Friday, January 16, 2015

Brewers and Bucks don't pay property taxes? Yes, it's true

Bruce Murphy had a very intriguing article in Urban Milwaukee discussing how the City of Milwaukee has lost over $100 million in property tax revenue in the 14 years Miller Park has been open. And with the financing of a new Bucks arena sure to be debating in the comijng months, Murphy notes that any Bucks arena deal will likely add to the amount of property that can be taxed in the city.

How did this happen? It starts back from when the Brew Crew played at County Stadium in 1991, and the State Legislature passed a provision to give the Brewers a break.
The change in the law came at a time when the Milwaukee Brewers were doing poorly and then-owner Bud Selig was constantly harping about the travails of a small market-team. Once Miller Park was built, the revenue flowing to the team and its market value rose incredibly, yet that law was still on the books, so Miller Park remained completely tax exempt. As City of Milwaukee assessor Mary Reavey noted in an email responding to my question, “this means that all the businesses like TGI Fridays, the Brewer stores, etc are all now exempt from property taxes for both real estate and personal property.”

Legislators were apparently unaware this exemption was on the books, until 2003, when they asked the Legislative Audit Bureau to review the Brewers’ finances, and the LAB revealed that the team was exempt.

Indeed, the assumption was that the Brewers, who own 31.5 percent of Miller Park, based on their contribution to construction of the stadium (a contribution which was itself controversial since almost none of it came from the team), would be paying property taxes on at least their share of the stadium. Nope.
Murphy estimates that this exemption means that the Brewers have avoided $106 million in property taxes over time, and city residents and businesses have to take up an extra share of property taxes to make up for that difference.

Regarding the Bucks and their property tax situation, the Bradley Center is already considered to be a non-profit and exempt from taxes, because it was donated by the Pettit family and is overseen by the state (which is part of the reason the state has ponied up money for Bradley Center maintenance in the past). What Murphy notes is that the law that exempts the Brewers from Milwaukee property taxes can also come into play with a new Bucks arena is under the provision.
So how will the Bucks manage to claim this exemption? I’m guessing their lawyers have concluded that the 1991 law covering pro sports “stadiums” will cover this new arena. The law, 70.11(36)(a)(a), covers “Property consisting of or contained in a sports and entertainment home stadium, except a football stadium” which is “leased to or primarily used by a professional athletic team that is a member of a league that includes teams that have home stadiums in other states.” The exclusion of football allows the argument that the legislature intended to include all other pro sports team facilities, including a basketball “stadium.”

If so, this means that unlike all other businesses in Milwaukee, which pay property taxes to help support all the city services they receive — police, fire, garbage collection, snow-plowing — the billionaires who own the Bucks will pay nothing. Similarly, Brewers’ owner Mark Attanasio (with an estimated net worth of $700 million) pays nothing in property taxes.
Remember, the City of Milwaukee doesn't collect a dime in sales, income or excise taxes, which means the property tax, fines and fees become pretty much the only way the city can generate its own revenues. And when the State of Wisconsin has continually reduced shared revenues to the state's largest city over the last 20 years, with the 2010s featuring a GOP-run State Legislature that almost seems to enjoy hurting Milwaukee to make their suburban base in the 262 area code feel superior, the City of Milwaukee is already having a hard time coming up with the money paying its bills. Losing hundreds of millions of dollars worth of property due to exemptions given to the Brewers and the Bucks is a major hit for city finances, and puts an unfair burden on the city's already-stressed homeowners and businesses.

With the Miller Park tax seeming to be within 5 years of finally sunsetting and the Bucks arena issue sure to heat up over the next few months, Murphy's article is a good reminder that the City of Milwaukee's two sports teams are already receiving major tax breaks due to their property tax exemptions. It also suggests that we should be hesitant to give these guys everything they ask for, since they're already taking advantage of a very good deal at a whole lot of expense to many others in Milwaukee.

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