History

"Use this and do good." That was the behest from then - Mayor Paul Soglin when his concept of a quasi-public economic development organization was created in 1977, armed with $500,000 in federal Community Development Block Grant funds, approved by the City Council.

Over thirty years later, the Madison Development Corp. (MDC), 550 W. Washington Ave., is still chugging along, providing loans to young businesses and offering low-cost apartments to residents.

Frank Staniszewski has been MDC's president since 1985. A Cleveland native who spent eight years working for the U.S. Department of Housing & Urban Development in Milwaukee, Staniszewski, works with a 13-member board of directors.

"The group, and Frank, have filled a great niche in the marketplace, particularly for microbusinesses and startup businesses that are looking for financing, that don't have all the equity or all the questions answered from a traditional bank financing perspective," said Mark Meloy, president of First Business Bank in Madison.

"Undoubtedly, there are a lot of success stories that have had some kind of financial start through MDC," said Meloy, who served on MDC's loan committee from 2000-2002.

Over 300 business loans, totaling more than $20 million, that MDC has issued over the past 33 years have helped to create 4,000 jobs, most paying at least twice the federal minimum wage.

Companies that have become part of Madison's fabric, such as Union Cab, the Willy Street Co-op and Michael's Frozen Custard, have been some of the recipients, Staniszewski said.

• Q: What brought about the creation of the Madison Development Corp.?
  A: When MDC was founded in 1977, development corporations were being founded around the country. The idea was to be non-bureaucratic and apolitical, in order to work more nimbly and flexibly than cities do, on business development, job creation and economic diversification. Housing was always part of MDC, but further on, it became more of a key role.
  


• Q: What do you aim to do, to help local businesses?
  A: If I had to sum up our business focus, I would say it's providing capital for hard-to-finance businesses. Restaurants, minority-owned businesses, neighborhood retail shops - these can be a tough grind.
  
  Places like Monty's Blue Plate Diner, Mother Fool's Coffeehouse, Community Car and WORT radio have all received MDC loans. MDC has always been there for non-conventional ventures that really can become, and have become, strong businesses. These businesses today help define Madison. And more recently, new technology businesses. It's a tough area for conventional lenders to grasp. Because of research and development, these companies may show a loss for many years; also, lenders are generally not trained in the technology.
  


• Q: Are your loans at discounted interest rates?
  A: No, they are market-rate loans. We almost always charge what banks charge.
  
  We don't want people coming to us because they want free money, grants or 2 percent interest. We want them to come to us because they can't get it anywhere else.
  


• Q: What is MDC’s budget and where does the organization get the money to make loans?
  A: The money has principally come from Community Development Block Grant funds that the city of Madison obtained from the federal government. Over a number of years, MDC built up $3 million in CDBG allocations and it became our revolving loan fund. The principal goes out to Madison businesses and the payments come back in. Every year, we get about $700,000 in payments, so we loan about $600,000 to $700,000 a year. We also earn about $200,000 a year in interest; that pays the bills to run this building and (MDC's projects). That's our main source.
  
  We don't get any subsidy. We live off the interest and keep lending the money that comes in from borrowers. So we're really self-sufficient and self-sustaining.

  In the early 1990s, several banks invested a total of $600,000 in a fund that allows us to do similar lending throughout Dane County, not just in the city of Madison.

  Then in 2004, we raised a Venture Debt Fund to help technology businesses. Banks, Madison Gas & Electric, the development corporations of Fitchburg and the Middleton area, and a small amount of Madison block-grant money was pooled to MDC to create a new fund. Today that Venture Debt Fund has almost $5 million for technology businesses throughout Dane County. The tech sector has also been where the strongest demand for loans has been, and generally they need larger loans than in other industries.
  


• Q: Have you had any big surprises, companies that you weren't sure would make it?
  A: The Barrymore Theatre would be a very good example - that was a long slog. Rescued from showing pornographic movies, the theatre was purchased in 1987 and began showing specialty films and holding live performances. Then the owners had to recapitalize in the early 1990s, also changing the theatre's focus.
  


• Q: What is MDC's aim with its housing properties?
  A: Quality, affordable housing is part of our mission. We buy property that may be troubled, fix it up, manage it better and rent it at lower-than-usual prices to lower-paid, working-class people.