CRW • Corporate Report • Wisconsin's Business Magazine

While the $787 billion federal stimulus bill is intended to provide a much needed boost for the economy, finding the available opportunities within the American Recovery and Reinvestment Act will go a long way in determining if your business receives a piece of the pie.

Wisconsin will receive about $3.7 billion, including $2 billion for Medicaid and the state stabilization fund to help ease the state budget deficit, according to Wisconsin Gov. Jim Doyle. Statewide, $550 million will go for construction of roads and bridges, $150 million to weatherize and improve the energy efficiency of low and moderate-income homes, while $90 million is earmarked for schools.

“Shovel-ready” projects, those that are the most advanced in the planning stage, figure to receive top priority in how the funds are doled out, and state road building projects that have been on the drawing board for years but delayed for lack of funds would appear to top that list.

While projects and business sectors that stand to benefit from the Recovery Act have received extensive coverage, so far very little money has been awarded as states determine the rules and the proper outlets for how and where the money will be parceled out.

“I think it’s still a little early for dollars coming to specific businesses,” says Mike Green, an attorney with Michael Best & Friedrich in Madison. “How it’s being allocated, and will ultimately be spent, is still being defined. We have clients who are very interested, and, would appear to qualify.”

At the end of April, only public schools, law enforcement and human service programs had received a share of the stimulus money, says Chris Patton, Deputy Policy Director for Governor Doyle’s office. Because the rules and mechanisms for doling out the funds still needs to be determined, much of the stimulus money will not be awarded until next year, Patton says.

Finding the opportunity
In order to determine if your business qualifies for stimulus money, it’s important to understand the areas that are synergistic with your business, and also your customers, to see if they are going to benefit, says Art Harrington, an attorney with Godfrey & Kahn in Milwaukee.

“It’s a very diverse bill that does not provide a uniform structure for following the money – that’s what complicates it,” Harrington said. “Figure out what opportunities are there for you or the people you service, and see if those areas are in the stimulus package. If your customers are going to be direct beneficiaries, that is work you can get.”

For example, if you are in the construction business and doing work on school buildings, there may not be direct money available, but there may be opportunities for providing building efficiency upgrades, Harrington said.

Most of the federal money is going to state and local governments for projects that will be implemented by private contractors who will build the roads, bridges, water works and other infrastructure projects that are a significant part of the stimulus bill. Therefore, it’s essential to get up to speed on how government contracting works, Harrington says.

Hastings Air Energy Control in New Berlin has taken a proactive approach by identifying nine different areas where it could benefit, says general manager Kevin Rohde. Hastings offers systems that clean and recirculate industrial air.

At the federal level, money is available for removing diesel exhaust, as every new fire station in Wisconsin is required to have it in place, and Hastings serves the largest number of fire stations in the state. Energy management upgrades of public safety and university buildings is another target for Hastings, Rohde says.

When it comes to health care, the application of technology to health-care records in order to deliver more efficient services is fertile ground under the stimulus act, says Charlie Herf, an attorney with Quarles & Brady.

However, with the emphasis on shovel-ready projects, the opportunity for investment in health care technology is currently taking a back seat, says Tina Chang, owner of SysLogic, a Brookfield information technology services firm.

“Next year, I feel like there will be great opportunity for investment in health care and electronic infrastructure,” Chang says.

“We will start to see more of the free flow of those funds, and grants in research areas. Right now, everyone is applying for them but nothing is getting funded – yet.”

In the building construction arena, Herf cautions that there are strings attached, such as the “Buy American” requirement for all components.

“We want our clients to be prepared to seize it, because it’s not going to be around forever,” Herf says. “It appears slowly but surely, the money is starting to trickle in. They [clients] are getting grant responses in road construction and Title I (schools).

This money is going to be funneled through the state with the extensive federal reporting requirements, and that is an entanglement that has slowed the process. But Wisconsin and Gov. Doyle are ahead of the curve compared to other states.”

Green energy technology
While almost $50 billion of the federal money is earmarked for renewable energy projects, almost half of that amount has been allocated to enhance energy efficiency and develop an electric smart grid. For business, now is the time to identify products that are energy efficient to get rebates and other forms of financial support.

Stimulus money has been directed to Focus on Energy, a state-run program, and other energy rebate programs that are available through local utilities. Businesses can apply for direct grants from Focus on Energy when Hastings installs energy management systems, Rohde says.

One of the larger renewable energy projects that could be realized in Wisconsin under the stimulus bill is construction of a low-pressure pipeline that would save customers of the Milwaukee Metropolitan Sewerage District $148 million over 20 years by transporting landfill gas from Veolia's Emerald Park Landfill in Muskego to fuel the Jones Island Water Reclamation Facility.

The estimated $80 million effort, one of the largest green energy projects in the state, will require the installation of a 17-mile pipeline, which would mean work for everyone from engineers and consultants to the firms and contractors that would build the pipeline, says MMSD spokesman Bill Graffin. Construction of the pipeline would save brewer MillerCoors –  one of MMSD’s largest customers – an estimated $6 million over 20 years, Graffin notes.

“The higher natural gas prices go, the more our customers will save,” Graffin says, adding that MMSD has filed all of the necessary applications and is awaiting word on whether stimulus money will be made available for the project.

The state wish list includes $993.3 million for green projects, including converting state-owned power plants from coal, investments in research by the University of Wisconsin into alternative energy sources and upgrading state vehicles to run on alternative fuel. The stimulus plan also could result in more wind turbines being built in the state. Wisconsin already has an established alternative energy marketplace in the areas of wind, biogas and solar panels.

The state’s largest corporation, Johnson Controls, is well positioned to take advantage of the allocation in the stimulus bill that calls for upgrading federal buildings to make them more energy efficient. Johnson Controls’ automotive segment could also benefit from the $2 billion federal earmark that provides funding for the manufacture of advanced batteries and components, including advanced lithium ion batteries and hybrid electric systems.

SBA loans enhanced
Because the stimulus also contains a package of reduced fees and bridge loans made available through the Small Business Administration, Rohde said Hastings Air Energy is working to create awareness with its clients about small business loans and microloan programs.

Under the stimulus, the SBA Microloan program has been enhanced to finance up to $50 million in new lending and $24 million in technical assistance grants. Loan guarantees have been raised to as much as 90 percent on some loans, and existing loans can be refinanced for fixed assets to allow for plant expansions. The intent is that this increased guarantee will help thaw the credit markets and assist small businesses in accessing capital.

One new SBA provision offers businesses a temporary guarantee of loans up to $35,000 issued by banks to small businesses to pay existing debt for up to six months. Small businesses are not required to start paying the loan back for one year.

The American Recovery and Reinvestment Act also provides for various tax incentives to help small businesses stay afloat in troubled times. A loss carryback provision allows small businesses with net operating losses in 2008 to offset that loss against income earned in the previous five years. This provision allows small businesses to potentially recoup their losses by getting a refund of taxes paid in the previous years.

By John Rondy

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