Both Republican Gov. Scott Walker and challenger Mary Burke, a Democrat, are airing ads with different takes on Burke’s background. Credit: Associated Press / Mark Hoffman

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Seven years after Mary Burke's state Commerce Department issued a $12.3 million award aimed at enticing Illinois-based Abbott Laboratories to expand in Wisconsin, federal officials declared the award improper and demanded their money back.

The deal, touted in 2006 as sure to attract at least 2,400 new jobs with the pharmaceutical giant, has yielded no jobs with the company, which has not developed a site the grant helped assemble.

The deal by Burke, the leading Democratic candidate for governor, came under attack Tuesday in a campaign TV ad by Republican Gov. Scott Walker.

Walker's ad didn't mention the action by the federal Housing and Urban Development office but said that, "As Jim Doyle's commerce secretary, Mary Burke spent $12.5 million dollars to buy a vacant lot for a company that said it had no plans to create jobs in Wisconsin" and had laid off 800 workers in Illinois.

In March 2006, during an election year, Burke joined Gov. Jim Doyle in announcing up to a $12.5 million forgivable loan funded through federal community block grant dollars, the largest such award in Commerce Department history. It was to support development of 500 acres acquired in Kenosha County by the global pharmaceutical maker.

Abbott, a major employer of Wisconsin residents based just 15 miles south of Kenosha County, had purchased 467 acres on the Wisconsin side since June 2005. Doyle and Burke and local officials sought to augment that purchase with another 40 acres paid for with the state award.

The money, $12.3 million in the end, did not go directly to Abbott.

The funds were disbursed to the Village of Pleasant Prairie, which gave them to Abbott. The company purchased the property to take off the market land that was being eyed for a private truck stop, according to Michael R. Pollocoff, Pleasant Prairie's administrator.

Abbott conveyed the land to the Kenosha Area Business Alliance for $1 and it's been readied for development. Abbott did not agree to promise that a minimum number of jobs be created in the deal, but the Business Alliance did — 2,400 jobs within 10 years of the 2006 deal, Pollocoff said.

Kenosha-area officials felt the truck stop could impede a possible expansion by Abbott.

Documents and comments released Tuesday by Walker's Department of Administration at the Milwaukee Journal Sentinel's request showed that after a federal review, the state is now required to repay the funds, half in cash and half by a reduction in future block grant funds.

The HUD office in Milwaukee ordered the $12.3 million repaid, saying in August 2013 the development project was ineligible for the block grant dollars the state had used.

HUD's letter noted the Commerce Department under Burke had no written commitment from Abbott to develop the property or create jobs. In any event, HUD concluded, 10 years is too long to meet the "public benefit" test for block grants. Commerce "participated in a speculative land banking venture without ensuring that the funded activity" would be eligible, HUD found.

Even years later, "the specific proposed use of the acquired land has not yet been identified," HUD's Sernorma Mitchell wrote to state Department of Administration Secretary Mike Huebsch.

A Burke spokeswoman said Tuesday that the candidate strongly disagrees with HUD's finding and would challenge it if elected governor.

In addition, Burke issued a statement, before the release of the HUD documents, saying the Walker ad, "Just goes to show how little Scott Walker knows about economic development and job creation. This was an opportunity to attract the corporate headquarters of a Fortune 500 company — those don't come along very often."

Abbott, Burke's campaign said, "made a significant investment in land and we made sure that there were clawback provisions in place to protect taxpayers if the development didn't move forward in the 10 year time frame that was laid out."

The Walker administration's own housing official, Lisa J. Marks, has questioned HUD's findings, according to the documents released Tuesday.

Marks argued to HUD that while the Abbott jobs didn't materialize, the purchase that blocked the truck stop opened the door to major spinoff development, including Uline's new corporate headquarters and distribution facility that already employ more than 850.

And Pleasant Prairie officials talk up the 2006 deal, saying the plan was part of a long-term strategy involving Abbott.

On the campaign trail Tuesday, Walker said, "We'd be happy to work with Abbott Labs, but we'd actually want to have some sense that they were actually going to develop a piece of land or add jobs. That's the fundamental difference with Mary Burke's administration at that time."

Abbott officials did not respond to interview requests Tuesday.

Burke also released an ad Tuesday. It touted her experience as a former executive in Trek Bicycle Corp., the successful Waterloo company founded by her father, Richard Burke.

The focus on Burke in both ads isn't a surprise.

Opinion surveys such as the Marquette University Law School poll show Wisconsin's polarized voters have already formed strong opinions about Walker — both positive and negative — that won't be easy for television ads to change. Burke, on the other hand, isn't as well known, making advertisements more likely to be effective in shaping public opinion on her.

In her one-minute ad, Burke presented herself as a businesswoman ready to tune up the state's economy. In addition to Trek, Burke references a college preparation program she helped start in Madison schools while serving as president of the Boys & Girls Clubs.

But the ad doesn't explicitly mention her time serving as state commerce secretary or on the Madison School Board, state GOP executive director Joe Fadness said.

"Mary Burke's TV ad conveniently fails to make any mention of her terrible record as commerce secretary under Jim Doyle, raising taxes on the Madison School Board, or how she helped ship hundreds of jobs overseas as an executive with Trek," Fadness said.

Also Tuesday, Walker made clear that his wife and two sons last month attended the same-sex marriage of a family member. The governor did not attend because he was traveling out of state.

"She's a family member we love very much, and it speaks for itself. Everyone in my family attended except for me," Walker said.

Walker's son Alex, who will be a sophomore this fall at the University of Wisconsin-Madison, acted as the state-required witness to the marriage of Shelli Marquardt and Cathy Priem at the Waukesha County Courthouse on June 9.

The governor said none of that represented a policy position for him on gay marriage, a practice that he once publicly opposed but is now no longer voicing his opinion on.

Marquardt is the cousin of first lady Tonette Walker.

Walker also said Tuesday that he wasn't involved in a former aide receiving a new job in the state Public Defender's Office making $113,000 a year, or 31% more than her predecessor in the same information technology post. The governor appoints the board of the public defender's office but doesn't control the agency directly.

Cindy Archer hadn't applied for the civil service job, and she was not among the two finalists put forward to state Public Defender Kelli Thompson by a hiring committee.

Devon Waugh of the Journal Sentinel staff in Milwaukee contributed to this article.