some of business’ top targets in 2016 will be right-wing, tea party candidates, the types that have bucked the corporate agenda in Congress by supporting government shutdowns, opposing an immigration overhaul and attempting to close the Export-Import Bank.” Politico adds a highway bill to big business’ list of grievances against fiscal conservatives.

This clash between pro-market and pro-business is an old one. Adam Smith wrote “The Wealth of Nations” to denounce mercantilism, the crony capitalism of his day. Milton Friedman said at a 1998 conference: “There’s a common misconception that people who are in favor of a free market are also in favor of everything that big business does. Nothing could be further from the truth.”

Locally, which side would one choose, in a contest between (a) Smith, Hayek, & Friedman on one side, and (b) on the other side the economic manipulations of the WEDC,  UW-Whitewater chancellor, Whitewater city manager, Community Development Authority, and (with some of the same ‘development’ gurus) the Greater Whitewater Committee business lobby?

Honest to goodness, that’s no choice at all.

When one contends in support of free markets, doing the best one can to understand, apply, and defend the arguments of Smith, Hayek, Friedman, et al., one embraces a tradition incomparably superior to the crude, deceptive, and ineffectual manipulation of the economy to the benefit of a few, favored businesses.

One can be confident about this not because there’s anything special about oneself (in my case there certainly isn’t), but because the tradition of which one is a proponent is vastly better than the views of those on the other side.

A strong tradition uplifts its advocates; a weak tradition diminishes its adherents.  Personality doesn’t matter more than sound principle; sound principle creates the world in which personality, of whatever type, may be freely expressed and enjoyed.

 

 

WEDC Spends More, Produces Less

It should come as no surprise that the Wisconsin Economic Development Corporation’s millions in taxpayer handouts to well-fed executives and political cronies are producing less with each successive spending spree:

The state’s flagship job-creation agency handed out nearly $90 million more in economic development awards last year than the previous year, yet those awards are expected to create or retain almost 6,000 fewer jobs and result in $400 million less in capital investment.

Most of the additional award funding resulted from a historic rehabilitation tax credit that Gov. Scott Walker and the Legislature expanded in 2013. The agency gave out $2.9 million in 2013-14, but that jumped to $78.1 million last year.

Even without the historic credits, total economic development awards increased $13.5 million, while promised job creation and capital investment dropped….

See, AGENCY HANDED OUT $90 MILLION MORE LAST YEAR: WEDC awards increase as job creation numbers fall @ State Journal.

At the same time, Wisconsin lags America in job creation:

Wisconsin ranked 30th overall in the nation in private-sector job creation during the 12 months ending in March, according to data released Thursday.

Wisconsin reported a 1.72% increase in private-sector jobs for that period, compared with the previous 12 months, according to employment numbers released by the U.S. Bureau of Labor Statistics. The state added 39,624 jobs.

The state’s performance compares with a 2.4% increase for the nation — continuing Wisconsin’s historic lag in job creation.

We’re spending more, but producing less for it, and still underperforming the national average.

Three other key points:

1. As with tens of millions in state credits for Kohl’s, some of the jobs created needn’t last long to be counted. Supposed job-creation claims are often sketchy and temporary.

2. There’s now a flood of statewide reporting about WEDC’s failures. That wave of inquiries & reporting isn’t close to being done.

3. Even after results of those inquiries are published, there’s a significant issue of how local development agencies or city governments are spending public money, what they’re reporting as ‘job creation,’ and how loans are either unpaid or converted into grants so that they needn’t be repaid. Several cities or agencies in Wisconsin have embraced WEDC more firmly than others. Whitewater’s Community Development Authority and city government are among them.

Most of these communities have proceeded with little more than economic-justification-by-press-release. Actual evidence of job creation is either absent or flimsy. In Whitewater, the CDA truly looks more like a third-tier public-relations effort than an actual community development agency. In this regard, Whitewater is probably at the forefront of the WEDC wave: headlines, happy insiders, and exaggerated claims.

Months of statewide examinations into WEDC will inexorably lead to examinations of local agencies that have embraced the WEDC model most warmly.

The Weakness of Sugar Cubes

When conditions are dry, sugar cubes are fairly sturdy. When placed in coffee, they don’t last long.

Cronyism is like this – it does well in the dry jar of municipal officials, insiders, press-toads, big-business lobbyists, and their lightheaded cheerleaders. In the bracing coffee of careful analysis, sound economics, and impartial observation it dissolves quickly enough.

What’s happened to the WEDC statewide – it’s a disgrace that no insiders’ flickering hopes can overcome – should be a warning for local cronyism in Whitewater.  It’s true that some men have devoted their political careers to these kinds of projects. No matter: their work has been profligate and selfish, their hopes for a positive legacy are hopes in vain. Whitewater’s tiny versions of statewide failures have no political future except the ashcan.

It’s unlikely that men devoted to these projects will change their tune; they’re more likely to play the same off-key score with even greater intensity. Associating with their own kind, they can’t or won’t imagine alternatives to their way.

(Even as recently as three years ago, their ideas must have seemed, to them, winning ones.  That was never true, of course.  They should have read more of history, and less of their own grandiose press releases.)

Still, nothing of their efforts will be sufficient.

The future will write the history of the present; that history will be favorable to many, but dismissive or contemptuous of these projects.

There are years yet ahead, but the outcome for cronyism in Whitewater is no better than a sugar cube’s chances in a mug of Kona.

What City Officials and the Press Haven’t Told You About the HyPro Layoffs

Updated, 9.9.15, 2 PM, and bumped forward from original 9.8.15 post date. I’m always eager for more discussion about WEDC –

To reconcile the figures of $1,300,000 and $262,000: There are differences in the dollar amounts of tax credits depending on whether one considers the maximum authorized or the amount HyPro has so far taken.

In 2013, HyPro had a maximum tax-credit authorization of over a million dollars ($1,300,00). The company used around $262,000 of that maximum. (The Legislative Fiscal Bureau report below lists legal maximums in Economic Development Tax Credit — Maximum Total Tax Credit Limit.)

That maximum, by the way, assumed 80 jobs created for $1.3 million in tax credits, or $16,250 per job.

In the clip below, WKOW reports that HyPro so far took over $262,000 in credits, and created just two jobs.

The tax credits used were actually 8x less efficient than WEDC estimated.

The WEDC’s own records indicate that HyPro created jobs at the price of over $131,000 per job.  

There should have been no tax credits for this employer; everything received should be paid back.

WKOW 27: Madison, WI Breaking News, Weather and Sports

Original post, 9.8.15:

Local newspapers have reported that HyPro is laying off over sixty workers at its Whitewater building. Those workers will be out of jobs by early November.  

What city officials and local newspapers haven’t mentioned is that only two years ago, HyPro received $1,300,000 in tax credit [authorization] from the Wisconsin Economic Development Corporation.  

One-million, three-hundred thousand in tax credits.

See, from the Legislative Fiscal Bureau,  Economic Development Tax Credit — Maximum Total Tax Credit Limit (General Fund Taxes — Income and Franchise Taxes), page 16.

Commenting on these layoffs, Whitewater City Manager Clapper is quoted in the Daily Union observing that that “[w]e’re sad to see them go, but we recognize this happens in the life cycle of a business.” See, HyPro Inc. closing Whitewater plant @ http://www.dailyunion.com/news/article_d83ec8d2-5291-11e5-a5a7-1fb4265234ef.html.  

If that should be so, and these developments occur in the life cycle of a business, then why would Wisconsin offer $1,300,000 in tax credits to that business?  Either that money was futile from the beginning or it’s not true that layoffs like this simply happen in the “life cycle of a business.”  

Proponents of the WEDC cite its funding selectively: big talk when the grants, loans, or credits are issued, but then silence when those grants, loans, or credits prove ineffectual.  

(Rep. Jorgensen is quoted in the same story alluding to the failure of tax credits as an incentive, although his printed remarks don’t say directly that HyPro received tax credits, or in what amount. He’s right to be critical of the WEDC; it’s almost a measure of reasonableness.)

City Manager Clapper has been a supporter of the WEDC, likening its work to a natural science like chemistry.  

WEDC funding is nothing like a natural science; it’s akin to alchemy, not chemistry.

HyPro’s workers deserved better than the WEDC.

The New Crony Capitalist

Gov. Scott Walker on Thursday appointed banking executive and frequent GOP donor Mark Hogan to lead the state’s troubled job-creation agency [WEDC]…..

M&I Bank faced its own problems several years ago with bad loans and a crashing stock price and ended up being absorbed by BMO Harris of Canada in 2011.

M&I loan losses during the real estate bust — concentrated heavily in Arizona and Florida — totaled $4.8 billion across its portfolio from Dec. 31, 2007, through December 2010, according to a Milwaukee Journal Sentinel review.

Hogan has given $24,125 to Walker’s campaigns for governor since 2009, state records show.

He gave another $10,000 this year to the super PAC backing Walker’s presidential run. His son, Patrick, has worked for Walker’s office and campaign.

Walker spokeswoman Laurel Patrick said the contributions and Hogan’s son’s work for the campaign played no role in Hogan’s appointment.

Via Scott Walker appoints banking executive to lead state jobs agency @ JSOnline.

Cross-posted at Daily Wisconsin.

The WEDC Taints Walker (and local officials even more)

The WEDC is a state and national story that has local implications.

Some of the toughest political battles are intra-party ones: Republicans or Democrats fighting against fellow party members for their respective primary nominations.  For rival Republicans, Gov. Walker’s creation of the Wisconsin Economic Development Corporation will offer a legitimate and compelling line of attack against his candidacy.  (The former Wisconsin Department of Commerce was no great shakes; the WEDC is worse. )

Republicans like Gov. Walker, but there’s more than one national GOP candidate who is well-liked within the party.  In fact, they’ve a large field of candidates who, regardless of relative standing in the polls, are well-regarded among the party faithful.    That’s Gov. Walker’s self-created problem with the WEDC: it’s a bad idea that other Republicans will legitimately use as a point against his candidacy.

Peter Suderman (himself a libertarian, not a Republican) makes the argument that, if necessary, others will make along the way to the GOP national convention next year:

Walker’s jobs agency is better understood as a model of what not to do. The persistent struggles of his perpetually mismanaged, publicly funded business development facilitator highlight just how inept government-designed agencies can be at spending taxpayer money to create jobs, and the perils of a politically driven, get-something-done approach to economic growth. And, in combination with his flawed arguments for the stadium deal, they offer a stark reminder of the sort of dismal results that can occur when politically connected corporate interests team up with politicians under the banner of happy economic boosterism: Businesses benefit, and so do politicians—but only at taxpayers’ expense. Despite Walker’s campaign-trail claims to be a champion for the little guy, what he’s inadvertently shown in Wisconsin is how the special interests win.

SeeScott Walker, Crony Capitalist: The Wisconsin governor has a long record of doling out corporate welfare to political allies @ Politico.

The WEDC is also a local story, as so many political officials, moribund print publications, and the self-described ‘Greater Whitewater Committee,’ a 501(c)(6) business lobby entwined with the CDA, erroneously believe that WEDC-like projects and spending will uplift the community and advance the reputations of those involved.

It’s hard to believe that these few local men could have been so ignorant and foolish, but they have been. They’ve committed to a selfish and sham policy that has not the slightest chance of genuine local gains. This banana-republic economics has nothing behind it.

Gov. Walker is far more capable that any local official in the city; our town squires have no chance whatever of achieving what he has (and indeed, could) not.

The full measure of cheerleading from Whitewater’s reflexive flacks, and their dutiful friends in the press or online, is useless to rehabilitate, let alone justify, years of economic error.

On neither Left nor Right, from among the many fine American economists designated Nobel laureates, for example, there’s not one – not one – who would defend the white-collar cronyism of the Whitewater CDA, Tech Park Board, city manager, or like-minded print & online publications.

By contrast, the most insightful thinkers (among them, Hayek, Friedman, Coase, Buchanan, Krugman, Stiglitz) – of whatever ideological position – would be united in rejecting anything like these local efforts.

A critic of cronyism has centuries of learning in support of his or her criticism; a defender, however crafty or insatiable in self-promotion, has not a single, worthy argument on which to rely.

That’s why efforts in support of these development schemes are destined only to rust, rot, and ruin.

The case against this cronyism, by contrast, is incomparably stronger and imperishable.

WEDC Leader Quits: “It is time for me to return to my previous retired status”

Having presided over the national embarrassment that is the Wisconsin Economic Development Corporation, WEDC leader Reed Hall now heads for the exit:  

The state’s top economic development agency, stung by a series of scathing audits, media reports about questionable loans and accusations of mismanagement, is once again seeking new leadership.

After three years steering Gov. Scott Walker’s flagship job-creation agency through troubled waters, Reed Hall announced Tuesday he is retiring as Wisconsin Economic Development Corp. CEO on Sept. 25.

In a statement, Hall thanked Walker, the WEDC board, other cabinet secretaries and agency staff in saying “it is time for me to return to my previous retired status.”

Via WEDC CEO Reed Hall to leave troubled agency on Sept. 25 @ Wisconsin State Journal. 

The best timing for Hall would have been to remain retired in the first place, but better late than never to depart.  

The former Department of Commerce was a mess; the WEDC has been even worse.  

Locally, there were a few development gurus in at the Community Development Authority who thought that WEDC support would prove both valuable and a public-relations boon to Whitewater.

Here we are, these years later, and all their proud claims are proved false: the WEDC has been – so very predictably – a state-funded failure. 

When the WEDC, itself, will be shut down I cannot say, and in the meantime it’s sure to do more damage.  
The local gentlemen who believed in it, against sound understanding, have espoused a sham economics.  

Almost any sensible person, of Right or Left, would have crafted something better than this.

Someday, some of them will.  

Previously:  FW posts about WEDC negligence and waste.

The State’s WEDC and Whitewater’s Facsimiles

Ongoing revelations about the Wisconsin Economic Development Corporation are a double concern: they’re stories of statewide malfeasance, and those revelations beg the question of how local officials in Whitewater are managing their own pools of public money.

First, the latest stories (it’s a steady stream) of state-level error, waste, and negligence:

Madison— Failing to run adequate checks, Wisconsin’s flagship jobs agency gave two awards worth more than $1.2 million to a financially troubled De Pere businessman who had not disclosed his problems to the state, a Milwaukee Journal Sentinel review has found.

Despite those omissions in 2011 and 2012, Gov. Scott Walker’s administration kept working with Ron Van Den Heuvel and his clean energy company, Green Box, into 2014, state records show.

There is no record of the Wisconsin Economic Development Corp. notifying the city of De Pere about the company’s money troubles even though Green Box was working with the city in an unsuccessful attempt to get tax-exempt bonds — in part to repay the state’s soured loan.

It’s the second case disclosed in recent weeks in which WEDC failed to catch omissions by businesses about their troubled finances and then continued to work with them….

Via Jobs agencies loaned $1.2 million to businessman with troubled finances.

Yet make no mistake – even after being thrust into the spotlight WEDC is pressing on in issuing unmonitored awards. Just this past Monday [7.20.15] – four days ago – Walker took a break from his campaign to drop in on the agency’s quarterly board meeting. While that $500,000 loan [for William Minahan] was on the public agenda and one board member openly wondered why there hadn’t been “a giant red flag to cease and desist all activities,” the agency’s staff quietly presented a different proposal: to cut the number of tax credits [that] the agency audits from a required 100% (which it has never managed to comply with), to just 25%.

Via Brian Murphy @ Talking Points Memo

Second, inevitable concerns arise about local distributions after a stream of state-level reports: should a reasonable man or woman believe without careful inquiry & verification that state officials have managed these kinds of public funds poorly but that local officials (the CDA, Tech Park Board, etc.) have performed better? 

Put another way: Does anyone think that state officials are less competent and diligent than their local counterparts?

I don’t know.

At the very least, Whitewater – her city government, her Community Development Authority, all with pools of taxpayer money to dole to so-called startups, etc. – the officials responsible owe as much of an accounting of actual performance as any state official. 

In a well-ordered community, these local distributions would be periodically and independently audited. 

Libertarians (and others of different views) know well that any number of special interests – business, labor, political – will seek to ensconce themselves into government positions, directing government work to their own selfish ends. 

One would prefer a community requiring no political concerns.  A serene place like that would perhaps be a world only of cat videos and puzzles; we do not live in such a place. 

Grants and loans of public money to white-collar firms, an addiction to tax incremental financing, sketchy claims of job creation, expensive buildings at public expense, public men who present themselves as development gurus, the selling of public property to business interests too cheaply – this gutter economics infects the CDA and other public agencies in Whitewater. 

In a city with so many who are poor, these distributions to white-collar professionals have been utterly ineffectual for the many, and useful only to a few (for their immediate gain or in scrapbook headlines).

In any event, no one owes these few their claims on faith alone; they’ve wasted too much already in this city. 

Perhaps it is enough – Dieu aidant – that some are naturally inclined to review, first from curiosity and thereafter in root-and-branch scrutiny. 

Business Dependency in Whitewater

For residents facing poverty, one would hope for, and understand, a combination of private and public relief.  Churches and other private organizations do much in this effort; government expenditures for the genuinely needy amount to a small portion of all government spending. Support of this kind is a worthy effort.

Whitewater also has two large public educational institutions, both of which by their nature as public entities receive significant taxpayer support.  Neither the Whitewater Unified School District nor UW-Whitewater could go on without public funding, and as they’re public institutions, that’s hardly surprising.

Look beyond that, though, and one finds a city that talks ceaseless about private development, but in saying so really seeks nothing so much as public money.  What’s an economic development specialist for city government?  It’s a publicly-paid man looking to use public money to manipulate the local economy in ways suited to other public officials.

What’s the Community Development Authority save mostly a collection of present or former public officials, using public money taxed from private citizens, to direct business development in ways those public men find suitable?  (Some of those same men simultaneously hold positions as leaders of a local 501(c)(6) business lobby, looking to influence legislation and public affairs in ways suitable to their organization.)

Even the small downtown merchants’ organization, having been in operation for years, relies on city funding and state guidance (from WEDC, the Wisconsin Economic Development Corporation) to carry on.  Both practically and ethically, it would be better to take nothing than to take anything from WEDC.   They’ve wasted this state’s money, and disgraced Wisconsin before all America, in the embrace of cronyism and sham economics. 

We’d be better off on our own, however hard that might initially seem. 

The finest song from a WEDC official is as discordant as an ape’s screeching.  Worse, really: the ape vocalizes in a way natural to it; the WEDC man stoops below ordinary human understanding, producing something beneath our society’s capabilities. 

Whitewater is lousy with public officials who talk about business growth but use public funds, derived from private taxpayers less well off than the officials, so that those few can play the role of financiers and developers on the public’s tab. 

That model has failed us, and will continue to do so.   That model has never been broadly believed, and is less persuasive with each successive year. 

In this, at least, there’s progress: these public men are almost out of ideas, having greatly depleted their inventory of shoddy proposals.

WEDC Backed Use of Public Funds to Pay Off Luxury Cars

There is more than one person in this town who has insisted, more than once, that the Wisconsin Economic Development Corporation has been good for Wisconsin, and good for Whitewater. 

It’s been, instead, a failure and a disgrace.

At a time when many communities did not have enough money for vital needs, WEDC was trying to find money for a firm to pay off its Maserati lease. 

All the talk from a few local men and women describing WEDC as a positive force has been evidence of poor judgment and contempt for sound reasoning.   All the plaques and certificates that a few local men and women have received from WEDC are, themselves, pitiful badges of poor judgment and contempt for sound reasoning.  

Consider the latest on the Wisconsin Economic Development Corporation:

Madison — Officials at Wisconsin’s top jobs agency sought federal tax incentives for a failing Milwaukee business for a year after being told that the owner was seeking the money to pay off business debts such as the leases on luxury cars.

Officials at the Wisconsin Economic Development Corp. worked to get that federal help for Building Committee Inc. even though a $500,000 loan it had given to the company had gone sour within months and the owner of the firm had provided false information to the state.

Top officials in Gov. Scott Walker’s administration pushed to get Building Committee the initial loan and worked to get more for the company. But the jobs agency had to pass on giving the company more funding from state taxpayers after finding numerous problems with the firm and being told that owner Bill Minahan was promising some of this second proposed loan to pay a leasing debt on cars such as a 2010 Maserati and a 2011 Nissan 370Z luxury sports car.

Information about state officials’ long-running attempts to find help for the troubled company are coming to light just as the Republican governor prepares to announce his bid for the presidency next month. Walker said he didn’t think his jobs agency had cut any corners.

WEDC officials’ alarm didn’t stop them from persuading three counties to allocate $4.5 million for Building Committee from a federal program meant to spur energy conservation, according to hundreds of pages of emails and other documents recently released under the state’s open records law. Those federal incentives were never used because, even with the subsidies in hand, Building Committee was unable to get the financial backing it needed to proceed with its project.

WEDC officials never told those counties about the concerns that had made them email each other with statements like “Yikes!” and “I can’t believe we are actually going to do this” about earlier proposed help for Building Committee….

See, WEDC backed firm after learning state money was for luxury car debts @ JSOnline

$124,000,000 Without Underwriters’ Review 

In its first 15 months, a jobs agency created by Wisconsin Gov. Scott Walker gave businesses 26 awards worth $124.3 million in all without a formal review of the deals by underwriters.

The Wisconsin Economic Development Corp. is reporting to its board on the awards made between July 2011 and June 2013 after reports that the agency in September 2011 gave an unvetted, unsecured $500,000 loan from taxpayers to Building Committee Inc., a now-defunct company whose owner had been taken to court a year earlier for not paying taxes.

The records also confirmed for the first time that the prominent lobbyists for Building Committee included Gary George, a former Democratic state senator who was convicted in 2004 of one felony count of conspiring to defraud the government….

Via Jobs agency gave loans, credits to firms without financial review @ JSOnline.

Cross-posted @ Daily Wisconsin.

Another Six-Figure WEDC Loan to an Unworthy Applicant

Across the state, revelation after revelation shows that the Wisconsin Economic Development Corporation has been a mistake, a wasteful political endeavor contrary to sound economics. Locally, support for the WEDC, from Whitewater’s Community Development Authority, Chancellor Richard Telfer, City Manager Cameron Clapper, etc., shows not only that they’re ignorant of sound economics, but so politically inept that they’d pick the WEDC as the vehicle through which they’d assert their self-professed sophistication.

Initial public-relations efforts on behalf of the WEDC (whether flashy from the state or dull from local officials) now look like nothing so much as a coat of paint on a brothel.

Months after Gov. Scott Walker’s flagship job-creation agency was formed in 2011, it gave a forgivable $686,000 taxpayer loan to a Sheboygan company planning to build a combination helicopter and corporate jet — even though the company had no experience in aircraft manufacturing and underwriters hadn’t reviewed the company’s finances in years.

But Morgan Aircraft hasn’t created the 340 jobs it promised by the end of 2015, did not make the promised $105 million investment and is not expected to repay the loan….

See, $700,000 WEDC loan to aviation company unpaid @ State Journal.

12 Points on the WEDC’s $500,000 Loan for Campaign Contributor’s Failing (and Lying) Company

Seemingly, all Wisconsin is discussing a $500,000 Wisconsin Economic Development Corporation loan to a failing company of a Walker political contributor. 

Here’s a summary of what’s known so far.

1.  The loan was to Building Committee Inc. (BCI), a business owned by William Minahan, a Walker political contributor (and Minahan made contributions to other campaigns, of both major parties).  It was meant to allow BCI to renovate bank or credit union buildings for “energy efficiency.”

2.  The 2011 loan to BCI created no jobs. 

3.  It’s uncertain where the money went.

4.  It’s not been repaid, and the state is suing BCI.

5.  Then-Secretary of Administration Mike Huebsch wanted the WEDC to extend a forgivable loan over eight times as large ($4,300,000).

6.  The WEDC lent BCI the half-million, aware that even that large-but-reduced amount was “fairly risky.”

7.  No other state or federal programs were willing to lend BCI anything.

8.  The original underwriting documents (different from a loan application) for the BCI loan cannot be found. 

9.  State officials never conducted a loan review.

10. BCI failed to disclose lawsuits pending against it, although a loan application required that they be disclosed. 

11.  BCI listed business partners on the energy efficiency project who received no funds and did almost no work. 

See, Top Scott Walker aides pushed for questionable $500,000 WEDC loan @ State Journal.

12. Some of Minahan’s employees contend he asked them to submit political contributions to candidates (in other states) that he designated, and that Minahan promised to reimburse them.

See, Company obtained loan from WEDC, unsuccessful elsewhere @ State Journal.

Below is a selection from FREE WHITEWATER on the WEDC.  There’s also a category link useful for following updates: WEDC.

WEDC Slowly Crumbles

image
WEDC ‘CEO’ Reed Hall Looks Downcast. 
You Would, Too, If You’d Disgraced All Wisconsin Yet Again. 
AP Photo.

On a Friday afternoon, there’s breaking news across Wisconsin. Having rejected free markets in capital, labor, and goods for cronyism and ineffectual manipulation of the economy, the Wisconsin Economic Development Corporation now slowly crumbles:

Scott Walker calls for elimination of state economic development loans

In the wake of another scathing audit of his flagship job-creation agency, Gov. Scott Walker called on lawmakers Friday to eliminate all loans the agency provides to encourage business development.

He also called for scrapping a proposed $55 million revolving loan fund for the agency included in his budget and using the money for education and worker training programs….

Should one be surprised?  Years of sham economics, lies about progress and development, and of job creation have met their match in audit after audit after audit.  So many of these millions went to the undeserving, bloated friends of insiders. 

To each and every person in this city who touted the work of the WEDC, one can confidently say this: you recklessly abandoned America’s deep tradition of reason and knowledge, and her advanced economic understanding, for hucksterism, for nothing but a low ideology common in banana republics and other degraded places.

If an ape screeched, hooted, and howled along Main Street, on that occasion Whitewater would have heard wiser and more melodious remarks than anything this city’s officials have ever said in defense of the WEDC.

There is much more work to be done, about this agency and in opposition to its unctuous defenders, but today is a good day for reason, learning, and fairness.

Reed Hall’s Inauspicious Choices

Reed Hall, who ‘boldly,’ ‘innovatively’ uses the private title of CEO for an organization that runs on public money, has written two defenses to his agency’s latest audit fiasco.  The first of those appears as a few platitudinous paragraphs online (‘WEDC takes bold, innovative approach to economic development,’ subscription req’d,  and the second as a reply to the Legislative Audit Bureau’s one-hundred-sixteen-page audit from this month.)

Consider how Hall touts his agency’s accomplishments, with the same “expected to create or retain” language that Republicans criticized ceaselessly (and rightly) in Pres. Obama’s stimulus package.  Imprecision and ambiguity were once a problem the GOP criticized.  Now, a sketchy phrase is at the center of how Hall describes the WEDC’s work.

Hall wants you to think that there’s been improvement in his agency’s performance, of course, but he deceptively hides the reason for better WEDC loan delinquency rates. 

Hall does this by mentioning a May 2013 audit and the May 2015 audit, while simultaneously omitting information from a September 2014 audit that undermines his claims of a legitimately lower delinquency rate.

First, what Hall hopes you’ll take at face value:

As a result of our efforts, our loan delinquency rate dropped from 2.7 percent in 2013 to 0.2 percent in 2014. The uncollectable loan balance declined from $5.5 million in 2013 to $1.3 million in 2014, and the percentage of performance reports that are late fell from 55 percent to 5.4 percent in two years.

Then, the truth he omits, as revealed in a September 2014 audit:

Of the $7.7 million decrease in troubled loans held by WEDC, the biggest chunk — $3.2 million — came from loans that were written off by WEDC because they were 90 days past due.

For the state to proceed with the collection process, those loans had to be transferred from WEDC to the Department of Administration. So by itself that change is just a bureaucratic shuffle, not a gain for taxpayers.

The audit didn’t examine what had happened to the loans after they went to the administration department.

The next biggest chunk of past due loans, worth $2.1 million, had their contracts rewritten by WEDC to delay repayment by the borrowers and $1.3 million in loans were forgiven by WEDC in whole or in part.

Hall gets better figures by concealing that the WEDC has shuffled loans to another agency and has simply written many other loans off.  

I’ll say there are two possibilities: Reed runs a multi-million-dollar, taxpayer-funded agency, yet is unable to count to three (skipping the second of three audits), or he knows that there have been three, but deceptively hopes you’ll remember only two.  

Dunce or deceiver? 

Hard to see how that’s an auspicious choice for Mr. Hall, no matter how bold and innovative he claims the WEDC to have been.