WisBusiness: Study Says University Research Park Pumps $680 Million Annually Into Economy

By Brian E. Clark

WisBusiness.com

MADISON – The University Research Park on this city’s west side is a major force in not only local commerce, but a player in the regional marketplace.

That’s the essence of a new report that says 22-year-old park contributes more than $680 million to the Badger State economy annually, supports 9,100 jobs on a 225-acre campus, and generates local and state tax revenue of more than $46 million each year.

Northstar Economics, an independent consulting firm, prepared the report. It estimated URP’s economic impact using data it collected directly from park companies and through its proprietary models. The full report is at: www.universityresearchpark.org.

The study said the total annual payroll of URP companies’ 4,155 employees is more than $260 million, or an average salary of $62,000 a year. That figure is significantly higher than the state and county averages of $35,500 and $39,000, respectively.

Mark Bugher, director of URP for the past seven years, said he was “pleasantly surprised” with the numbers in the study because they also show the impact of the park on Dane County and the state.

“The overall number of $680 million is remarkably large and certainly a hefty contribution,” he said. “It underscores the importance of technology transfer from UW-Madison to the private sector. It’s an endorsement of moving research from academia to the entrepreneurial world.”

Tom Still, president of the Wisconsin Technology Council, said URP has been a huge contributor to the Madison and Dane County economies.

“It has added thousands of jobs to the Dane County market, all in the past 20 years,” he said. “It’s an example of how 21st Century economies can work.

“It used to be you wanted to have a big factory and a lot of jobs in one place. But this park has produced a cluster of companies that produces a high number of jobs.

“Ultimately, this is a more stable approach because you know the park and the critical mass it has generated will be here for the long term.”

In addition, Still noted that the park pays millions of dollars in taxes.

“That’s often forgotten,” he said.

Jennifer Alexander, president of the Greater Madison Chamber of Commerce, also said she was impressed with the numbers in the study.

Alexander said the report backs one of the themes of the Chamber-backed Collaboration Council, which is trying to form a regional economic development entity.

“Carefully targeting potential growth sectors in alignment with our region’s assets can really pay off,” she said.

“Capitalizing on cultivating local businesses vs. chasing smokestacks makes good economic sense,” she said, noting that the park has diversified the workforce and boosted the tax base.

“It also demonstrates the importance of the UW System as a regional economic engine,” Alexander said, urging continued support for the university.

Bugher said this is the first economic impact report done on the park. He said the board knew how many companies were in the park and what their payrolls are. But he said no study had been done on their ripple effect.

“The study demonstrates that the return on the creation of URP by UW-Madison, the Wisconsin Alumni Research Foundation (WARF) and the Madison-area business community has been monumental,” he said.

The park is home to 114 firms, most of which were founded based on discoveries made at UW-Madison.

Bugher said he is confident that the cluster of biotech and other firms will expand and produce continued growth for region and state.

The study concluded that more than $170 million of the payroll spending by park companies remains in Wisconsin communities after federal tax deductions and other non-local spending is taken into account.

The study, which was commissioned by URP’s board of trustees and released Tuesday, also found that park companies spend more than $122 million each year on Wisconsin goods and services.

This spending has directly supported the creation of more than 3,600 new jobs at firms that provide goods and services to companies in the park.

Spending by URP company employees also has created new jobs, including approximately 1,300 in Dane County, where the park is located. For every job created by a URP company, the study said, another job is created elsewhere as a result.

In addition to the direct impact of both payroll and non-payroll spending, the study found that the economic contribution of URP to the community is multiplied through the spending of park employees and those who provide goods and services to park companies. For every dollar spent by a company in the park, the study concluded, another $1.47 of economic impact is created as a result.

The tax revenue generated by URP companies and their employees is also significant, the study said. The jobs created by URP-related spending generate an additional $18 million in state and local tax revenue.

Employees of park companies pay more than $8 million in state income taxes, nearly $6 million in sales tax and $11 million in local property taxes. URP itself pays almost $3 million a year in local property taxes.

Bugher said people are often surprised that the park pays property taxes.

“We run an entrepreneurial, non-profit real estate development effort out here,” he said. “We are a partner with the university, but it was decided early on that we would not take a property tax exemption.

“I think the development community views us as an equal competitor.”

Bugher said he hopes potential entrepreneurs, companies considering a move to Wisconsin and state policy makers read the report to understand what a vibrant biotech business community the region has.

“Faculty members who might be thinking of becoming entrepreneurs should understand that others have forged ahead of them and made this model work,” he said.

As for legislators who often criticize the university, he said the study shows how research coming from its labs is creating high-paying jobs.

“The taxes we pay alone are impressive,” he said. “It shows why we need to continue to invest in this extraordinary university.”

Bugher described the relationship between the Legislature and the university as “rocky.”

“We hear from a small number of critical legislators who get a lot of press,” he said. “But I believe the vast majority respect it and appreciate what it does for state and workforce.

“If the Legislature could envision a scenario without UW-Madison, it wouldn’t be pretty for job creation, economic activity or quality of life.

“The university and the Legislature need to work together,” he said. “That would be a lot better than throwing brickbats up and down State Street.”