RACINE — When the City Council approved $900,000 for economic development and construction workforce training in March 2018, even with some caveats, not everyone was on board.
When the motion was passed, Aldermen Sandy Weidner and Mary Land opposed it because they contend it was a misallocation of intergovernmental funds, which the city receives from surrounding municipalities in exchange for water and sewer service, and are supposed to be dedicated to economic development.
One of those caveats for the motion’s passage was that the city Finance and Personnel Committee was to receive quarterly updates on how the funds were being spent.
But up until last week, Aug. 26, the council has only received two generic updates from Racine County Economic Development Corp., which did not go into details on how the money was being spent.
Weidner and Land said they received some documentation of how the money was spent, but they still have many questions that were unanswered.
IG over the years
In 2018, the intergovernmental fund had a reserve of $3,297,905 from previous years and received $1,874,931 in revenue, which is where the $900,000 came from. The amount the fund receives each year has grown alongside the area’s recovery from the 2008 recession.
In 2019, the fund had a reserve of $3,626,335 and received $1,949,279. Kathleen Fischer, the city’s assistant finance director, estimates the fund will have a reserve of $1,565,473 at the end of 2019.
As of last week, city staff estimated the city would receive about $2 million in 2020. It is unclear what direct effect the Foxconn development in Mount Pleasant will have, but city staff estimates it will not be significant.
Where did it go?
According to a spreadsheet provided to aldermen, the $900,000 was divided up accordingly:
- $125,000 to the City Attorney’s Office for development and real estate-related work.
- $275,000 to RCEDC for consulting services related to economic development. Those services could include communications, planning, smart city design, transit and working with the private sector.
- $400,000 was split evenly between the Wisconsin Regional Training Partnership/Big Step and the First Choice Apprenticeship program through the Racine Family YMCA.
- The remaining $100,000 was allocated for job training and will go to either Big Step or First Choice at some point in the future.
Of the $125,000 allocated to the City Attorney’s Office, so far $60,480.38 has been spent on:
- $17,700.38 went to Mallery and Zimmerman SC for the Racine Steel Castings project.
- $1,162.50 to Mallery and Zimmerman SC for work on proposed projects along the lakefront.
- $34,265 to William P. Scott, an environmental lawyer, for services related to the proposed lakefront Sheraton Hotel and the bill pending in the statehouse that would allow the project to go forward.
- Another $595 to Scott, who is also a member of the City Development Department’s environmental assessment and remediation team, for services related to the Racine Steel Castings project.
- $6,757.50 to Arenz, Molter, Macy Riffle and Larson SC for Downtown development counsel services.
- Out of the $275,000 allocated to RCEDC, so far $73,439.12 has been spent:
- $25,000 for grant administration services. RCEDC Executive Director Jenny Trick stated in an email that RCEDC applied for a grant from Fund for Lake Michigan to engage Vandewalle & Associates, a Madison firm that includes in economic development specialists. The total cost for their services was $75,000 and grant administration RCEDC include a $5,000 grant administration cost, totaling $80,000. The grant from FFLM was $55,000, resulting in the difference of $25,000.
- $48,439.12 for communications consulting, first to Mueller Communications, which Trick said was hired for a number of press events, and then as salary for city Communications Director Shannon Powell, who was initially hired as a communications consultant in the summer of 2018 before being moved to city staff in 2019.
RCEDC has another $165,350 allocated:
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- $2,000 for design review services.
- $7,350 for development consulting services.
- $120,000 to go to the city’s chief innovation officer William Martin for Smart City consulting services.
Preliminary training results
Gateway submitted a spreadsheet with information on 77 participants in the job training programs that received funds from the city.
Out of those 77, 14 completed the program and were employed. They consisted of seven black men, three Hispanic men, one white man, one black woman, one man of Hawaiian and Native Islander descent and one man who checked “other.”
Two of them were working for the same employer they had before attending the program, though its unclear if the program allowed them to move to another position or higher salary.
Seven of them were working in permanent positions, six were in temporary positions and one was in a seasonal position.
Fifteen people completed the program but were not employed as of when the data was collected. Most of them completed the program in March or May of 2019, but one had completed it in January, 2019 and one in October, 2018. Nine people had completed the program but their employment status was listed as unknown.
Nine people had withdrawn from the program.
For the remaining 30 individuals, the spreadsheet does not provide any information on their status in the program.
What does this mean?
No one from either Gateway Technical College or RCEDC attended last week’s meeting to answer aldermen’s questions and help them interpret the data.
“That’s what we’re paying RCEDC to do,” said Weidner. “I am not any more clear on who’s in charge.”
The committee decided to defer on the item until a representative could attend a meeting and answer the committee’s questions.
While she voted against the motion in 2018, Land said she’ll withhold judgement on the project until she better understands the outcomes so far.
“The spreadsheet from Gateway today was not very informative,” said Land. “I’m waiting for them to come in and ask them, ‘What does this mean?’ We just had a spreadsheet.”
Weidner submitted the agenda item requesting the update on the funds in February and at a committee meeting on March 25, was told that it would happen after Gateway submitted its second-quarter data to the state. After last week’s meeting, she was not optimistic that the funds were used appropriately.
“It’s a very expensive lesson,” said Weidner.
Correction: This article has been corrected from an earlier version. The Gateway Technical College Foundation did not receive any intergovernmental funds. The foundation committed funds to the job training program separate from the city fund.