Paul Soglin: Waxing America

Celebrate Madison Business 2015 Meet and Greet

Thank you to the Greater Madison Convention and Visitors Bureau and the Greater Madison Chamber of Commerce for hosting their recent Celebrate Madison Business 2015 Meet and Greet.  It was good to see many City Alders and County Supervisors have an opportunity to talk directly to business owners and community leaders.  Special thanks to Dane County Board Chair Sharon Corrigan as well as Deb Archer of the Convention and Visitors Bureau and Zach Brandon with the Chamber.

Global Entrepreneurship Week

This week, November 17th-23rd, 2014, marks Global Entrepreneurship Week.  This is the world's largest celebration of the innovators and job creators who launch start-ups that bring ideas to life, drive economic growth and expand human welfare.

Entrepreneurs play an important role in the social and economic well being of our Madison community. Countries, states, and cities alike all around the world are taking  time this week to recognize the important work of some of the world's leaders, creators, and inventers. Global Entrepreneurship Week is designed to enlighten, inspire, and encourage individuals and organizations to explore opportunities and strengthen connections through networking events.

I am proud to support Global Entrepreneurship Week and encourage Madisonians to check out some of the events in Wisconsin  which include the Wisconsin Entrepreneurship Showcase, a forum on Intellectual Property Basics, a Three Day Startup Final Presentation and others.

The Importance of Being Prudent

In the 1970s, Madison played a vital role in the creation of Wisconsin’s Tax Increment Financing (TIF) law. Our city applied for a grant from the Department of Development to study the model used in other states and construct a bill to bring the tool to Wisconsin.

 Our original idea was simple: we sought to encourage the redevelopment of blighted urban sites by leveling the playing field between the cost of urban development and greenfield sites.

 TIF is a creative financing tool that allows municipalities to borrow against potential future tax revenue gains in order to make investments and ensure those gains are actually realized. Used properly, it’s a critical economic development tool. Too often, however, TIF is misused, creating economic problems in both the community that abuses TIF and those that compete with the abusive TIFers.

 Warrens, Wisconsin, with a population of 360, took on more than $18 million of debt assisting the Three Bears water park-hotel-condo development. That’s $50,000 for every person in Warrens. When the hotel and water park closed and property values plummeted, Warrens found itself unable to retire its debt without a change in the TIF law.  Repeatedly, communities fail to use TIF prudently and then run to the legislature to ask for special treatment.

The legislature should encourage, not discourage, prudent municipal TIF policy. Forcing municipalities to take a cautious approach ensures that taxpayers won’t have to bail out troubled Tax Increment Districts. In Madison, we conservatively estimate the increased tax base we expect a project to generate. We discount future revenues at a rate much steeper than our cost of borrowing, and we typically provide only a portion of the increased tax base that a project generates.

When communities fail to employ good practices like these, two things happen. First, they risk overextending themselves and requiring a bailout either from their own taxpayers or from the state. Second, and perhaps more perniciously, they create bad incentives. When a municipality competes with an overly aggressive player, the prudent municipality is pressured to go farther in providing TIF than they find justifiable. This arms race mentality serves neither municipality.

Bidding up the price of landing a company or a development transfers public resources to private interests with no commensurate increase in the public good. Worse, it encourages other companies to seek ever greater incentives, regardless of whether they actually need them. After all, it’s not one-time funding, but the quality of life, skilled workforce, great schools, and urban vitality that makes companies successful and prosperous in the long run. Madison is blessed with these enduring factors. And when we compete to offer better schools, a cleaner environment, vibrant neighborhoods, well-trained workers, and low crime, and a great quality of life, everybody wins.

More Discussion on TIF

The issue of TIF or Tax Incremental Financing is a complicated one, but it's important and it's a vital tool that municipalities utilize for development in a particular area, or TIF District.

TIF is a financing tool where the distribution of taxes from property in a defined geographic area is frozen for a period of 27 years.  While the value of property in that area increases, the amount of money distributed to the city, county and school district remains the same.  Any increased property taxes are then used to fund capitol improvements and assist developers. 

 At Tuesday’s meeting of the Madison Common Council I spoke about the challenges facing our City’s economic development.  Among the factors I listed was the use of TIF by other communities.  I expressed concern that other municipalities are looking beyond the traditional factors in an effort to lure a specific business.  On Wednesday morning, I discovered that Assembly Bill 536 which would allow the City of Middleton to extend its TIF district another 10 years was introduced.  This is precisely the problem to which I was referring.

Changing the rules of TIF financing to allow a company to move from one community to another provides no net benefit.  The property tax base in one community is decreased by an amount that it is increased in another.  The jobs that are being “created” in one community are not new jobs.  They are simply being moved to a new community.  This is a zero-sum game, and the state should not change the rules to facilitate it.

Supporters point out that these types of changes have been done before.  Whether this has been done before is irrelevant.  Changing the playing field where the law must be uniform statewide is neither healthy for the economy, nor fair to the communities involved.  Instead of passing piecemeal legislation to help the one community at the expense of another, the Legislature should conduct a comprehensive examination of the TIF law.

 

 

Shop Local

A well known on-line store is apparently asking customers going into brick and mortar stores to use the company's smart phone price-check app to receive a discount on a product that could have been purchased in the local store.  It's a great reminder that although we all want to save money when we can during the holidays and beyond, we need to support our local businesses.

There are a number of promotions in Madison to do just that and I encourage you to participate.  Remember this past summer when so many people worked together to shop and eat at establishments on Willy Street to support business during the construction?  We can, and should do it again and expand our efforts to other neighborhoods as well.

Consider the stores on State Street, Willy Street, Monroe, Atwood and others.  They are destinations for thousands all year round.  You can find unique items and get to know the shop owner and employees who may very well be your neighbors.  Those neighborhoods and store fronts have been redeveloped at great expense and are a source of pride for Madison.  We need those stores, boutiques and restaurants to provide the unique character and charm of which we are proud.

Part of the distinctive character of State Street and others is a result of the restrictions on the size of the businesses.  The stores are more narrow and chain stores generally don't consider them, as they are too small. It's a character of the street that I support and appreciate.  It is part of what makes Madison special. If we don't support those stores though, now and year around, they won't be here to appreciate. 

Join me in taking some time away from the computer and heading out to businesses that are uniquely Madison.  You won't be disappointed!

 

 

A boycott is not an informational picket; an informational picket is not a boycott

Yesterday, I posted No General Strike in Wisconsin arguing that such an idea was a bad idea but that we had to expand the arena of conflict. While our demonstrations are formidable, we are not going to move Governor Walker head-to-head. But we can influence moderate Republicans who helped elect Walker - especially those who understand the disastrous consequences to our schools, counties, and cities of his policies.

This is the point I have made for two weeks, going back to the Downtown Rotary luncheon March 3, 2011 Moderate Wisconsin Republicans Should Step Forward:

I’ve been calling on moderate Republicans to step up and make their voices heard in an effort to help us solve the budget impasse that has now entered its third week...What we have to do right now is reach out, change the equation, expand the arena in which this fight is being waged and find people to whom Governor Walker will respond.  They must be Wisconsin residents who voted for him, who publicly supported him.  People who contributed to his campaign. People who have done all that, and yet disagree with what he is trying to do and how he has done it. People like former Governor Tommy Thompson, for example.

Nowhere in yesterday's post did I suggest a general strike or a boycott and yet some are reporting that. I have called for sunlight, for transparency, for explanations, and support.

As a shopper who pays money to businesses, I have a right to know how the profits from my purchases are used; especially if they destroying my community.

It is possible that I will continue to use a particular vendor, even if I do not like the way they spread money politically. An example of that is Home Depot (though that may change). On the other hand I do not shop at Wal-Mart. That is my personal decision. It is also yours.

 

 

 

 

 

Surprise! NCAA Has No Problem With Auburn and Cam Newton

Charles Pierce lays it all out for us:

Let me see if I understand the NCAA's reasoning here. Cam Newton's father, the Rev. Cecil Newton and yet another guy named Kenny Rogers, were peddling young Cam's services all over the South but, since the NCAA's jurisdiction does not extend either to men of the cloth  or to people who share their names with bad pitchers and mushmouthed country crooners, all's well and it's full speed ahead for the Heisman Trophy and the eventual BCS Championship game.

In other words, we are being asked to believe that a) young Cam himself had no idea that Reverend Grabitall and Not The Gambler were using him as an ambulatory ATM card, and 2) that the team that landed young Cam's services happens to be the one that didn't pay what everyone now seems to agree was the asking price.

And, of course, This Blog is the Tsar of all the Russias.

The BCS system and the NCAA's "rules" make the US Tax Code seem simple, fair, and and totally reasonable.  More reasons to just eliminate the hypocrisy and allow all the BCS football teams to pay their players a reasonable wage considering the real risks to their bodies and brains.  Allow those who really want college degrees to attend for free after their football "careers" end. Today's big-time college football makes dogfighting look fair and less exploitive of its participants.

- Barry Orton

Overture: Next Steps

Madison common council member Mark Clear is offering a new proposal that requires private ownership of the Overture arts facility, unlike the original Focus Model that requires city ownership. That is a bold and favorable step in the right direction for the short term, but it does not provide a long term solution.

 

Clear's recommended proposal should be viewed as an interim solution.

Clear's proposal also calls for privatization of the work force. That needs to be changed. For the next two two years, despite the serious problems of having a work force employed by the city and directed by 201 State, the non-profit operator, the workers should remain public employees. That is because we do not know the final arrangement for Overture in 2012.

Clear's proposal would be amended to call for the appointment of a Madison Commission on Overture.

That commission is an independent body with representation from the city government, 201 State Street, prospective donor, resident companies, members of the arts community with no association with Overture, and interested citizens with no allegiance to any specific arts organization or Overture.

That body should conduct three studies. First an examination of the potential for long term private giving that will lead to a building endowment fund, secondly an independent examination of the building and its financial, and thirdly an inventory of Madison's artistic needs.

The artists and their audiences are the base of any operating model for Overture

It is this last point that is most critical and it should have been the focus in 2000, 2005, 2008, and 2010.

I personally want to apologize to Madison's artists, the performers, and the audiences. Those of us who served on the Ad Hoc Overture Committee had little time to hear from you. We were presented with the AMS study and the constraints upon us required that we look at the financial and the building itself.  Maybe this time we can get it right.

As a community we must look at our needs as artists and their audiences and then we will know the best structure for the operation of Overture.

When the study is completed, I do not know if the recommendation will be public ownership, my original preference, or private ownership.

When the study is completed, I do not know if the recommendation will be public management, my original preference, management as envisioned by 201 State, which I find unacceptable, or management by another non-profit more responsive and representative of the community, an acceptable alternative.

When the study is completed we will have a better knowledge of the staffing needs and which employees should be public and private.

In any case, we will make better decisions with better results because of a better process.

Mortenson Report Gives Reason for Optimism

In the meantime the first of several new reports is available.

This independent report on Madison's Overture Center for the Arts indicates that the facility is in fairly good shape. There are several areas of concern that need further explanation:

• The report is optimistic about the tile floor which suffered from from red wine spills to high heels cracking and puncturing the surface. The report suggests that the sealant is working and that the floor should survive for another 15 years. In several of my visits to Overture on the days following performances of Wicked I spotted fresh punctures in the tile floor. I am curious as to how many punctures like this the floor can withstand and how the sealant helps to prevent them.
• There is no mention of the 700 different lamps in the facility, that many are energy inefficient, and that the German manufacturer of some of them indicated they will discontinue their production. Does the absence of a discussion on this subject mean that Mortenson feels that the subsequent refurbishing costs are insignificant?
• If the lamp issue is significant, are there additonal design areas of concern not covered in the report?
• The capital budget is analyzed for 15 years. My experience is that capital budget analysis is usually 20 years , or at least multiples of 10. I am wrong? Sorry if I am.
• Besides the lighting issue, are there other costs associated with bringing the facility up to city energy efficiency standards?

 

 

The story was first reported by yesterday in The Capital Times by  Kristin Czubkowski in her Laptop City Hall column, Council working on model for private Overture Center,and subsequently in the Wisconsin State Journal by Deam Moisman, In a major change, officals will consider private ownership of Overture.

 

 

Another Madison Institution Gone: The Fruit Stand On UW-Madison's Library Mall Closes

George Hesselberg was the right reporter to write this story. Eric Roang, the proprietor of the Fruit Stand, has packed up his fruit and stand into his truck for the last time. He will be sorely missed on the UW-Madison campus.

Eric Roang, 59, garrulous owner and operator, temporary confidant to thousands of apple-polishers, opened in 1980 with "a few boxes of fruit on a couple of planks" adding fresh fruit to the menu for thousands of students and workers.

In addition to the recent opening of a new, full-line supermarket nearby, Roang said "the nature of pedestrian traffic here has changed."

The university has moved administrative offices away from the corridor, which cut into business from workers, he noted. Business this year is down 50 percent, he said. And attracting student walkers to trail mix, apples and oranges is not easy when eyes and attention are fixed on their cell-phones, Roang said.

"We have a whole different ball game than even three years ago," he explained. "People don't talk anymore, they are almost timid. A whole section of our business is attracting people walking by."

He said life after the Fruit Stand may include a run for mayor, which he is looking into and has been thinking about for the last 20 years.

I'm not sure Eric should make the run for mayor, which he has been considering for years.  Mayor Dave isn't going without a fight, and Eric is far too straightforward a speaker to not offend voters with his pronouncements. The County Executive job is more wide-open, but the voters are probably going to want someone a bit more polished.

Two suggestions:

• Locate a permanent, indoor kiosk selling fruit and healthy snacks in the new Union South. Grant the franchise to Eric. Engineering students can be educated to add fruit to their Cheetos and cola diets. Add the Fruit Stand to the list of places that take Athletic Department food vouchers and have Coach tell the team to all eat fruit twice a week. 
• Grant a franchise for the Fruit Stand to operate in the main lobby of the Kohl Center for all of its events. (Insert snarky comment about unhealthy food served at UW athletic events here.)

Otherwise, it's thanks to Eric Horang for 30 years of making Library Mall a more healthy, funny, and welcoming place. Thanks also to Don Helly, Eric's longtime (24 years) sidekick fruit seller and resident philosopher.

Another great Madison institution ends a long run.

- Barry Orton

America Now a Banana Republic - Slate via New York Times via Business Insider

Before reading further, understand that the orginal article is Timothy Noah's The United States of Inequality: Introducing the Great Divergence   in SLATE.

His work was picked up by the New York Times which led to the headline cerated by Business Insider,   reporting IT'S OFFICIAL: America Is Now A Banana Republic

One of the hallmarks of banana republics, says the NYT's Nicholas Kristof, is income inequality. In some countries, the wealthiest 1% of the population takes home 20% or more of the national income.

And now the same is true in America:

The richest 1 percent of Americans now take home almost 24 percent of income, up from almost 9 percent in 1976. As Timothy Noah of Slate noted in an excellent series on inequality, the United States now arguably has a more unequal distribution of wealth than traditional banana republics like Nicaragua, Venezuela and Guyana.

I am not sure which is worse, Republicans who made it happen, or Democrats who refused to stop it and aquiesced.  Thus the heading for this blog:

A candid examination of right-wing policies and the Democrats who play along and the horrid liberal policies designed to assuage the moderates but end up irritating everyone. And other stuff.

This is not other stuff.