Wednesday, September 2, 2015

Bucks update- the city will still have its say

You may think that the new Milwaukee Bucks arena is a guaranteed “go” at this point, given that the State Legislature signed off on the arena funding bill in July. But that’s not necessarily the case. The City of Milwaukee still needs to set aside its part of the Bucks arena project, and that’s not a small portion. Here’s a good rundown from the Milwaukee Business Journal on what the City still has to agree to.
The proposal [City Comptroller Martin] Matson reviewed calls for the city to contribute the $47 million through tax incremental financing (TIF) derived from the existing Beerline district and a new tax incremental district that includes the Park East corridor. The city would repay the $47 million with increased property tax proceeds from the new development.

The Bucks propose new retail, residential, office and hotel development along with a new practice facility and the new arena.

The city would contribute $35 million toward a new parking structure on West Juneau Avenue across from the new arena and $12 million toward a 130,000-square-foot plaza on North Fourth Street and West Highland Avenue at the site of an existing parking structure that will be demolished.
Matson indicated the City could come up with the funding to do this, and eventually be able to close out the TIF district in less than 20 years. You can take a look at the report yourself, and see what you think about it.

There also has been a fiscal and economic feasibility study done for the city on the Bucks project, and it gives a good insight on which properties should eventually pay property taxes around the new arena. This was a big bone of contention, as much of the area around the arena project was initially proposed to be exempt from property taxes, which would have put a huge burden on the City and County of Milwaukee. But this area seems to have been significantly decreased as the bill was hashed out, to the point where only the arena itself and the nearby “live block” seem to be the ones getting the property tax break.
Tax parcels associated with Arena Project and the Phase 1 City-owned parking garage are expected to remain property tax-exempt upon completion and therefore will not generate property tax increment. However, it is our understanding that the Developers will not seek property tax-exempt status for any parcels associated with the Greater Arena Project and that the site currently occupied by the Bradley Center will become taxable upon demolition. Incremental property tax revenues resulting from the increased value of Greater Arena Project parcels and inflationary growth on other parcels within the TID comprise the revenue stream for the TID.

Given the conceptual nature of Phases 2 and 3, SB Friedman analyzed only the ability of a modified version of Phase 1 development program to amortize the expected TID expenditures. While the Developers’ Phase 1 program (presented in Chapter 1) includes two residential rental projects, only the proposed 98-unit residential rental property has been included in the projections. An additional proposed eight-story 48-unit residential rental project has been excluded to limit the overlap of product types in the Phase I development. Blocks 2 and 3, which are currently occupied by the Bradley Center, are assumed to be become taxable as vacant land upon demolition, and will therefore generate future increment. Detailed information regarding valuation of the Phase 1 development components is presented below.
This plan had a public hearing this Monday, and is scheduled to go before the city’s Zoning, Neighborhoods and Development Committee on Sept. 15, and then the full Council on Sept. 22.

The timing is interesting, as Mayor Tom Barrett’s budget is usually introduced around that time, so the question would be whether the Bucks proposal is included in that document, or is it not? In addition to an estimated $275,000 in lost revenue from the demolition of the 4th Street parking garage, Matson’s letter mentions that there would be a little more than $4 million in infrastructure costs that the city would take on to help build the new pedestrian plaza and resurface Juneau and Highland Avenue as well as do work on other streets around the new arena site (one block north of where the Bradley Center is today). So let’s see where those numbers figure into the 2016 City budget as well, and see if some other spending has to be held back as a result.

However, the city’s tax base (and Barrett’s budget as a result) does seem like it’ll get some help in the near future from another venture of one of the Bucks’ co-owners. Bruce Murphy at Urban Milwaukee has an intriguing story about how Milwaukee’s Common Ground coalition shamed Bucks co-owner (and hedge funder) Wes Edens into having one of his subsidiaries give tens of millions of dollars toward foreclosure relief in the city.
Yes, the press conference was held by city officials, with Mayor Tom Barrett and Common Council President Michael Murphy announcing the Nationstar settlement. And yes it’s very good news for Milwaukee, which needs all the help it can get to fix the problem of home foreclosures, which can have ruinous effects on neighborhoods.

But it was really Common Ground that discovered and publicized the fact that Nationstar was owned by Fortress Investment Group, a company in turn owned by Milwaukee Bucks owner Wes Edens. Common Ground assailed Edens as a "slumlord" who was asking for government financing of a new Bucks arena even as Nationstar was responsible for foreclosed and distressed homes in Milwaukee. It was an ugly picture that made Edens look like a cold-hearted corporate villain, and made it far tougher to sell the Bucks bailout.

And here was the Common Council, facing a vote on the city subsidy for the Bucks. The announcement of Nationstar’s $30 million commitment was perfectly timed as a way to replace the image of an uncaring Edens with that of a business leader who wants to help Milwaukee.
Even with this, Common Ground mentioned at Monday’s public hearing that they were unhappy with the prospect of more money going to the Bucks arena than what was going to playgrounds and other athletic facilities in the city, and would make their voice heard more as the 2016 city elections near, when all city alders and the Mayor are up for re-election.

So let’s see how the final piece of the Bucks funding puzzle plays out over this next month, and to see if there are any ripples in the city’s budget or its politics in the near future. The Bucks arena issue may not be as dead or forgotten as the Milwaukee oligarchs and the sports media wants to think it is.

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