Eaton Corp.'s announced move of its local division from the north side of Milwaukee to the Milwaukee County Research Park in Wauwatosa is in jeopardy after the company was denied federal tax credits that would have financed part of the project.
Although Eaton has not responded to repeated requests for comment, city officials in both Wauwatosa and Milwaukee have confirmed that the federal support, under the Treasury Department's New Market Tax Credit program, would not be forthcoming.
"Eaton is pursuing creative ways to overcome the financial hurdles caused by the loss of New Market Tax Credits," Wauwatosa Economic Development Director Paulette Enders said Monday.
An official with the City of Milwaukee who asked not to be identified because of ongoing negotiations with Eaton over the relocation plan also said that the tax credits would not be available to the company.
Financing for the project was to include low-interest loans available through the federal program, which resides with the U.S. Department of Treasury with oversight by the Community Development Financial Institutions Fund. Eaton applied for the tax credits through a community development entity that allocates the credits in Wisconsin and is made up the Wisconsin Housing and Economic Development Authority (WHEDA), Legacy Bankcorp and Impact 7.
Eaton had said that it hoped to begin construction of a 90,000-square-foot facility this summer.
Eaton is an international corporation headquartered in Cleveland, Ohio, that develops and manufactures a wide variety of electrical and power systems for aerospace, automotive and other industries. The Milwaukee division is no longer involved in manufacturing; it employs about 145 people in research and development roles.
The proposed move to the Research Park using federal tax subsidies was controversial because New Market Tax Credits are intended to attract businesses to locate in low- to moderate-income census tracts.
The Research Park location technically qualifies because the only residents in the tract are zero-income invalids living in care facilities.
The relocation project was announced as a $15 million initiative, with about $4 million to have been financed by the low-interest loan using the federal tax credits to draw investors. The Milwaukee official said that Eaton had initially pursued financing of the loan through Johnson Bank, but the bank had withdrawn from funding the project.