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Study of the National Scope and Potential for Improvement of State Economic Development Highway Programs

Part 5. Case Study - Wisconsin Transportation Economic Assistance Program

5.1 Program Overview

The Transportation Economic Assistance (TEA) Program is administered by the Economic Development Section of Wisconsin Department of Transportation (WisDOT). The goal of the TEA Program is to attract and retain non-speculative business firms and create or retain jobs in the State. The TEA Program provides 50% funding grants, ranging between $30,000-$1 million, to eligible communities or private businesses for projects that are necessary to help attract employers to Wisconsin, or encourage businesses and industries to remain and expand in the State. Local communities are required to put up the other 50% of the project cost. The 50% local match can come from any combination of local, federal, or private funds or in-kind services.

Grants are for completion of transportation infrastructure improvements serving new and expanding industrial facilities, as well as biotechnology and information technology facilities. Office, retail and tourism-related development is not currently eligible. Funded projects may include roads or railroad segments. (The rules also allow for funding of airport runways or harbor improvements, though no grants have been used for those modes in recent years.) The funding may cover right-of-way development, project engineering, design and construction. Most of the road projects are local roads, but the program also funds improvements to segments of state highways, as well as improvements to interchanges and intersections.

Job creation is an explicit requirement for these grants, and applications are ranked based on cost per job promised, as well as the local unemployment rate and benefits to regional transportation. The new or expanded business activity cannot be speculative. Local communities must assure that the number of jobs anticipated from the proposed project will materialize within three years from the date of the project agreement and remain after another four years.

In recent years, annual TEA projects have totaled around $14.5 million -- $7.25 million from state funds with another $7.25 million from local matching funds.

5.2 History and Evolution of the Program.

Wisconsin's TEA program was established by the state legislature through a statute passed in 1986. It was initiated in response to the establishment of Iowa's RISE program (which supports industrial access roads in that adjacent state). (A further discussion of the RISE program is contained in an earlier report (http://www.fhwa.dot.gov/planning/economic_development/task_ab/) in this study. The TEA program was officially opened for applications in September 1987.

In 1995, the Economic Development Section within WisDOT and the Wisconsin Dept. of Commerce (WisDOC) initiated a process of direct communications to facilitate joint packaging incentive offers to prospective businesses considering locating or expanding in Wisconsin. Today, half of the total leads for TEA applications come from WisDOC and the other half as direct applications from local communities.

Later in the 1990's, eligibility rules were modified to reflect technological changes in the economy. Whereas the program was formerly limited to manufacturing industry, it now allows funding for biotechnology and information technology businesses. However, the program still does not allow funding for office or commercial/retail development. Some inquiries have occurred about tourism development projects, which are currently not eligible for project funding but could be considered for a truly unique state attraction.

In 2001, there was a major change in the project selection process. Up to that time, projects were selected based on a process of ranking applications using a five-point scale, which considered public investment cost per job, local unemployment rate, etc. At that time, the program switched to funding all applications passing the basic eligibility criteria (discussed next), on a "first come, first served" basis. Applications are reviewed and funded three times per year, and if there are more passing applications than funds, then those projects may be rolled over to the next review cycle (if desired by the applicant).

The program has also shifted in recent years from a centralized administration to a more dispersed organization with regional office representatives.

Finally, the program has also evolved in terms of the type of industrial businesses being assisted. Originally, the funded projects were primarily to support the attraction of new industry to locate in Wisconsin. However, in recent years the applications have been largely for business expansion projects. Occasionally projects are funded to enable business retention, but only if a strong case can be made that the project would otherwise move out of the state.

5.3 Program Funding Decisions and Follow-Up.

Applications are considered in three cycles of decisions conducted annually. Applications are first come, first serve, and funded when all eligibility information is complete and satisfactory.

A community may approach WisDOT with an application on behalf of an existing industry wishing to expand, or on behalf of a prospective new industry that has expressed interest in that community as the site for a plant location. However, many of the program applications now start from inquiries by the Governor's Office or the Secretary of Commerce, who approach WisDOT with an initial request for TEA funds to make a local Wisconsin site more competitive for a specific prospective new business. Three quarter of all projects are now part of a package offered along with other state programs (such as local revolving loan funds and tax-increment financing) to further help to promote local community projects.

Eligible projects must meet the following criteria:

Applications are followed by: (1) an environmental review of the project location, and (2) a financial review and background check of the company promising the investment and new jobs. After a positive funding decision, WisDOT district engineers review the project specifications. Approved projects are then implemented, typically, by contractors funded by the city or county agency. The local government agency must front all funds, and WisDOT later provides reimbursement to the local community for its share of the project cost.

WisDOT monitors the results of all grants, in terms of their achievement and retention of the promised number of jobs. Program staff formerly relied on state unemployment filings to observe updated employment figures for benefiting businesses, but that is no longer available to them. Now, WisDOT requests that each benefiting company itself turn in a copy of its own unemployment filings to demonstrate their number of active employees. There was a case in which a new road was built, and the company then moved out within two months. The community then worked hard to find a substitute business for the site, so that it would not have to reimburse WisDOT for the project cost.

The TEA program has had internal audits conducted twice, the most recent being in June 2003. The audits found the following results:

From program inception through the end of 2003, 55,000 jobs have been created through the $56 million invested in grants awarded to 159 communities. Some 247 businesses have benefited from the grants.

5.4 Supplementary Program Information.

The following text is taken verbatim from Wisconsin DOT documents:


Eligibility Criteria

  • The new business development will definitely occur within 3 years if the transportation improvement is completed.
  • The new business development is not primarily retail, an eating or drinking establishment, a recreation or entertainment facility, or hotel/motel.
  • The new business development does not primarily involve transfer of business from other parts of the state.
  • Applicant(s) will comply with all federal and state laws and local ordinances as they relate to the development and use of the transportation facility development.
  • Community acknowledges its willingness to sign a Job Guarantee with WisDOT. The actual Guarantee can be signed later. A copy of a Job Guarantee with the language we currently use is attached. The Community may elect to adopt a like guarantee with the business(es).
  • (If applicable) The road improvement will be under local government jurisdiction, will be open to the public, and all municipalities concur in the project where more than one jurisdiction is involved.
  • (If applicable) The rail improvement will either be under the jurisdiction of a public authority, or businesses or persons other than the TEA application business(es) may use the improvement.

Eligibility Documentation

  • From the community(ies): A written statement on letterhead signed by a company official detailing why it is not able to fund 100% of the proposed transportation improvement and what alternate sources of funding have been explored.
  • From the business(es): A written statement on company letterhead signed by a company official indicating that it is electing to expand in Wisconsin partially because the TEA eligible improvements are promised and that it either: (a) explored expansion alternatives in other states, detailing their alternatives; or, (b) will not expand in Wisconsin at all without the proposed transportation improvements.

Evaluation Data - From the Community

  • Description of the Transportation Improvement
  • Justification for the Proposed Transportation Improvement
  • Cost Estimate of the Transportation Improvement, including amount of materials and unit prices. Eligible cost items are: design engineering, environmental testing and remediation, real estate (purchase price of that portion under the right-of-way only), relocation of residence and business (if applicable), construction, reconstruction (if applicable), utility relocation (if applicable), and construction engineering & contingencies (15%).
  • Proposed Typical Cross-section for a road transportation improvement
  • Site Plan
  • Cost of ineligible infrastructure (i.e., sewer, water, electric, gas extensions to new plant).
  • Funding Sources: Include amount requested from TEA, matching funds, and in-kind services
  • Schedule for Transportation Improvement and Business Development

Evaluation Data - From the Business(es)

  • Description of the business improvement:
  • Estimated cost - land, building(s), machinery & equipment, other capital costs map, site plan, or schematic of the proposed business expansion
  • Explanation of why the proposed transportation improvements are needed by the business.
  • Expected volume of autos and truck/trailers entering and exiting the new facility.
  • Number of jobs and average wage
  • Major standard industrial classification code
  • Job category, number of jobs, average wage
  • Jobs due to: new facility, expansion another state, retention
  • Background information on the company(ies)
  • Financial information on the company(ies)
  • Data for calculating project benefit/cost ratio (rail projects only):

5.5 Examples of Funded Projects.

Wisconsin Transportation Economic Assistance Program Projects FY 2002

Highway Project Business State
Amount
Jobs
created
Private Capital
Investment
Emerald/Emerald Dairy, LLC Corporate dairy farm $200,000 40 $6,390,000
Rhinelander 2/Ponsse USA, Inc. Manufacturing $64,000 30 $1,180,000
Weston/J7D Tube Benders, et al Hardware store $606,500 186 $11,350,000
Hobart/WOW Logistics Co. Wholesale & logistics $243,000 66 $13,510,000
Mauston 3/Shielding for Electronics Manufacturing $536,500 248 $9,170,000
Edgerton 3/Save-A-Lot, Ltd. Grocery wholesaler $304,000 100 $17,430,000
Tomahawk 2/Harley-Davidson Inc 2 Manufacturing $259,000 NA $38,800,000
Green Bay 3/Proctor & Gamble Warehouse/distribution $469,000 100 $21,000,000
Sylvan/Lowe Mfg.Co.Inc. Manufacturing $47,500 37 $1,000,000
Madison/Covance Inc. Research testing lab $507,000 284 $35,280,000
Stanley/Ace Ethanol, LLC Ethanol refiner $151,384 38 $27,020,000
Mt. Pleasant 5/CNH Global, N.V. Manufacturing. $273,000 325 $21,900,000
Chilton/Kaytee Products, Inc. Manufacturing. $205,000 41 $2,300,000
Superior/Phoenix Solutions Inc Metals Reclaimer & Manufacturing. $250,000 50 $8,910,000
Rothschild/Imperial Industries Inc. Manufacturing. $478,500 127 $300,000
New Richmond 3/Phillips Plastics Corp Manufacturing. $129,500 35 $1,800,000
Verona/Epic Systems Corp Software developer $1,000,000 250 $108,000,000
New London 4/Prefecseal, Inc. Manufacturing. $200,000 40 $15,780,000
DeForest 5/Cartonplast, LLC Manufacturing. $200,000 40 $5,000,000
Sub Total Highway Projects $5,923,884 1,997 $330,340,000
Rail & Other Project
Beloit 5/Frito-Lay 3 Manufacturing $259,500 107 $11,650,000
Shawano 3/Bay Lakes Coop Wholesale agribusiness $220,000 44 $6,060,000
Manitowoc 2/Extrutech Plastics, Inc. Manufacturing $175,500 100 $5,820,000
Prairie Du Chien 5/Cabela's Inc Catalog & retail $375,000 75 $10,500,000
Marshfield 2/Wick Building Systems Manufacturing $80,500 35 $4,800,000
Schofield 2/MerrillIiron & Steel, Inc.2 Steel fabricator $122,500 42 $ 680,000
New London 4/Prefecseal, Inc. Manufacturing $200,000 40 $15,780,000
Sub Total Rail Projects   $1,433,000 443 $55,290,000
Grand Total   $7,356,884 2,440 $385,628,000
Updated: 04/18/2012
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