Density: It isn’t just for big cities anymore
SHERRY: We talk about density, and I will tell you, it is one of the biggest issues in a developer’s discussion with a municipality to make a deal work. The question is, what density levels will there be? That’s going to affect transportation issues, housing, schools; it’s going to affect a whole multitude of things.
IB: Neighborhood associations for height. Is density a hot button for them?
SHERRY: There’s no question about it. But density is probably one of the single biggest issues developers have to deal with, in regard to municipalities, to get developments done.
HYZER: That’s been a problem here in our community. If you look at Manhattan, that’s very dense, it’s very green, it’s very environmental because you put a lot of people in a small place. Madison? It’s always been a problem. I think developers have tried, and we’ve seen this in the papers, they’ve tried to develop in Madison, tried to be denser, but they meet resistance.
They meet resistance from the Council, from the neighborhood organizations. I think until that attitude changes, it isn’t going to happen. Developers are going to move to other areas where it’s easier, where they can get their projects done in a timely manner and make a profit.
It’s all about profit. It doesn’t have to be huge profit, but if you can’t make a profit, you’re not going to do it.
ALLEN: We’re having exactly the opposite problem in Fitchburg, where the developers coming to us are wanting to build less density, and we keep trying to push them and push them and push them toward more. We’re running into a different brick wall now. So I don’t know what to do about that.
COOLEY: Well, they’re responding to the market. And youÃÂre talking about balancing market needs immediately with long-term planning; that’s a tough balancing act to have.
You ask who should take the lead, Jody. I actually think that you should take the lead.
It’s the media, and it’s our job in government to start taking a look and being very, very self-critical — and with clarity, identify what the trends are that are taking place — explain what those ramifications are both inside government and to the citizens as a whole.
We’ve got to make some tough decisions because some of these trends are so insidious in their timeframe. It’s not going to take place next month, next year, or maybe in five years. But 25 years from now, we don’t want to look back and say, “Why didn’t we see this coming?”
How does Madison rank now on business Top 10 lists?
COOLEY: We need to be able to recognize what’s going on now.
Let me give you a perfect example. All these polls about Madison. I gave a presentation where I asked how many people saw the Kiplinger study that had Madison listed as number six for something.
Everybody.
Then I asked how many people looked at Kiplinger’s background on it.
Nobody.
I said, “Let me show you the second slide.” They had Madison at 538,140 some people. I said, “Well, jeez, Madison doesn’t have that many people.”
Of course, it doesn’t. They’re talking about the Madison MSA, Dane, Iowa, and Columbia counties.
We need to understand what’s happening in our own backyard in order to be able to make intelligent decisions. And we also need to realize that itÃÂs businesses that create economies. Some of the process and some of the roadblocks thrown out are anti-business, not “corporate welfare,” whatever they’re calling it. One of the roles of government is to maintain, create and maintain a viable environment for business.
GORSUCH: Absolutely. And it’s not only development. You know, we’ve been talking a lot about development. Don’t forget existing business.
It’s easier to keep one business here than it is to bring one in. So many times all the emphasis is on the new business and giving them special benefits and so forth. I think, look at our good employers and go out and visit with them and find out what we can be doing.
COOLEY: You’re absolutely right. One of the things that I did when I first came to town was go out and meet with the top 25 CEOs in the area of companies that could actually pick up and leave, as opposed to developers that are kind of stuck here.
GORSUCH: The state needs to do that too.
SHERRY: A comment, since we’re all talking about growth: Remember, two things are needed for growth, capital and debt. If you’re going to build something, you need that. And the problem right now is that it ceases to exist in today’s market the way it used to. Okay. And nowadays, it’s much more difficult to put that whole plan together and get that equity money to come in, get that debt to come in, and get the project off the ground.
COOLEY: Okay. Can we do that locally then? Because the best opportunity we have is a local company funded locally.
SHERRY: No question about it.
COOLEY: We keep the wealth in town, if it works. We’re creating the jobs here. And we can start building on that over time.
What does the banker in the room say?
SHERRY: Bob [Gorsuch], I turn to you for the banking industry side of it. Where are you guys at in loaning the money out right now?
GORSUCH: Well, we haven’t changed our underwriting at all. It’s just that there’s so much uncertainty. What is a good project today? I mean, how do you evaluate, with the way things are changing? Every week, there’s something new coming out of Washington or out of Madison that changes the whole environment you’re playing in.
COOLEY: You mean out of the Capital building, not out of Madison …
GORSUCH: Yes, you’re right. But there’s a lack of being able to get your feet on the ground and say, “Now I know what we’ve got going forward.”
SHERRY: Just to back that up, I had a conversation with a client who is in the hotel business, a hotelier, and a major, major player nationwide. Basically, their upper executive said, “We’re on hold.” And the reason they’re on hold? The one word was uncertainty. They do not know what to expect 12 months from now.
GORSUCH: Well, here’s another dynamic that’s happening in Wisconsin: You’ve got a lot of community banks located in areas where loan demand has not been strong; a lot of community banks that have depended on getting participation in loans from things going on in the Madison MSA, Milwaukee MSA, Fox River Valley, Green Bay, wherever. All of a sudden, they’ve been stung by a lot of these participation loans, and they won’t touch them.
Probably the same motel developer you’re talking about tried to put together a large syndication, which was dependent upon these community banks buying participation, and they couldn’t close the deal. They could not get enough interest because everyone’s on the sidelines from that.
And that’s an interesting dynamic, because there are almost 300 of those community banks in the state that do fund a lot of the things you’ve seen around here. The Department of Revenue building out there, the
Department of Ag building on the interstate — those were loans put together with participations from those community banks.
There are a lot of dynamics, but a lot of it is the uncertainty. What’s good?
SHERRY: That’s my point. My point is “what certainty?” What’s out there that they can say and look to, to say “I’ve got confidence.”
GORSUCH: Ethanol is an example; there’s a $100 million ethanol loan that’s going down the tubes. That’s $100 million of loan losses to about 100 banks.
BLETTNER: They don’t want to do that again.
GORSUCH: There was a time when that was a slam dunk, I’ll tell you that.
COOLEY: From the state’s perspective, they have to be very aware that unless the Milwaukee area, the Madison area, and the Fox River area works, the state doesn’t work. They have got to understand what it is we need to be able to have the tools in our pocket to be able to build these economies. I invited the head of development from Milwaukee, Rocky Marcoux, and I spent a day with him last week. And the reality is that we need to be at the table to be able to get some things done that we need to make our cities and our areas work.
I think that’s just imperative. We need to be our own best lobbyists from an economic perspective. I can’t say more about what we do have lobbyists for … or she’ll [Jody/IB] print it. [Laughter]. Then all of us couldn’t go into a bar for the next 10 years.
IB: Join the club.
Closing Comments
IB: Okay, now we’ve come to the juncture where I ask for closing remarks, and you can make any comment. It doesn’t have to piggyback someone else’s remark; please offer a take-away that you would like our readers to have from your point of view. Mike, can we start with you? Are you ready, with no notice?
DAVIS: Sure. I think the role of government with the down economy is to continue making strategic investments in our infrastructure, and not just maintenance, but long-term investments that will promote economic growth.
I’ve seen that work in Middleton. In fact, most of the time, in my opinion, private investment follows public investment. If you make a good strategic investment — the Middleton Corporate Center is an Airport Research Park area, across from the airport, those were public investments — the private investment followed that.
The same thing with ETC [Electronic Theater Controls, Middleton]. Same for re-development districts. While we tighten our belt from an operating standpoint, now — for me, at least — is not a time for local government to stop investing in the infrastructure.
IB: Wonderful. Thank you. Tim?
COOLEY: I think we have a once-in-a-century opportunity, both because of the cycle and what we have available in re-development opportunities like the East Washington corridor. or what’s going on with the University Research Park, or what’s going on in the various urban fringes — is that the right phrase?
DAVIS: Urban ring.
COOLEY: Urban ring.
IB: Oops. They’re not fringe.
COOLEY: There’s enough fringe. [General laughter.] I think we have an opportunity to really define a vision for what Madison should be going forward. And it’s something that has never been done. It’s always been a laissez faire type of an attitude of, “We’re Madison, we’re kind of cool, we’re the area, let’s just kind of keep on going, and we’ll try every experiment or whatever sounds good at the time, and give that a shot for a little while.”
But I think we have an opportunity now to really take a look at what our strengths, weaknesses, opportunities, and threats are; to do some good strategic visioning, figure out what we’re going to do, get the buy-in of both the business sector, then public sector, and the citizenry, and then start moving ahead.
We’ve got the political cover of the headlines every day, with where we are in the cycle to make some tough decisions that we may have been sitting on the backburner for too many years.
But with the strengths that we have in this area, with the attitude we have, and the recognition that we need to do something going forward, I think this is a once-in-a-lifetime opportunity.
IB: That you for that, Tim. Jay, your thoughts?
ALLEN: Well, we’re Fitchburg, so we’re not Madison, so we’re kind of cool.
COOLEY: Don’t put that on a bumper sticker….
ALLEN: But, seriously, we are all part of the same system here. And it’s not as if Fitchburg can unplug and just be its own little thing. So part of the new economy is creating partnerships in ways that have never been done before.
And what’s really important is that the people in the marble dome need to pay attention to what’s going on here, and they need to provide us the tools so that we can do the things that we need to do to help the economy grow.
We’re a lot more in touch with what’s going on with everyday businesses. I [privately] own a small business. I’ve got seven employees, and we are just kind of struggling through like everyone is. Even in the service business we’re in, we’re not untouched by what’s happening in the economy. So we have to be careful about what’s going on too. I know about that.
A lot of the people working up there in the legislature aren’t so in touch with what’s going on down here. And they really need to listen to us and take what we say into account, because we’re the ones, us at the local level, who are going to bring the jobs back. We’re the ones who are going to create more sustainable environments. They can’t do it up there. So they need to help us.
IB: Thank you very much, Jay. Tim?
SHERRY: I’m looking at my clients and talking to them about watching their business plan — really, really getting into putting a plan together so they know what they have, they know what their costs are, they know what their opportunities are.
I will tell you that, in the next two years, I think there are going to be some tremendous opportunities in the real estate area. There are going to be great opportunities for buying, there are going to be opportunities for growing, once we come out of the cycle. And so my advice is watch your plans, watch your cash flow, and look for the opportunities that will be there in the future.
IB: Is this a good time to invest? The million dollar question.
SHERRY: That’s a tough question. Are we at the bottom is the question. I don’t know the answer to that, but I would say in the next six to 12 months, you’re going to see a lot of opportunities that will come up.
IB: Good to hear that. Dave?
HYZER: A couple things. I think that what I’ve heard — we’ve got a good cross-section here — is that all ships rise with the tide. So it takes all of us. It takes the communities, the developers, the building owners, the company owners — we all have to work together, cooperate, and communicate what we want to do.
I also heard, and I would agree, that this is a great opportunity. Look for edges of things, or to changes, for opportunities.
I think we have a great opportunity here in the Madison area to attract people from around the country here that could live here. We’ve got a viable city, we’ve got viable real estate, we’ve got a great community. But we’ve got to take a long-range view on it. We can’t be looking at just what we’re doing next year or the year after. It’s got to be a decade look.
Also, I think that corporate culture in the big corporations has always been “the bottom line,” “what’s my quarter going to look like?” “What are my stockholders going to think if my stock price goes down?” And that view isn’t a good view.
It needs to be looking at building this and saying, “Where are we going to be in 10 years?” It may cost us a little bit of time and a little bit of money right now, but in the long-run, we’ll be better off for it.
IB: Thanks for those words. Bob?
GORSUCH: I think it’s important we don’t forget that small business creates jobs. It’s not big business. And we are blessed with a lot of very, very fine companies in this area.
I do think it’s the wrong time for anyone to stick their head in the sand and say, “I’m not going to do anything.” We see a lot of businesses prospering.
There’s a tendency to dwell on the negative, but there’s a lot of good things going on. This is still a great community to live and work and play in. And I think we need to accent those assets, continue to raise them up. Something good is happening, and let’s not forget that.
So I think don’t stick our heads in the sand, we’ll get through this, we’ve been there before. I’ve been in this business for 45 years now, and things will be fine.
IB: Good. Thank you. We needed that repeated, frankly, at the end of this. Other Bob, your thoughts?
BLETTNER: Well, I think that we need a 10-year view, as many people have said. I think that government is going to play a key role — in fact, probably a dominant role — as much by doing the right things as avoiding the wrong things. And that will include job training, for example. Education. We’re in an international market; you can’t just answer the telephone and get a job here, because that’s going to be done in India.
It used to be that MIT was the leading research university in the world. Now it’s the Indian Institute of Technology. We need to pay our teachers at UW so that we can keep them, and keep that part — the teaching element of the university — going strong. It’s becoming grant-based, research-based to the point that we’re ignoring that. And that’s where the legislature can and has to do that.
Just as we need to have a long-term view of all of these things, including health care reform. Holland and Denmark have fairly good systems that work, and the government guarantees basic healthcare to everybody, but beyond that, the private sector provides it.
We’ve got to take a lot of the politics and the special interests out of these decisions because we can’t afford to do that anymore. And I hope that we’ll be more measured in agreeing on what our priorities and goals are, and then pursue them in the best way to allocate resources.
IB: Thank you, Bob.
Now, if you gentlemen would all would be so gracious as to allow me to sidestep my role as moderator for just a moment to represent small business, as well as media in the room, I would like to say that I believe we have a good representation here who should be at the table with those legislators, exploring ideas to develop this expertise into a working partnership, really as a partnership.
SHERRY: You make a good point. I think public-private partnerships are going to be extremely important in the next couple years to see where things are going to be going.
COOLEY: I think you’re right, but I also think that we need to realize that right now the attitude is to demonize large businesses, and to demonize business as selfish interests, self-interest. The reality is, I have not come across any developers, any business people, anyone working in the area that wants to screw up the environment, that wants to rape and pillage, that wants to do anything other than be responsible.
One of the advantages we have here is there’s a tremendous love of where we live. Part of it is the university and the people that went there. Those are secular cathedrals to most people. And part of it is the unique character that we have in Madison, and a willingness to live where it gets to 20 below.
IB: It is a small enough town. It’s a small town and it’s your reputation. There’s a personal reputation. It’s not Milwaukee, where you can get lost on the street. You’re tied.
COOLEY: That’s right. They care here. And if we can get over the attitude, you know, Bob La Follette may have been right. I’m going to get crucified, Bob La Follette may have been right.We should not be demonizing business. Business makes it all work.
Editor’s Note: We thank our panelists for sharing their viewpoints with you. IB also adds a final closing comment: We realize there were no women (other than the moderator) or minorities at the table.
Gender or ethnicity is not our first priority when putting together a feature story or a roundtable group; only subject expertise. We strive to bring diverse industry viewpoints; we also add “diversity” of orientation by including government, academic, or nonprofit participants.
IB usually intends to gather five people at the level of expertise of these folks, so we do routinely invite a few extra. We were very fortunate in our latest roundtable samplings to have had all but one person be able to attend. Coincidentally, this just happens to be the first roundtable in recent history where, of the eight people invited, the seven able or willing to coordinate their schedules with the other panelists happened to be white males.
We comment on it, since we noticed it in hindsight…. not that it would have changed our editorial policy, but it does allow us to explain it.
