Monday, March 11, 2019

So are we paying for Fiserv Forum, and how will we pay for DNC 2020?

You may have heard a sizable event is heading to Milwaukee in July 2020, and a new resident of the Cream City was glad to take credit for it.

Oh, Scotty says he didn’t raise taxes to get the Fiserv Forum built? Well, let’s go the Legislative Fiscal Bureau’s summary of the Bucks arena package and see how this arena did get paid for.
Sports and Entertainment Facilities Project Public Funding. Expand the authority of the Wisconsin Center District (WCD) to allow the District to issue up to $203 million in bonds to assist in the construction of a sports and entertainment arena and sports and entertainment arena facilities in downtown Milwaukee. In addition, before any state funding could be provided to WCD for the project, the Secretary of the Department of Administration (DOA) would have to determine that the City of Milwaukee has provided at least $47 million and the Wisconsin Center District has issued debt for the development and construction of a sports and entertainment arena facility. The proposal also anticipates that the City will finance the construction of a $35 million parking structure and $12 million in bonds for a tax incremental financing (TIF) District development near the facilities.

WCD would provide $203 million in bond proceeds for the project. However, in order to do this, it is anticipated that WCD would receive more than $203 million in bond proceeds, as allowed under the Act, for the following amounts: (a) amounts to pay issuance or administrative expenses; (b) to make deposits to reserve funds; (c) to pay accrued or funded interest; and (d) to pay the costs of credit enhancement. The accrued or funded interest would include any potential capitalization of interest associated with zero coupon bonds that are expected to be issued by WCD. It is likely that WCD would have to issue zero coupon bonds because its current tax revenues are needed to retire the District's existing bonds, and thus, would not be fully available to pay debt service on any new bonds until that current debt is retired.

WCD would use the following revenues to fund the debt service on the bonds they would issue for the project: (a) $55 million in bonding would be supported by a $4 million annual general purpose revenue (GPR) appropriation from the state to make grants to the District, which would sunset in 2035-36 and would be limited to $80 million; (b) $55 million in bonding would be supported by a separate $4 million annual GPR appropriation from the state to make grants to the District which would sunset in 2035-36 and would be offset by a $4 million GPR, annual reduction in the county and municipal aid payment to Milwaukee County; and (c) $93 million in bonding would be financed by indefinitely extending the existing WCD taxes, which would otherwise end after the District's current debt is retired, which is scheduled to occur in 2032.
So the state is spending $8 mil a year toward the arena, which is being partially offset by $4 mil that they aren’t giving each year to Milwaukee County. In addition, the food/beverage, car rental and room taxes for the Wisconsin Center are now permanent.

In addition to the extra spending, there is a TAX that helps to pay for the arena, and some of it goes to the state. But it’s only paid by people attending Fiserv Forum.
The Act also specifies that the WCD Board require the sponsor of an event held at a sports and entertainment arena to impose a surcharge on each ticket that is sold to the event equal to $2 on each ticket sold. Estimated revenues from the surcharge would be $2 million annually in the first year after the arena construction is complete and events begin to be held. The WCD Board is required to remit 25% of the surcharge revenues to DOA for deposit in the general fund and the District would retain the remainder of the surcharge revenues, which the Board could use to offset the District's cost for the arena facilities. It is estimated that GPR revenues to the state would increase by approximately $500,000 annually to reflect the deposit of these funds to the general fund, which would offset state's cost for the arena facilities.
So Walker is not entirely giving the full truth about the state taxes and spending that are part of the Bucks arena, and is instead parsing words because it's not technically a STATE tax that goes to the Forum - typical Walker seaminess.

And Walker nor WisGOP have allowed the City of Milwaukee or Milwaukee County to raise their own revenues to make up for the extra costs and expenses that they have taken on with this arena. Instead, they are still under the same property tax and sales tax limitations that they had before Fiserv Forum was a thing (although theoretically, they’d have more tax base, which lets them raise property taxes in general).

But there should be enough ability to get the large number of people around the city during DNC 2020. After all, we have a wide-ranging light rail coming in from the suburbs and intercity train travel out to Madison and up to Green Bay. Oh wait., NO WE DON'T! (thanks again, suburba-GOPs and AM radio hate talk).

A huge event like DNC 2020 will require a lot of security and other government-type services for Milwaukee. So how’s that going to work? We found out some of that today, via a quick meeting of the Milwaukee Common Council this afternoon.
The City of Milwaukee won't be on the hook for costs related to the 2020 Democratic National Convention, according to a contract approved Monday by the Common Council.

The contract, an agreement between the city, DNC Services Corp. and the host committee, was approved unanimously during a special council meeting at City Hall….

The resolution to approve the contract spells out, for example, that federal grants are expected to pay the costs for police and other security services needed for the convention. Although not detailed in the contract, the federal government is expected to provide a $50 million stipend for security costs.

"In the event federal grants are not available, the city agreement requires the host committee to reimburse the city for such costs," the resolution reads.

The DNC and the host committee are entering into a separate agreement with the Wisconsin Center District. A third agreement would be between the DNC and Fiserv Forum.
Ordinarily, I’d assume the federal money to offset the costs of cops and other services would be a routine move. But with the classless jags that we have in charge these days? Stay tuned, as I could totally see Trump and McConnell try to make the DNC pay for those costs instead.

I'll admit that I never backed the Bucks arena package, because I felt that there were so many other needs in the city and the state that we could spend $250 million on. But it’ll still be very cool to have this major event in my home state in 16 months, just like having the MLB Playoffs in Milwaukee last October was great to be part of in person (the NBA Finals this June would be much bigger, by the way).

It’s also outstanding to see an underrated city like Milwaukee command the national spotlight. Maybe now Republicans in Wisconsin will stop their race-baiting and remove the fiscal handcuffs from the state’s largest city, as they’ll recognize that the major attractions that come to Milwaukee also bring tourists to the GOP-voting suburbs, and adds a lot of tourism-related tax dollars to the state’s treasury that is used throughout the state.

HAHAHAHAHA!!! Just kidding, WisGOP. We know you won’t do a sensible thing like that. In fact, watch for these guys to try to monkey-wrench DNC 2020 in some way, even though many of these guys voted for the arena and development that allowed Milwaukee to compete for the convention.


  1. Here's Jeramy Jannene from Urban Milwaukee with more on the DNC's contract with Milwaukee. Among the odd items.

    1. Lots of police escorts and safes.

    2. The Convention won't just be at Fiserv, but also the Convention Center, Milwaukee Theatre, and the UWM Panther Arena/MECCA. There's akso supposed to be streets blocked for a "protest area" (lame, but typical).

    3. The DNC has rights to all official gear. Very NCAA-like. We'll see how well that works, especially with GOP ratfuckers being the petty adolescents that they are

  2. 8 million a year toward an arena which will function as a revenue source, true, but the net flow of revenue will not be to local businesses, local government, or, tellingly, to the local economy.
    No, the net flow of revenue from this arena will be out of the local economy.
    David Kay Johnston wrote about the corporatized sports welfare machine in his book, "Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill)."

    1. Have referenced "Free Lunch" a few times on this blog. I generally agree that often entertainment spending is funneled to the arena district vs other areas of town, with tax subsidies making it a net loss.

      Getting major tourists events like the DNC and a more competitive team that increases attendance (the big variable) are net positives, but your point is a good one.