Madison's monopoly on state office sites

Why are Madison and Dane County always the default for locating new state government facilities?

By JOHN PAULUS | Nov. 4, 2015

It’s no secret that between state government and the University of Wisconsin, public institutions are a huge economic engine driving Madison’s economy. For most of us, public institutions are taxpayer-funded enterprises — maybe necessary, maybe excessive. In Madison, they appear to be growth industries.

So a new, 600,000-square-foot state office building planned for Madison’s west side is not only touted as needed but is heralded as a catalyst for economic development. The project will cost an estimated $177 million, plus $2 million to pay off debt on properties involved.

The building will be the future home of the Wisconsin Department of Transportation. The state will consolidate staff from seven other agencies at the site, according to the Milwaukee Journal Sentinel. The new building will house 2,000 to 2,500 state employees.

The project involves redeveloping the Hill Farms State Office Building off University Ave., which currently houses the DOT in what has been described as a Soviet-era concrete facility.

Madison Mayor Paul Soglin hailed the building project as opening opportunities for additional economic development on the west side near planned new development as well as downtown.

The state’s GEF-1 Office Building downtown likely will be torn down, freeing its footprint for redevelopment. The state also would sell property on Badger Road on Madison’s south side that currently houses the Department of Employee Trust Funds. That agency would be among the departments relocating to the new building.

Soglin told The Badger Road sale presents “some exciting possibilities on a significant private development in that area.”

So for the City of Madison, the new building is a win-win. It opens up pricey Badger Road property and possibly the GEF-1 real estate for private development.

Yet, the project highlights an increasingly contentious question: Why are Madison and Dane County always the default for locating new state government facilities?

The new office building was funded in the recently passed budget bill. The bill had included a provision to require the state Department of Administration’s Building Commission to consider sites outside of Dane and Milwaukee counties when leasing or renewing leases on state office facilities.

That’s a position strongly supported by state Rep. Joe Sanfelippo (R-West Allis). Commercial real estate prices in Madison are skyrocketing, he told WPRI. The Dane County real estate market is driven by state government development and has resulted in development costs that are much higher than they would be elsewhere. And worse, he said, it’s a market cycle that feeds upon itself. Each project increases the cost of the next one down the road.

Here’s the deal, according to Sanfelippo: “The State of Wisconsin Building Commission’s process is sacred” and it focuses on Madison.

It’s one of the many unwritten and written processes that have made Madison an enclave that concentrates state taxpayer wealth. It’s not a small thing.

This was detailed in a recent WPRI commentary by Tom Hefty. Here’s a short take on it: The median annual family income in Madison is $77,700. In Milwaukee, it’s $40,800. For Wisconsin as a whole, according to the U.S. Census Bureau, it’s $52,413. That’s a sore spot.

Reflecting that point, Sanfelippo said: “It’s a topic I’ve put out in the Legislature. Madison shouldn’t get shared revenue.”

But worse, he said, concentrating state government in Madison doesn’t serve Wisconsin taxpayers well and, more important, it likely diminishes the quality of service from various state agencies and bureaus.

For example, the GEF-1 building houses Wisconsin’s Department of Workforce Development and the Department of Children and Families.

Sanfelippo observed, “The Department of Children and Families — most of their caseload is in Milwaukee,” and he suggested that it makes more sense for the agency to be in Milwaukee.

The same could be said of the Department Workforce Development or the various permitting bureaus of the state Department of Natural Resources. This list of agencies and bureaus that would do better work if they were closer to their “clients” and the “regulated communities” they serve makes a strong argument for decentralizing state government away from Madison.

Gov. Scott Walker vetoed the provision requiring the Department of Administration to consider locating agencies outside of Dane and Milwaukee counties. In his signing statement, he said the department already had the legal authority to do so and it could be accomplished administratively. In addition, he said he would have the department review its processes for locating facilities and to consider opportunities where leases could be made outside of Dane and Milwaukee counties.

 It’s a small measure, which could help loosen Madison’s monopoly on state government facilities. To what degree that actually happens remains to be seen.

 John Paulus of Cedarburg is a retired reporter who covered environmental law and regulation and now writes on public policy issues. This column represents his personal opinion.