Sunday, April 12, 2015

Bucks project expands, but who'll pay the bill?

A huge bit of news from the week was the announcement that the Bucks arena project, has evolved into something much larger- a multi-block entertainment complex that could lead to development of more than $1 billion. Rich Kirchen of the Milwaukee Business Journal has been very good at covering this story, and here's his summary of what the project will entail, which will be located at the current Bradley Center site, and go north and west for a few blocks.
The arena and entertainment “live block” that would anchor the new development. The live block would front Fourth Street and connect with Old World Third Street;

• The arena design itself. The building would include glass and “transparency” that would provide views of Milwaukee’s skyline.

• The “live block,” which the Bucks said would be an “arena arrival experience” augmented by a transparent facade that marks the front door and a “monumental atrium.”

The live block would serve as both an “arena forecourt and community living room,” the Bucks said. The block would be designed as a year-round destination.

“We’re not just trying to build a new home for the Milwaukee Bucks, but create a 365-day attraction for Wisconsin residents that will help revitalize downtown Milwaukee,” said Bucks president Peter Feigin. “We’re excited to share this glimpse of our vision for the future as we continue to work with our local and state partners to arrive at a viable plan. This collective effort will create a ripple effect of growth, development and transformation for the entire community and region.”
And if you look at the architect's drawings of the proposed development, it's pretty badass. Here's a look the Milwaukee River, looking west across 3rd, 4th, and 6th Streets.

The site is certainly available, as this article from Sean Ryan of the Business Journal mentioned last week.
Milwaukee County on Monday received an offer from an unidentified party for the purchase of land in the Park East corridor that the Milwaukee Bucks' owners are targeting for some of the $500 million in developments surrounding their planned arena.

That offer likely came from the Bucks organization, although county officials declined to discuss details. Milwaukee Bucks officials have yet to respond to a request for comment.

The county and city of Milwaukee own 9.8 acres between West Juneau and West McKinley avenues where Bucks owners on Wednesday unveiled plans for development to surround a new arena.
That empty lot of land has always been a blight as you head into downtown on McKinley, and would be a great introduction to the city for folks coming off of Highway 43. This is definitely more of what I wanted to see out of this project, where the arena is a mere part of a much larger development, and I'm very much in favor from that part of the Bucks arena issue.

Of course, the tough part is to make sure the public and private financing is truly there. Gov Walker had a plan to borrow $220 million of state money to chip into the arena (with the Legislative Fiscal Bureau saying that lifetime costs would reach $488 million when you figure in the total debt that's also to be paid), but it clearly hasn't gone over well with many decison-makers and the public, and an alternative proposal from Senate Majority Leader Scott Fitzgerald has looked at reducing that initial borrowing number to $150 million. Much of the non-arena development seems to be ready to be financed by private investors, which would leave the state off the hook for that part. And there are signals from Assembly Speaker Robbin' Vos that some kind of Bucks-related package will ultimately go through the Legislature as part of state budget discussions.

But here's where things get tricky, because Robbin' and the anti-Milwaukee GOP legislators also are yapping about how the City and County of Milwaukee need to "step up their game and make more of an investment" in the [Bucks] project. This seems to indicate that they have no clue what the local Milwaukee governments are already offering up and giving up to the project, which is a lot. In addition to supplying and maintaining the streets, sewers, community law enforcement and related infrastructure for the proposed development, take a look at this provision that is part of the LFB's summary of the Governor's plan for the "Sports and Entertainment District" in Milwaukee.
District Income Tax Exemption. Specify that the income of a sports and entertainment district would be exempt from the state corporate income and franchise tax. (this seems to be related to income from investments that the district board makes, and not the profits of the team itself...I hope)

Property Tax Exemption. Current law [s. 70.11(36) of the statutes] provides a property tax exemption for property consisting of or contained in a sports and entertainment home stadium of a professional athletic team that is a member of a league that contains teams with home stadiums in other states. The exemption includes parking lots, garages, restaurants, parks, concession facilities, entertainment facilities, transportation facilities, and other functionally related or auxiliary facilities or structures.
Sure seems possible that a whole lot of this development could fall under this definition of a "Sports and Entertainment District", which would mean the City and County would not get any of the benefits of a higher tax base for it, while still being expected to install and provide the services for those buildings. That seems to be one hell of an in-kind contribution without getting the property value benefits from it, and it sounds similar to what Urban Milwaukee's Bruce Murphy described when he mentioned that the property tax exemption for Miller Park will allow the Brewers to avoid paying $156 million in property taxes over the course of 40+ years.

With that in mind, the Milwaukee contingent of the Legislature should write into any Bucks bill specific limitations on where this district is, to make sure the city and county taxpayers are not on the hook for making up the difference that would result from the write-off of hundreds of millions of dollars of tax base that would otherwise be added to the city and county totals. Combine that with the services that would be provided with this entertainment district, and it sure seems like the City and County are paying more than their fair share as it is, (especially if the Park East land is sold for below full market value). So the GOPs at the Capitol would be wise to shut their mouth about Milwaukee's contribution to this project if they want it to work, because it sure seems possible that like most things in this state, Milwaukee is putting a lot more than they get back with the Bucks arena and related development.


  1. So in other words the so called property tax exemption for all the businesses located in the "Sports Complex" is really nothing more than a taxpayer funded handout to the wealthy.

  2. If the added development is exempt from property taxes, that seems like a helluva giveaway. I would caution that I'm not sure the extra buildings do fall under that exemption. I sure hope not, and I'd ask the legislators to make sure they ARE not

  3. Looks like a hipster paradise!

  4. From all Bucks prez Feigin has said about wanting to be as "opportunistic" as possible and get as big a footprint as they can (about 27 acres) it looks like this "arena annex" will all be under the tax-exempt umbrella. Bucks will likely get a big cut of all revenues, as they do now from every BC transaction, and the "public" arena authority will have to cover all upkeep, management (getting/keeping tenants), and trying to cover all deficits. (All pain, no gain.) BC can't keep up now with the Bucks revenue share ($4.7M of total $11M receipts in 2014), so ticket surcharges, MU * Admirals rent, $10 in state subsidies, biz sponsors try to make up for it. And the arena was a gift!. There's no way for this to return taxpayer investments, or as "econ development, but the pretty pictures will make everyone swoon and sign on the dotted line. Bait & switch. Heads, Bucks win, tails, we all lose!
    Oh, and the city will hand over the garage it built for $25M, plus $1M in annual income, to build this new "live block" PLUS pay for a new parking garage, so Bucks can get revenue from that. A great way to screw MKE.

    1. Milwaukee's Bruce Murphy mentions the parking garage in his new article today, as well as it her in-kind donations the city would be making with this project.

      It does seem that the new development won't be part if the tax exemption, but I still want to see it on writing in the bill

    2. Bucks are also talking about "other development" in Park East as well (such as a training facility, maybe hotel someday). Not sure if that will be tax-exempt, but this annex absolutely was presented as integral part of the 27-acre arena complex pictured in renderings. Their goal is to get more businesses under the umbrella of Bucks' revenue skim, tax exemption, etc, all taxpayer funded. And they're calling the annex a public space, even though it's a multi-floor mall.nightclub. They said they're modeling it after "Kansas City Live" which has a strict "dress code" and entry is for 21 & over. Not like any public space I know of. Public Risk. Private Reward. Same as it ever was with sports venues.

  5. PublicPurseDefenderApril 17, 2015 at 7:14 PM

    Bucks getting big cheers for planning to build practice facility & more. At very least, they'll likely get free land & pay no taxes for all their projects, adding them to the "district". At worst, taxpayers may end up paying to build them, too. Bradley Center district could not make a go of running one off-site restaurant (at Turner Hall) but it was just a lease that was cancelled. They want to take over huge swaths of property--including a city-owned parking/commercial structure that makes a million a year, Ugly's & other venues on 3rd St., Sydney Hih parcel, major amounts of Park East. We won't have as many vacant lots but city tax base will be far worse off w/all that new development and NO NEW TAXES!