Public money is fueling the tug of war for private development in cities such as Waukesha, where two manufacturers are requesting city support for expansions.
Waukesha Electric Systems Inc., which plans an estimated $70 million expansion, is seeking $9 million in city grants. That planned expansion prompted Waukesha-based Weldall Mfg. Inc., a supplier to Waukesha Electric, to propose a $6 million expansion, said Steven Crandell, Waukesha director of development. Weldall requested $900,000 in city support for the project, he said.
Crandell said he has not yet reviewed Weldall’s request. But the $9 million for Waukesha Electric, which would be raised through a tax-incremental financing district, would cover the cost of expanding in the city, a project that is more expensive than building on undeveloped land available in other states, he said.
“Not only do you need a location for the expanded plant,” he said, “but also you need a location for the infrastructure, such as the parking.”
The Waukesha Electric TIF district will help pay for the project’s construction costs, which include demolishing the Waukesha Training Center building to make room for the manufacturer’s new parking lot, Crandell said.
The tax districts let municipalities borrow money for projects and pay off the debt with the increased property taxes generated by the new development.
In this case, the incentives package prevented Waukesha Electric from moving to another state where the company could have pursued a cheaper project, Crandell said.
“They were looking at other sites,” he said. “I don’t know where those other sites were.”
Dan Vrakas, Waukesha County executive, said he does not like local governments competing to build up incentive packages for projects. But, he said, the cooperation among state, county and city governments to dedicate money to the Waukesha Electric project is a good example of public-private partnership.
Vrakas said he had no success in the late 1990s trying to rally officials from Wisconsin and other states to agree to a code of ethics when competing for companies.
“When you get into the incentive wars between states,” Vrakas said, “that is something that I think gets to be more controversial.”
The question of public support for private development hinges on how many new jobs the projects create and how much they increase property taxes, said Fred Stier, president and CEO of Stier Construction Inc., Waukesha, and chairman of the Waukesha County Chamber of Commerce. The manufacturing expansions, he said, will generate work for tradespeople, particularly ironworkers, electricians and masons.
“Obviously, it’s good for all of us, no matter who it is,” Stier said, “because even the smaller contractors will get some jobs out of this as the suppliers start expanding.”
Weldall Mfg.’s proposed 76,000-square-foot expansion is directly related to the business it can land through Waukesha Electric’s expansion, Crandell said. Weldall would expand from 110 employees to 185 in Waukesha, he said, referring to the company’s application for TIF money.
City elected officials have not considered Weldall’s request, but the TIF proposal for Waukesha Electric will go to the city Plan Commission on Wednesday night.
“Right now,” Crandell said, “there hasn’t been anything that’s come up that we would call a red flag.”