Spectrum Brands/Exact Sciences

Exact Sciences is expected to name the former Spectrum Brands headquarters, 601 Rayovac Drive, as the site of a second lab it will create to process Cologuard cancer tests. For the past couple of months, crews have been clearing out the vacant building so it can be used as a temporary site for at least 350 Exact employees, most of whom will handle customer service calls.

JUDY NEWMAN, STATE JOURNAL ARCHIVES

Exact Sciences is expected to announce within the next few weeks that it has chosen the former Spectrum Brands site for its second Cologuard processing lab — a $57.3 million project.

A company spokesman declined to confirm the decision at this time.

“We are still narrowing and making final decisions and preparations. ... We continue to evaluate options for a second lab location, and we’ll have more details to share over the coming weeks,” corporate affairs manager Scott Larrivee said.

Exact — whose Cologuard DNA-based stool test screens for colorectal cancer — has said it was considering two sites: the vacant Spectrum Brands headquarters and a Fitchburg property it has not disclosed.

The Madison City Council this month approved $2.5 million in tax incremental financing (TIF) for the company if the lab is built at the Spectrum site, where Exact already plans to move several hundred office employees on a temporary basis.

Exact Sciences also has an option to buy 32 acres at the Uptown development in Fitchburg, at the intersection of East Cheryl Parkway and Lacy Road, Chris Armstrong, president of Avante Properties, confirmed. The option remains in force, he said.

The Fitchburg location, though, apparently has not been a serious contender for months, according to Fitchburg city officials.

No TIF proposal or development plan has been on the recent agendas of Fitchburg city committees.

“No negotiations are currently underway. My guess is that we are not in the running any longer,” Fitchburg city administrator Patrick Marsh said. “Yes, it is very disappointing. Fitchburg would have been a great partner in this project.”

Fitchburg Mayor Jason Gonzalez said he thought the Uptown site was being highly considered earlier this year. Then things changed.

“We were directed by them to stop working on our TIF at least two months ago,” Gonzalez said. “We were directed to put the project on indefinite hold by a representative working with the company.”

Exact’s Larrivee said no location other than the Madison and Fitchburg sites are in the running for the project.

In the meantime, starting next week, Exact plans to move more than 350 employees into offices it is leasing in the four-story former Spectrum Brands headquarters building, mainly to handle calls from customers and health care providers using the company’s 24-hour support line.

“Those are the types of folks that’ll be filling that space,” Larrivee said.

The Southwest Side office building, just off of the Beltline at 601 Rayovac Drive, and an adjacent research and development building, 650 Forward Drive, have sat empty for four years since Spectrum Brands moved to a new building at 3001 Deming Way in Middleton in October 2013.

Wages, training plans

The packet of documents sent to the Madison City Council before the vote on the TIF funding offers a broader look at Exact Sciences’ plans, as well as some of the financial ammunition the company used to bargain for a TIF loan that was beyond normal guidelines.

The new lab is expected to be 137,000 square feet, to be built on an existing parking lot on the property.

  • Details are unclear on how many jobs will be created by the new lab. The TIF proposal “would guarantee 250 jobs new to the city of Madison,” according to a memo to the City Council from city economic development division director Matthew Mikolajewski. But some of the jobs would be relocated from the current lab at 145 E. Badger Road in the town of Madison, which also is being expanded. The new lab will have to employ at least 125 by the end of the first year.
  • The wage rate for the jobs at the new lab will range from $31,200 a year to more than $100,000 a year. A breakdown shows three-fourths of the jobs will pay $15 to $25 an hour, or $31,200 to $52,000 a year. Fifteen percent will receive $52,001 to $75,000 a year and 10 percent will receive more than $75,000 a year.
  • Benefits may include an annual cash bonus, company stock, and medical, vision and dental insurance.

A Sept. 6 letter to the city from Exact senior vice president and general counsel D. Scott Coward said Exact is “under contract” at the Uptown development but formal terms have not been finalized. “The city of Fitchburg has indicated that it would be willing to consider a request of approximately 10 percent of project costs,” Coward wrote. That would work out to $5.7 million, based on the estimated construction cost of $57.3 million — more than twice as much as the $2.5 million the city of Madison will provide. Gonzalez said a 10 percent TIF arrangement would fall in line with those allowed for other recent developments in Fitchburg.

  • Exact pledged to target jobs to area residents, particularly those in lower-income areas near the site. The company said it will conduct an aggressive internship, apprenticeship and training program aimed at disadvantaged youth and unskilled adults living nearby, working with the Urban League of Greater Madison — in particular, the Park Edge Park Ridge neighborhood employment center on Gammon Road, just blocks away.

Ruben Anthony, president and CEO of the Urban League, said the organization has had a partnership with Exact Sciences for a couple of years and the chance to expand it is “exciting.”

At least a dozen people trained through the partnership have gotten jobs at Exact so far, mainly in the call center, Urban League senior vice president Ed Lee said.

“They already have a track record of hiring people of color and poor people,” Anthony said. “When you get diversity in your organization without someone compelling you to do it ... that’s a model organization.”

Even the lower-level jobs will provide a “good start for base money” to take care of a family, he said.

TIF matters

Madison’s $2.5 million TIF plan was approved without a “gap analysis waiver” — the process the city uses to see if a project meets the requirement that it would not be feasible without TIF. It also provides more than the $1.8 million city officials said Exact would qualify for, based on a complicated formula the program uses.

One requirement for a waiver is evidence of a competing financial offer from another community. In this case, Fitchburg’s prospects were shelved.

The TIF program lets a community loan money to development projects with the assumption that the loan will be paid back through the higher property taxes the developer will eventually pay on the improved property. Originally aimed at upgrading blighted areas, the program was later expanded to fund projects that will create a large number of jobs.

The city’s plan will put some scrutiny on the company, though. Under an amendment sponsored by Ald. Rebecca Kemble, Exact will get a $1.8 million TIF loan when the company shows it has spent at least that much on the project. The other $688,000 will be held until the lab is built and occupied, and employees have at least 125 full-time-equivalent jobs there.

Publicly traded Exact Sciences has more than 1,000 employees, about 750 of them in the Madison area. It occupies several buildings in University Research Park and has a warehouse and recycling center on Holtzman Road in the town of Madison.

“My guess is that we are not in the running any longer. Yes, it is very disappointing. Fitchburg would have been a great partner in this project.” Patrick Marsh,
Fitchburg city administrator
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Judy Newman is a business reporter for the Wisconsin State Journal.