Jeramey Jannene
Eyes on Milwaukee

New Bucks Arena Approved

City completes final step of financing puzzle for new Bucks arena.

By - Sep 22nd, 2015 02:53 pm
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$100 Arena Bill

$100 Arena Bill

The Seattle Starbucks or Las Vegas Gamblers they are not. The Milwaukee Bucks will stay in Milwaukee. Fifty years after the Milwaukee Braves played their last game in Milwaukee before bolting to Atlanta, the Milwaukee Common Council approved a $47 million financing package that will keep the Bucks playing in Milwaukee for decades to come.

The Common Council approved the creation of a new tax incremental financing district (#84) on a 12 to 3 vote. The new district encompasses a large swath of Westown and will pay for a new city-owned parking structure and other public infrastructure improvements. Voting against the measure were council members Mark Borkowski, Nik Kovac and Tony Zielinski. The council chambers were packed for the vote by supporters and employees of the Milwaukee Bucks and members of the non-partisan Common Ground, which has used the deal to propose more investment in youth athletic facilities.

The meeting was perhaps more notable for what didn’t happen. Compared to the acrimonious debate surrounding the passage of the Milwaukee Streetcar starter system, the arena debate was downright tranquil. No one threatened to start a petition to force a referendum. There were no parliamentary maneuvers to hold or enter into the journal the file, moves that were used against the streetcar to delay approval for two months. Council members simply stated their beliefs and voted. No delays, no political trickery that only a lawyer can appreciate.

The deal negotiated by Mayor Tom Barrett‘s office was unanimously amended at the meeting to include three key changes. One, any potential naming rights revenue from the parking garage will be split evenly between the city and Bucks, instead of going fully to the Bucks. The city proceeds will go towards funding the MKE Plays initiative. Two, the city will not vacate N. 4th St. at this point for a planned plaza and will retain the rights to reacquire the street in the future should the Bucks fail to stick to their to-be-approved operating plan. Third, instead of the negotiated 30% rate and its associated details, 40% of the workers on the project shall be required to qualify under the city’s Residential Preference Program (RPP). This program is required at the 40% level for large TIF districts by the MORE ordinance and ensures job opportunities for Milwaukee residents that are unemployed or underemployed. In the event that the Bucks exhaust all eligible workers (as agreed on by the city and the Milwaukee Area Workforce Investment Board), they can hire any city resident. The Bucks and city will each also contribute $375,000 over the next four years in an effort to increase workforce capacity. These changes were introduced by alderwoman Milele Coggs, but had substantial support from the rest of the council including council members Robert Bauman, Jim Bohl and Ashanti Hamilton.

The arena deal is of course a bit anti-climatic at this point. Yes, the city did need to approve their part of the package, but it wasn’t the contentious process that getting the bigger funding package approved at the state level was. As I predicted in July, the council barely had to lift a finger to get the deal done. Yes there were a couple public hearings that stretched on for hours, but in the end the deal was approved as part of the normal legislative process.

Though the financing is done, much work remains on the design and engineering of the arena. Despite the three renderings released by the Bucks, they have yet to submit final plans to the city. A condition of the deal approved today requires the Bucks to submit the arena for city approval via a Detailed Planned Development (DPD). DPD’s are regularly used by the city for zoning changes or buildings that exceed density limits for a parcel. The upside for the city (and public) in requiring a DPD is that the final design will be reviewed by the city to ensure it fits well within the existing neighborhood and has the necessary amenities (wide sidewalks, many doors, loading areas, etc, etc) to handle large flows of people. The DPD eliminates the ability for the developer to pull a fast one and helps ensure things happen according to approved plans.

The new arena is scheduled to open in time for the 2018-19 season. The approval of the financing leaves the project far from completion though, with some of the ancillary development for the Park East land not scheduled to be completed until 2026. Fear not, we’ll have plenty to cover for years to come.

For those curious about the exact language of the terms between the Bucks and city, the final term sheet is available online as is the legislative file for the new TIF district. The lease for the arena between the Bucks and the Wisconsin Center District still needs to be negotiated by Department of Administration secretary Scott Neitzel and the Bucks.

For more background on the financing deal and the fallout from it, see my Arena Winners and Losers column from July.

Arena Renderings

More about the New Bucks Arena

8 thoughts on “Eyes on Milwaukee: New Bucks Arena Approved”

  1. Ryan says:

    Mark Borkowski is a complete clown and horrible human being. It was hilarious though to watch him make false statements and lie about everything and then have all the other Alderman tell him he was wrong. That crap might fly on the useless County Board but it won’t fly with the Common Council Borwkowski! Hope you get thrown out along with Donovan come April!

  2. M says:

    It’s interesting that the Bucks exposed their no-limits greed by going after “the crumbs of the bun” as Ald. Bohl had described garage naming rights money in committee. There was zero reason for the city to relent & nix an existing ordinance that governs all naming rights of city assets. Bucks/Head of the Herd LLC simply had to let the city know who’s in charge here.

    The CC said it split the garage-name crumbs with the Bucks in exchange for the Bucks marketing them. That’s like giving your realtor half of your house-sale proceeds.

    There was no CC acrimony–or even -debate–because it’s an open secret that all the votes were counted by May or June, before the state even voted. There was never a word of CC public discussion, beyond the Steering Cmte. meeting in June, about the fiscal soundness of giving away a garage built for $30M and building a new one for $35M (which Kovac questioned in that meeting). Or giving away the Sydney Hih lot for free to the Bucks, which taxpayers paid nearly $1M to buy and raze in 2013 (in a stealth move).

    Bauman questioned whether the Bucks bar mall might cannibalize existing businesses at that June meeting, but not subsequently. No study was done on any potential economic impacts from such a bar mall–the CC chose to not spend money on that. (Maybe getting a million bucks for Sydney Hih lot or ANY amount for the garage could have helped fund such a study.)

    So it appears it was all worked out behind closed doors long ago. A single public hearing and a couple district town halls were held to allow citizens to let off a little steam. If that’s what passes for public input, then the rest of the permitting process should also proceed without a whimper. The CC applauded itself for letting people speak at one hearing, as opposed to not a single citizen hearing held by the state. Even the biggest funding entity, the Wisconsin Center District, was barred from speaking at a state Joint Finance Committee meeting.

    So now that this deal is all sealed, maybe a few pols and others will allow themselves to engage in moments of critical thinking about this and other civic issues. But maybe not.

  3. mbradleyc says:

    Cheers Milwaukee! You did it! You started the year with quite the laundry list of stuff to accomplish and they all got done.

    It’s a new day. I will be moving back in four months to be a part of it all.

  4. Amos Andrew says:

    Is there anything in this $47 million financing package that will keep the Bucks playing in Milwaukee for decades to come, Jeramey? Just asking, as I have not seen anything that indicates this. I am disappointed in most of our city leaders today. I think the city could have bargained for a much better deal for the city taxpayers.

  5. Sam says:

    In the term sheet:

    “A. City shall convey City’s Park East Parcel to Bucks by quit claim deed within 30 days after Milwaukee County conveys the Park East Land to Head of the Herd, LLC.
    B. City shall convey the 4th & Highland Parcel to Bucks by quit claim deed.
    C. Both parcels shall be subject to a deed restriction that requires them to be subject to a PILOT agreement.”

    I am not familiar with a PILOT agreement. However, a quick Google search indicates tha it is a payment in lieu of taxes (also sometimes abbreviated “PILT”), made to compensate a local government for some or all of the tax revenue that it loses because of the nature of the ownership or use of a particular piece of real property. Usually it relates to the foregone property tax revenue.

    So is that to say that the Bucks will be paying a fixed sum for the land rather than taxes? The land is tax-exempt? What exactly does this mean?

  6. @Amos,

    That will be in the soon-to-be negotiated lease with the Wisconsin Center District for their use of the arena. Scott Neitzel, who is the head of the WCD board and Secretary of the WI Dept. of Administration will lead that.

    @Sam,

    It’s a cover-their-ass provision in the agreement (for the city) in the event that a future use of the land is tax-exempt. The parking garage portion owned by the city will be tax exempt, because the city owns it. The rest of the Park East land and the Live Block will pay property taxes as planned. In the event that say UWM partners with the Bucks on some facility in the Park East that is tax-exempt, the PILOT provision ensures that the equivalent of property taxes are paid (thereby allowing the TIF to pay itself off).

    It’s a standard inclusion in all TIF deals in Milwaukee. PILOTs have also been used fairly routinely when a tax-exempt development is built on otherwise prime land. An example being UWM’s Cambridge Commons residence hall on E. North Ave.

  7. Milwaukee Native says:

    @Sam,
    I don’t have the docs handy, but I recall in the state bill that any Bucks merchandise shop outside the arena would also be tax exempt. It’s expected one would be in the mall. Other Bucks-owned businesses may also be exempt in the mall, but not if they are leased to another business. At least at this point. The actual lease will trump the city Terms Sheet, which is all nonbinding. Final terms will all be part of other contracts etc. The lease may also be written to change wording in the state arena bill, since I believe there’s a clause in the bill that says final terms will be covered in the lease.

    Also, even though the Bucks would permanently “lease” any plazas (presumably for no rent, as with the arena), they would not pay any rent on those spaces, including it serves as a sports bar courtyard or for other Bucks exclusive commerce. That’s also one advantage of the franchise not outright owning the arena even though they will run it an get all revenue. Same with city-owned garage. I read that MSOE pays taxes on a portion of their garage that is leased by business.

    It should be noted that journalist Neil deMause, who covers every sports-venue deal for his Field of Schemes website (plus other media) wrote that it’s unusual–and very risky–that they passed the state bill and now the city’s package without nailing down the lease. It’s also unusual to place all control over the lease in one person’s hands.

    Michael Horne noted that city officials are quite concerned about that but they did not have a choice. I hear that the state finally hired some big-time attorneys who have helped negotiate sports-venue deals to help Scott Neitzel. It would have been smart to do this before all the pols started negotiating months ago–and being pitted one against the other. That was proposed to city and county deal makers but they chose to go it alone. A negotiator repping taxpayers at all levels could have been tougher and not allowed everyone involved to be played against one another at the taxpayers’ expense.

    The rest is history. Maybe pols in 25 years will take heed if/when a new arena is built.

  8. Milwaukee Native says:

    Oops…some clarification to this sentence in second graph in the previous post:

    Also, the Bucks would permanently “lease” any plazas (presumably for no rent, as with the arena), and would not pay any property taxes on a plaza, including if it serves as a sports-bar courtyard or for other Bucks exclusive commerce.

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