Both Waukesha County and the northwest side of Milwaukee will potentially see increased investment in the coming months from two new programs aimed at helping local businesses grow.
In Milwaukee, the Northwest Side Community Development Corp. received $500,000 from the Wisconsin Economic Development Corp. capital catalyst program. The grant will be paired with another $500,000 in NWSCDC money to fund loans to early-stage companies and small businesses, particularly those owned by women or minorities in the energy and power, food and beverage and water technology sectors.
The Waukesha County Center for Growth, meanwhile, is on the verge of establishing the $2 million Generating Resources and Opportunities in Waukesha, or GROW, revolving loan fund. The center is finalizing an agreement with the Milwaukee Economic Development Corp., which will administer the fund.
Leaders from both organizations say they are optimistic about quickly deploying the newly available capital in their respective areas.
Howard Snyder, executive director of the NWSCDC, said he hopes to close on a couple of loans by mid-September and would ideally have all of the money lent out by the middle of next year.
“If I said I want to see it all gone by Dec. 31, 2019 then I would feel like we probably took a little more risk than we should have,” Snyder said.
He noted that while NWSCDC has three years to make loans, WEDC made clear it would like to see some urgency in his organization’s efforts.
“We’re not going to be so urgent that we’re willing to throw $500,000 of their money and $500,000 of our money away, but it does mean we have to pick up the pace a bit,” said Snyder, who is stepping down from his position at the end of the year.
Tim Casey, executive director of the Waukesha County Center for Growth, said his organization is already in talks with eight companies about potential loans, including four in the process of submitting applications. Seven of the companies are in manufacturing while the eighth is in construction.
“A lot of the prospects we’re working with right now are smaller and medium-sized manufacturers, but they’re folks that have 20 jobs and are building a new building in Waukesha County or expanding and have an opportunity to add another five people,” Casey said.
WEDC announced the NWSCDC program with a visit from Lt. Gov. Mandela Barnes. Snyder said the media attention on the announcement generated a lot of prospects, although many of them would be difficult to lend to even with looser standards.
He said the best prospects have come through intermediaries like Silicon Pastures, Young Enterprising Society, BizStarts and the Midwest Energy Research Consortium.
“We are trying to figure out ways to lend to smaller businesses,” Snyder said. “It sounds like it should be easy, but it’s not when you’re used to a $10 million deal, where our loan is, say, $1 million.”
Loans in the new NWSCDC program are capped at $200,000, although the organization could bring in some of its own money to bolster a financing package, Snyder said.
Historically, the organization has focused on making loans to larger companies like Leonardo DRS. That approach was born out of a need to replace thousands of jobs lost in the 30th Street Industrial Corridor in the past several decades. While smaller businesses might grow to create a lot of jobs over time, the larger companies offered a chance for expansion projects with a lot of jobs in a shorter time period.
Snyder said the organization also trended toward larger, less risky companies several years ago after having a number of early loans go bad. In the past seven or eight years, he said there has been just one bad loan.
“We’ve had time to rethink what we’re doing,” Snyder said.
At the same time, the 30th Street Corridor is facing the looming departures of two of its largest companies, DRS and Astronautics. The former is moving to a new facility in Menomonee Falls while the latter is headed to Oak Creek. Briggs & Stratton is also consolidating warehouse operations in the area to Germantown.
The prospect of needing to fill those buildings helped push NWSCDC to focus on lending to smaller businesses as well. The change was less philosophical and more driven by timing, Snyder said.
“A gigantic company is probably not going to go into DRS,” he said.
If one did, chances are it would not need help from Snyder’s organization.
Tom Ryan, owner of Milwaukee-based Jonco Industries, bought the DRS building at 4265 N. 30th St. and the warehouse at 4143 N. 27th St. Ryan also owns the Century City tower at 4201 N. 27th St., where NWSCDC is based. All three buildings are located in close proximity to each other. Ryan has not disclosed plans for the two buildings.
“If what he did in our building is going to happen in the other two, it’s not going to get filled by one business. That’d be great but it’s not going to happen, so it’s going to be a whole bunch of businesses,” Snyder said.
Beyond business expansion, the GROW Fund is also hoping to address a challenge facing Waukesha County by supporting the development of more moderately priced housing.
Casey said the idea is for the fund to provide gap financing to help developers hold or tie up a site while they put together the rest of their capital. Ideally, the money would be lent out for 12 to 18 months.
“We’re in the financing for a relatively shorter period of time and then get the funds back so that we can continue to revolve them and get them back in the community,” Casey said.
He noted many of the dozen lenders the center talked to were very interested in including a housing component in the GROW Fund. BMO Harris Bank, First Bank Financial Centre, Johnson Bank and Town Bank are already part of the fund and Casey expects others to join when the fund is up and running.
Casey said banks were optimistic the housing could help them meet their Community Reinvestment Act requirements but Waukesha County executive Paul Farrow has also emphasized diversifying the county’s housing stock.
“There’s a real goal to find a way to do some more modestly priced housing, both multifamily and eventually potentially single family as well,” Casey said, noting more than 1,000 apartment units have been added in the county in recent years but the market rate for a one-bedroom is around $1,400.
“The goal here is to see if we can’t build some more modestly priced apartments that maybe come in closer to $900 a month so that folks who are just getting started on their career ladder have more modestly priced options to look at,” he added.
Snyder said banks have also increasingly been taking a closer look at opportunities in the central city, suggesting the success of community development financial institutions like NWSCDC has led them to consider smaller or more collaborative deals.
“There’s much more openness to that than there has been in the past,” he said.
Snyder also said that while it may be difficult to see for the average observer, progress is being made in redeveloping the 30th Street Corridor.
“There’s movement and it didn’t exist two years ago,” he said.
