Bucks Bailout Gets Even Bigger
And the proportion paid by local taxpayers keeps rising, which the Journal Sentinel still doesn't report.
Milwaukee Journal Sentinel columnist Dan Bice today offered an update on the financing for the Bucks arena that increased the cost for taxpayers. He reported an insider’s estimate that the $93 million in bonds to be issued by the Wisconsin Center District will probably cost $200 million when interest costs are included. Repayment of the district’s bonds, which will presumably be repaid by its hotel room and car rental tax (though that hasn’t been precisely spelled out) is likely to take many years, which will increase the interest costs.
It’s certainly a positive sign that the newspaper has begun to include the interest costs, something it hadn’t done for some time, but Bice’s story is still lacking in all sorts of ways.
First, the newspaper has yet to report the massive tax shift from state taxpayers to local taxpayers. The original plan called for the state to issue $220 in bonds, which was expected to cost $380 million with interest costs included, while the city and county would contribute $30 million, or about 7 percent of the total. Bice’s new total show local taxpayers now paying $327 million of an estimated total cost of $407 million, or 80 percent. I’d say that massive shift in who is paying is quite newsworthy.
-A property tax exemption on the arena which could result in a 30-year loss to taxpayers of as much as $450 million.
-A property tax exemption on any adjoining development by the Bucks, such as a beer garden, practice facility, public plaza, bars and restaurants, Bucks apparel and merchandise shops, etc. Assuming all that is worth some $200 million of the $500 million the Bucks have said they will spend on additional development, that would add another $179 million in lost property taxes over 30 years. (Both of these figures, as I’ve explained earlier, are estimates, and could change: the Bucks have suggested they expect to pay taxes of certain adjoining development, but the language in state law would have to be amended, and I’m told that city officials are pushing for such changes.)
-The state proposal for the Bucks arena also awards a sales tax exemption on “building materials, equipment and supplies used solely in the construction, renovation, or development of a sports stadium.” Assuming the cost of materials for the arena is, say, $300 million, that exemption would be worth about $17 million to the team.
-The proposal’s language also specifies that the “income of a sport and entertainment district would be exempt from the state corporate income and franchise tax.” This language is very broad and would seem to include anything the Bucks develop under the banner of an entertainment district. Given the state corporate income tax of 7.9 percent, this exemption could be huge.
-The creation of a tax exempt authority to help run a private company’s sports stadium allows Herb Kohl to claim his $100 investment in the new arena (which was part of the contract when he sold the team) as a charitable donation, meaning taxpayers will actually pay anywhere from $20 million to $36 million of his contribution, as I’ve reported.
-Federal and state tax exemptions on the bonds issued by the state and Wisconsin Center. My guess is this will be a small cost, perhaps several million dollars.
Assuming all of these exemptions are retained, the total cost to taxpayers will likely be in excess of $1.1 billion. These are all costs — property taxes, sales taxes, income taxes, etc. — a normal business pays. The only subsidy businesses typically get are a Tax Incremental Financing plan, which will provide about $12 million of the help the Bucks will get.
Bice also reported that both the city and county were originally asked to contribute to the arena by certifying their debt so the state could collect it, but only the county agreed to do this. Of course that was already reported by me. And no, Bice didn’t credit my story.
Nothing new about that. In a previous column, Bice reported about concerns by Democrats that current state party chair Mike Tate and a candidate to replace him, Jason Rae of Nation Consulting, would swap positions, with Tate getting a job at Nation Consulting. That, too, was previously reported by me.
I don’t blame Bice, as this appears to be the newspaper’s policy. Back in May, the late Don Walker wrote a story telling JS readers for the first time that (1) the arena proposal would also exempt parking lots, garages, restaurants, parks, concession facilities, transportation facilities and related structures; (2) the naming rights to the arena, which could gain the Bucks another $60 million, would not help pay to build the arena; and (3) the proposed governing board for the arena sports district would have 11 members, nine of whom would be appointed by the governor, with just two appointed by local officials. All of this had been previously reported by me, yet there was no credit to Urban Milwaukee or link to the story.
That’s okay, imitation is the sincerest form of flattery, and if over time, the newspaper begins to more frankly report this story, that will be good news indeed.