The Wisconsin Development Fund (WDF) consists of eight programs: (1) technology development grants and loans; (2) customized labor training grants and loans; (3) major economic development grants and loans; (4) Wisconsin trade project; (5) employe ownership assistance grants; (6) manufacturing assistance grants; (7) revolving loan fund capitalization grants; and (8) the rapid response fund. The WDF is funded through both a general purpose revenue (GPR) and a program revenue (PR) appropriation. The GPR appropriation is the primary source of funding for the WDF program.
The program revenue repayments appropriation was established to operate similar to a revolving loan fund. Amounts received from WDF loan repayments are credited to the repayments appropriation and these monies can be used to fund WDF grants and loans. The program revenue repayments appropriation is a continuing appropriation and, consequently, unappropriated and unexpended amounts remain in the appropriation balance and can be used to fund future grants and loans.
Under a provision of 1997 Wisconsin Act 27 (the 1997-99 biennial budget), the Department was authorized to provide financial assistance from the WDF to a nonprofit organization that provides assistance to organizations and individuals (Reggie White's Urban Hope Initiative). A total of $50,000 annually was required to be allocated to the project in 1997-98, 1998-99 and 1999-00. Commerce was required to enter into a memorandum of understanding with DOA that specified how Commerce could use the monies allocated for assistance. A grant of $100,000 was awarded in 1997-98 under this provision.
Act 27 also authorized the Department to provide loans from the WDF totaling not more than $1,200,000 for projects that included a pedestrian bridge. Loans could not be made for this purpose after January 1, 1999.
Joint Finance: Include provisions and, in addition:
a. Authorize Commerce to make grants from the Wisconsin Development Fund to municipalities that participate in the Main Street Program to fund revitalization and other activities related to participation in the program. The total annual amount of grants that could be made would be limited to $250,000 and Commerce wold be required to promulgate rules to administer the program.
b. Authorize the Department to make a grant of $100,000 for pedestrian enhancements to the city square in Menasha. A 100% local match would be required before this funding could be expended.
Assembly: Include Joint Finance provisions with the following modifications:
a. Require Commerce to provide $1 million in 1999-00 from the Wisconsin Development Fund GPR appropriation to the Wisconsin Housing and Economic Development Authority (WHEDA). Authorize WHEDA to utilize the funding for administrative expenses and start-up capital for a nonprofit, nonstock biotechnology development finance company to invest in new or existing biotechnology companies in Wisconsin.
b. Delete the Joint Finance provision that would authorize Commerce to make a grant of $100,000 in 1999-00 for pedestrian enhancements in the City of Menasha from the Wisconsin Development Fund and instead authorize the Department to make the grant from the community-based economic development program (CBED).
Senate: Modify Joint Finance provisions as follows:
a. Decrease annual funding for the Wisconsin Development Fund (WDF) by $1,000,000 GPR. Further, increase annual funding by $390,000 PR to reflect a reestimate of loan repayments available for awards in 1999-00. As a result, the annual amounts appropriated for the WDF would be $9,393,800 ($6,503,800 GPR and $2,890,000 PR) a $390,000 increase (4.3%) over base funding levels.
b. Create a Business Employes' Skills Training Program under the Wisconsin Development Fund (WDF) to provide $1 million annually in grants and loans to certain businesses to train employes. Commerce could make awards to a business if all of the following applied:
1. The business is located in Wisconsin and has 35 or fewer full-time employes or $2.5 million in gross annual income in the preceding year;
2. The business uses the funds to provide skills training or other education that are related to the needs of the business to current or prospective employes;
3. The business submits a plan to commerce detailing the proposed use of the funds and the Secretary of Commerce approves the plan;
4. The business enters into a written agreement with the Department that specifies the conditions for the use of financial assistance, including reporting, auditing and repayment requirements;
5. The business agrees in writing that, before providing training or other education to a current or prospective employe with the funds, the business will enter into a contract with the employe under which the business agrees to retain the employe and the employe agrees to work for the business for at least one year after the employe's training or education is completed;
6. The business agrees in writing to submit a report detailing how award proceeds were used within six months after spending the full amount of the proceeds.
The maximum award would be $10,000 of which one-half would be required to be a grant and one-half a loan. In making awards, the Department would be required to give preference to businesses in industries with severe labor shortages and to consult with DWD to determine those industries. Commerce would be required to award at least 30% of total awards to businesses in counties with populations under 100,000, unless an insufficient number of such businesses qualified. A separate program revenue appropriation for loan repayments would also be created.
c. Require Commerce to make an annual grant of up to $100,000 from the Wisconsin Development Fund (WDF) to the Wisconsin Procurement Institute (WPI) if certain conditions were met.
d. Authorize Commerce to make grants from the Wisconsin Development Fund (WDF) to municipalities and nonprofit organizations to fund costs related to conducting public retail markets. Require Commerce to promulgate rules to administer the program.
e. Require the Department of Commerce to provide an additional $250,000 GPR annually from the Wisconsin Development Fund (WDF) to the Southeast Wisconsin Technology Training Initiative.
Conference Committee/Legislature: Adopt the Joint Finance provisions with the following modifications:
a. Authorize Commerce to use up to $1 million in 1999-00 from the Wisconsin Development Fund (WDF) for administrative expenses and start-up capital for a nonprofit, nonstock biotechnology development finance company to invest in new or existing biotechnology companies in Wisconsin. Commerce would be required to organize and maintain a nonprofit, nonstock biotechnology development finance company to invest in new or existing biotechnology (technology relating to life sciences) companies in the state. The company would be prohibited from engaging in political activities. The finance company would be allowed to invest in eligible biotechnology companies by purchasing stock, convertible securities, evidences of indebtedness, warrants, subscriptions, partnership interests or membership interests. However, the finance company would be limited to a total investment in any one biotechnology company of $200,000 or 49% ownership, whichever was less.
The board of directors of the biotechnology development finance company would consist of nine members, including: (a) the Executive Director of WHEDA (or designee); (b) the Secretary of the Department of Commerce (or designee); (c) the Secretary of the Department of Administration (or designee); (d) the Executive Director of the Investment Board (or designee); (e) the President of the UW System (or designee); (f) the President of Forward Wisconsin, Inc. (or designee); and (g) one representative each of the state's biotechnology research community, biotechnology industry, and venture capital industry. Initially, the Governor would appoint the final three representatives for five-year terms. The company would specify in its bylaws a method of reappointing or filling vacancies for the three public members. The biotechnology development finance company would also be required to annually provide a report on its activities to the Governor and to the appropriate standing committees in the Legislature.
The biotechnology development finance company could invest in a biotechnology company if all of the following apply:
1. The biotechnology company has certified that the project plans conform to all applicable environmental, zoning, building, planning or sanitation laws;
2. There is a reasonable expectation that the biotechnology company will be successful;
3. Private industry has not provided sufficient capital required for the project;
4. Other investment in the project is unavailable in the traditional capital markets, or capital has been offered on terms that would preclude the success of the project;
5. The biotechnology company reports sufficient financial data about the project, which may include a periodic audit of the project's financial records, to the biotechnology development finance company;
6. The proceeds of the purchase will be used solely in connection with the costs of the project, which may include planning and design, land purchases, feasibility studies, equipment, and working capital, among other costs; and
7. The biotechnology company is able to manage its project responsibilities.
Commerce is required to enter into contract with the biotechnology company to make use of the company's services and to advise, assist and provide administrative services necessary to the biotechnology development finance company. Commerce could assign employes or contract with private or state agencies to perform administrative services.
b. Delete the Joint Finance provision that would authorize Commerce to make a grant of $100,000 in 1999-00 for pedestrian enhancements in the City of Menasha from the Wisconsin Development Fund and instead authorize the Department to make the grant from the community-based economic development program (CBED).
c. Require Commerce to make an annual grant of up to $100,000 from the Wisconsin Development Fund (WDF) to the Wisconsin Procurement Institute (WPI) if all of the following conditions are met:
1. The Wisconsin Procurement Institute uses the grant proceeds to further its efforts to secure federal government contracts and create jobs in the state.
2. The WPI submits a plan to Commerce for each grant detailing the proposed use of the grant and the Secretary of Commerce approves the plan.
3. The WPI enters into a written agreement with Commerce that specifies the conditions for use of the grant proceeds, including reporting and auditing requirements.
4. The WPI agrees in writing to submit to the Department, within six months after spending the full amount of the grant, a report detailing how the grant proceeds were used.
The WPI provides marketing, education and consulting services to state businesses.
d. Authorize Commerce to make grants from the Wisconsin Development Fund (WDF) to municipalities and nonprofit organizations to fund costs related to conducting public retail markets. Require Commerce to promulgate rules to administer the program.
e. Require the Department of Commerce to provide an additional $250,000 GPR annually from the Wisconsin Development Fund (WDF) to the Southeast Wisconsin Technology Training Initiative. In addition, require that the written agreement between the consortium and Department include a provision that requires 60% of the grant proceeds to be awarded to Racine County and 40% of the grant proceeds to be awarded to Kenosha County.
f. Require the Department of Commerce to make a loan of $1.5 million from the WDF to City Brewery in the City of La Crosse if all the following apply:
1. The proposed recipient submits a plan to the Department of Commerce detailing the proposed use of the loan and the Secretary of Commerce approves the loan;
2. The proposed recipient enters into a written agreement with the Department of Commerce that specifies the loan terms and conditions for use of the loan proceeds, including auditing and reporting requirements; and
3. The proposed recipient agrees in writing to submit to the Department of Commerce, within six months after spending the full amount of the loan, a report detailing how loan proceeds were used.
No loan proceeds could be paid under these provisions after June 30, 2001.
Under these provisions, total annual funding for the WDF would be $10,003,800 ($7,503,800 GPR and $2,500,000 PR).
Veto by Governor [B-18 thru B-21]: Veto provisions as follows: (a) delete authority to provide grants for Main Street Program municipalities and public retail markets; (b) limit the grant to the Wisconsin Procurement Institute to a one-time grant of $100,000; (c) delete the required grant of $1,000,000 in 1999-00 and authority for establishing and administering a biotechnology development company; (d) delete provisions that establish the total amount of the grant for the Racine-Kenosha consortium at $1,500,000 and that limit disbursements to $750,000 annually and request Commerce and the consortium to reach a financial assistance agreement that meets the fundamental goals of the Governor's initial proposal; and (e) delete the requirement that the loan to City Brewery in La Crosse be $1,500,000 and request Commerce to work with brewery owners to develop a financial assistance agreement that will ensure job creation and retention in La Crosse.
[Act 9 Sections: 196, 204, 2931 thru 2933, 2980m, 9110(4),(5),(6e)&(7bt)]
[Act 9 Vetoed Sections: 196, 204, 2937d, 2937f, 2980m, 2983c and 9110(5)&(7bt)]
9. WISCONSIN DEVELOPMENT FUND -- ADMINISTRATIVE PROVISIONS [LFB Paper 287]
Governor: Make the following modifications to Wisconsin Development Fund (WDF) administrative provisions:
a. Authorize the Department to charge the 1.5% loan origination fee on all WDF awards of $100,000 or more. The Department indicates that applying the loan origination fee to more WDF awards and reducing the threshold amount at which it would be imposed would have raised an additional $23,500 over the past year.
b. Authorize the Department to expend up to 1% of the moneys appropriated under the WDF GPR appropriation for (1) evaluations of proposed technical research projects that apply for technology development grants and loans; and (2) evaluation costs, collection costs, foreclosure costs and other costs, excluding staff salaries, that are associated with administering the WDF loan portfolio. Current law provisions, which give authority to the Development Finance Board to use this funding for certain evaluations and grants, would be deleted.
c. Change the definition of job used for the WDF to mean a position providing full-time equivalent employment.
The WDF currently consists of eight programs: (1) technology development grants and loans; (2) customized labor training grants and loans (CLT); (3) major economic development grants and loans (MED); (4) Wisconsin trade project; (5) employe ownership assistance grants; (6) manufacturing assessment grants; (7) revolving loan fund capitalization grants; and (8) rapid response fund loans. Commerce is authorized to charge a 1.5% loan origination fee on CLT and MED awards over $200,000. Fees are used to fund administrative expenses.
The Development Finance Board is currently authorized to expend or encumber up to 1% of the amount appropriated for the WDF GPR appropriation for: (1) evaluations of proposed technology development grant or loan projects; and (2) grants to small businesses for preparing proposals for the federal small business innovative research program. Under WDF provisions, a job is defined to mean a regular, nonseasonal full-time position in which an individual, as a condition of employment, is required to work at least 2,080 hours per year, including paid leave and holidays.
Joint Finance: Delete provision "a." lowering the award threshold for the origination fee. Rather, increase from 1.5% to 2.0%, the current origination fee that applies to MED and CLT grants and loans in excess of $200,000. Estimate additional revenues at $32,500 annually.
Senate: Delete Joint Finance provisions that would have increased, from 1.5% to 2.5%, the loan origination fee applied to Wisconsin Development Fund (WDF) major economic development and customized labor training grants and loans. Instead, restore the Governor's recommendation to apply the current 1.5% origination fee to most WDF grants and loans of $100,000 or more. This provision would reduce program revenues by $10,600 annually.
Conference Committee/Legislature: Include Joint Finance provisions.
[Act 9 Sections: 2985, 2993, 2996 and 2998]
10. WISCONSIN DEVELOPMENT FUND -- MANUFACTURING EXTENSION CENTER GRANTS [LFB Paper 286]
PR $2,000,000
Governor/Legislature: Repeal the manufacturing assistance grant program, including the manufacturing assessments, customized supplier training and technology transfer subprograms, and create a manufacturing extension center grant program under the Wisconsin Development Fund (WDF). The new manufacturing extension center grant program would provide grants to technology-based nonprofit organizations to provide support for manufacturing extension centers. A technology-based nonprofit organization would be defined as a nonprofit corporation as defined under state law or an organization that is exempt from federal taxation under the federal Internal Revenue Code (IRC) and that has a mission to transfer technology to businesses in the state. Technology would include biotechnology, which would mean technology related to life sciences. Business would be defined to mean a company located in the state, that has made a firm commitment to locate a facility in Wisconsin or a group of companies of which at least 80% are located in Wisconsin.
In order to obtain a manufacturing extension center grant, the technology-based nonprofit organization would be required to submit a plan to Commerce that detailed its proposed expenditures and performance measures related to the project and the Secretary of Commerce would have to approve the plan. A technology-based nonprofit organization that received a grant could not receive any other grants or loans under the WDF. Grant recipients would be required to provide a cash match of at least 25% of the cost of the project.
Annual expenditure authority of $1,000,000 would be provided under the WDF repayments appropriation. Commerce could not award more than $1,000,000 in manufacturing extension center grants in a fiscal year.
Commerce could not encumber any funds for manufacturing extension center grants after June 30, 2001.
Currently, the manufacturing assistance grants program consists of three subprograms—the manufacturing assessments, customized supplier training and technology transfer programs. The total amount of grants awarded through all three subprograms cannot exceed $750,000 in a fiscal biennium.
The manufacturing assessment grant program provides funds to small businesses for manufacturing assessments and plans. The maximum grant amount is $2,500. Grants must be used to fund manufacturing assessments and related plans that are designed to assist eligible businesses in adopting readily available and reasonably standardized new manufacturing processes and techniques. The assessments help a company define a basic course of action, recommend strategies and improvements and identify resources to assist in the implementation of actions. Assessments can include: (1) employe attitude surveys, descriptions of basic job skills and identification of potential training needs; (2) review of the current use of technologies; (3) review of order placement, manufacturing and distribution processes; (4) analysis of marketing activities; and (5) identification of financial needs.
The supplier training program provides funding to manufacturers or consortiums of manufacturers of original equipment to fund customized training for employes of supplier businesses. Grants are used to fund costs incurred to have the employes of Wisconsin-based suppliers trained to meet the specific needs of manufacturers of original equipment. Grant funds can be used to cover 50% of the costs of trainers, training materials and related facilities. To be eligible for funding the training must: (1) focus on new technology, industrial skills or manufacturing processes; and (2) be customized to meet the specific needs of the manufacturers of original equipment and the Wisconsin-based suppliers. The maximum amount of a grant that can be awarded to an original equipment manufacturer is $100,000. Each member of a consortium of such businesses is eligible for a grant of $100,000. The maximum amount of a grant that can be used to train employes of any single Wisconsin-based supplier is $20,000. The total amount of grants made through this subprogram cannot exceed $500,000 in a fiscal biennium.
The manufacturing extension grant program provides funds to nonprofit technology-based organizations to provide support for manufacturing extension centers that transfer state-of-the-art technological advances to small- and medium-sized Wisconsin businesses using innovative training methodologies. Financing is provided as grants. Grants can only fund up to 50% of the costs directly related to technology transfer activities between businesses and the organizations that receive the grants. A maximum of $250,000 in total technology transfer grants can be made in a biennium. Grants can be used to fund costs directly related to technology transfer activities. Eligible costs include capital equipment and operating costs for teaching factories, training in new technologies and related services.
[Act 9 Sections: 204, 2979, 2984, 2986 thru 2992, 2994, 2995 and 2997]
11. WISCONSIN DEVELOPMENT FUND -- URBAN EARLY PLANNING GRANT PROGRAM
Governor/Legislature: Create an urban area early planning grant program under the WDF to provide grants to persons for early planning projects. An early planning project would be the preliminary stages of considering and planning the expansion or start-up of a business that is or will be located in an urban area in the state. An urban area would be: (a) a city, village or town that is located in a county with a population density of at least 150 persons per square mile; or (b) a city, village or town with a population of more than 6,000.
In order to receive a grant, a person would be required to submit an application to Commerce, in a form determined by the Department, which contained or described all of the following:
a. The location of the new or expanding business.
b. The ownership structure of the new or expanding business.
c. The product or service provided by the new or expanding business.
d. The market for the product or service provided.
e. Competition within the market.
f. Any competitive advantages of the new or expanding business.
g. The person's estimate of the gross revenue of the new or expanding business over a period specified by Commerce.
h. The process for manufacturing the product, or providing the services, of the new or expanding business.
