Madison's business community is fed up with the city's "utopian" rules - some bitterly saying government is hurting, even killing them.

But despite all of the complaints, the city's economy is crackling, among the nation's best in some ways, Wisconsin State Journal research shows.

The city leads the state in population growth and has its lowest unemployment rate. Downtown has become a hip, magnetic jewel, offering a quality of life that seems to grow more attractive with each cup of local espresso, glass of microbrew and edgy piece of architecture. Homes and commercial buildings with compact, "new urbanist" designs are replacing cornfields on the city's edges. Property values are rising and visitors keep coming.

Although the economy isn't suffering, palpable anger about the smoking ban or paid sick leave proposal is feeding a potentially harmful perception that's spreading. Earlier this year, a New York Times article labeled the city "a hotbed of anti- business sentiment."

The "totality" of social justice initiatives and perceptions about their impact can be a "drag" on the local business climate, said Bill Strang, emeritus professor and former associate dean of the UW-Madison School of Business, explaining that owners, entrepreneurs and investors wonder, "What's gonna come next?"

But a bigger problem, perhaps, is the city's alleged "apathy" - borne of decades of prosperity from state jobs and the university - about keeping, growing and attracting business.

The city has a badly dated zoning code and economic development plan. It asks its respected but understaffed Office of Business Resources to compete with other places that pour greater resources into economic development. Its neighborhood groups wield real power to influence or stop projects. It bristles at tall buildings. It's invested its biggest chunks of public money - tens of millions of dollars - in upscale housing and retail stores, not industries that bring living-wage employment.

"We lack an economic development agenda," said Mark Bugher, former GOP Gov. Tommy Thompson's secretary of administration, director of University Research Park, and chairman of the city's Economic Development Commission.

Mayor Dave Cieslewicz, a liberal with an environmental background who has warmed to business since his election in 2003, said he's listening, has a vision and is making changes, but conceded, "This is a big ship to turn around."

'The little guy'

Moves to protect public health and safety, make the city look better, open up government, provide lower-cost housing and "help the little guy" are about improving quality of life, the cornerstone of a vibrant business climate, advocates say.

"These are the things that determine what kind of community we're going to have," said Rick Richards, chairman of the economics issues task force for the grass-roots, leftist political party, Progressive Dane, which controls seven of 20 City Council seats.

Not everyone in the business community is complaining, and some embrace the moves. But so many initiatives so fast - six major proposals in three years - have created a backlash.

"The sleeping bear has been awakened," Bugher said.

It's especially galling, some business owners say, because proposals to "micromanage" business flow from policymakers who have never had to meet a private payroll.

"It's a socialist point of view," said Mary Feldt, president of Park Towne Management, which owns 15 commercial buildings and manages others. "For some reason, they think people making a profit is evil."

Although she says she has little hard evidence, the council's "dictatorial" moves create a climate that repels business, said Jennifer Alexander, president of the Greater Madison Chamber of Commerce.

The initiatives are especially tough on small business, said Ray Allen, who is challenging Cieslewicz in the spring elections.

A different opinion

The complaints are heaped atop longstanding frustrations with taxes and hassles such as getting approval for a construction project, liquor license or just a business sign, Alexander and others said.

Until a few years ago, the city required a special $250 license to allow dancing in bars and restaurants, even in front of a jukebox.

Frustration poured out in 2004 at intense hearings sponsored by the Economic Development Commission, which advises city officials on the needs of businesses. Complaints ranged from a liquor store owner complaining that a "dark skies" initiative might kill parking lot lights to a hospital vice president who said delays and rules added $1.1 million to the cost of a major expansion project.

The sick leave proposal - defeated in May, but not dead - was the final straw for businesses, generating "more passion and energy and emotion than any other," Alexander said.

Cieslewicz even bucked his progressive instincts - and political base - and opposed paid sick leave as being too much, too fast.

But too much, too fast depends on perspective.

"Talk to people who are trying to use mass transit to get to jobs paying minimum wage without sick leave," said Progressive Dane's Richards. "You'll hear a different opinion."

Critics of the city point to businesses that have left - most of Epic Systems, the corporate leadership of Spectrum Brands, a Madison-Kipp Corp. expansion - as evidence that something's wrong. Those companies, however, cited various reasons for leaving, but not progressive city initiatives. When Alliant Energy left Downtown, it stayed in the city, moving to the Far East Side.

It's also unclear if the city's rules hurt business profits beyond some smaller bars on the outskirts suffering with the smoking ban.

"You can't always tell when a tenant has decided not to come to Madison," Feldt said. "I've had tenants move to Middleton. Was it because of the city of Madison? I don't know. I've had at least one tenant tell me, if there's any more of this, they're not renewing their lease. Would that cut into profit? You bet."

Lindsey Lee, owner of the Cargo Coffee and Ground Zero coffee shops, said the major cost challenges for business are health care and energy, and that it's "disingenuous" to say the city is a bad place for business.

Lee, who voluntarily began offering paid sick leave at his labor-intensive businesses during the recent debate, said it hasn't hurt profit. "Not at all," he said.

The city, Cieslewicz and others maintain, has a healthy business climate, evident in objective data or even a drive around town.

"Every time the Chamber of Commerce's hyperbole is measured against facts, they lose the argument," said City Council President Austin King, a main force behind the minimum wage and sick leave.

Susan Schmitz, president of Downtown Madison Inc., a diverse group that promotes the urban core, cautioned that harm isn't readily visible yet. "The fear a lot of us have is that, in 10 to 15 years, we'll say, holy ... what happened?"

Neighborhood watch

Although there's uncertainty about what the council may do next, the real wild card for developers is the city's influential - praised and sometimes feared - network of neighborhood associations. The groups have succeeded in changing some projects and killing others and are playing an ever-larger role in setting the landscape for growth.

"If you want to come into a neighborhood, it's neighborhood meeting, neighborhood meeting, neighborhood meeting ... " said Jim Garner, owner of Serginian's Floor Coverings and member of the chamber's small business advisory committee.

Neighborhood leaders say developers sometimes seek a "rubber stamp." But caring, involved residents make sure projects fit surroundings, look good, and contribute to a quality of life that ultimately makes business want to be here and stay here, said Ledell Zellers, president of Capitol Neighborhoods Inc., which represents areas that hug Capitol Square.

And residents are flexible, Zellers and others said. Neighbors helped St. Mary's Hospital move ahead with a major expansion on Park Street and worked with Gary Gorman to shape his $84 million Avenue 800 condo and retail project on the East Side, which, ironically, stalled over a dispute with city officials over public financial assistance.

A new posture

Cieslewicz insists the city can be both progressive and pro-business.

In response to complaints, the Economic Development Commission issued a 46-page report in December 2004 that called for changes in attitude and procedure.

The city is making many of those changes, from online permitting for minor changes like windows, roofs and doors to exploring a "one-stop shop" for reviewing construction projects, Cieslewicz said.

Stung by high-profile business departures - and the loss of tax base - the city developed a "Rapid Response Team" and has delivered loans, reduced land costs, tax credits and more to help more than a dozen companies, the mayor said. It helped Covance, one of the world's largest drug-testing companies and one of the city's biggest employers, with a $57 million expansion, he said.

Madison is now creating a "BioAg Gateway" campus on the city's Southeast Side, which the city and developers think could be a revolutionary place for promising, new technologies in agricultural and biological research, he said.

And the city is using public assistance to boost manufacturing on the Southeast and North Sides, and targeting the Near East Side as a place for jobs, added city Planning and Development Director Mark Olinger.

The business community is split on how the outreach is working.

Bugher, for example, questions if the city is being aggressive enough on the BioAg Gateway.

Terrence Wall, owner of T. Wall properties, said Madison's business climate has deteriorated.

"The reception we get in other communities - it's wonderful," he said. "They want business. They don't treat you as a pariah."

But Bret Newcomb of Newcomb Construction said "things are better," especially with city staff.

More to do

The city, in fact, won wide praise for delivering a $700,000 loan that helped TomoTherapy, a producer of cutting-edge medical equipment, expand.

But the loan, critics say, depleted the fund used for such assistance and fa ade improvements, proving there's not enough of such help available.

And there's much more to do.

As the city struggles to create work force housing, it would be great to see the same "energy, passion and resources" put into creating jobs, said Carole Schaeffer, executive director of Smart Growth Madison, a development industry group.

The city, critics note, still hasn't delivered a long-sought mid-State Street parking garage or mapped out parking to support hoped-for business growth on the Near East Side.

In tight budget times, Cieslewicz has yet to find $250,000 this year to rewrite the zoning code, which is so dated that most major projects are reviewed through an alternative process that lacks consistent, detailed standards.

The code doesn't even distinguish new, clean manufacturing ventures that can be done in office spaces from messy ones like pig slaughtering.

The council, meanwhile, refused a proposal by Progressive Dane council members to deliver $50,000 this year for a consultant to help update the city's 23-year-old economic development plan.

Cieslewicz said his 38-page Healthy City Initiative of 2004 lays out a vision and serves as a plan. It calls for growing businesses rooted in the area's strengths, job opportunities for all, being business-friendly, healthy living, a 21st-century infrastructure with rail transit, fiber optic networks, and quality power, and working with regional neighbors.

But it's the mayor's vision, not a city plan. City officials hope to have a plan written by next summer.

The city's apathy, critics say, is apparent with a look at staff resources devoted to economic development.

The city hasn't had a community and economic development director since December 2003, or an Office of Business Resources director since January of this year. The city is waiting to fill the former job until a major Planning Department reorganization and expects to hire the latter by the end of the year, officials said. The Office of Business Resources, meanwhile, operates with one full- time and a half-time employee. Des Moines, with a similar population, has five full-time economic development coordinators.

Some even make jokes, like one told at a recent Smart Growth Madison meeting, Schaeffer said.

Member: "What's the city's long-term strategy for growth?"

Another member: "Middleton."

A reality looms behind that humor.

Although Madison attracts the lion's share of construction, some suburbs are flexing muscles. In 2003 and 2004, Middleton, not Madison, saw the most construction spending for manufacturing in Dane County, data show. Last year, the $41.5 million for retail and service industry construction in Fitchburg was more than the $40.8 million spent in Madison.

Madison, the mayor vowed, will address many issues with the much-anticipated Planning Department reorganization that will make economic development more of a priority and be part of the mayor's proposed budget for 2007.

"I think it's important to step back and do it right," he said.

Read the full series
Read the blog and add your comments on Madison's economic future