Four Plans to Save the Bucks
But can any of the plans create the new NBA arena they need?
The old adage about Milwaukee is that you can’t get people to come here and then you can’t get them to leave. Few want to move to what’s still seen nationally as a very unsexy city, but once they get here they fall in love with Milwaukee, cold weather and all.
Which still leaves the problem of how to get them here. One key way that businesses recruit top prospects is by selling them on the sports teams (Packers, Brewers, Bucks) and the arts scene (symphony, ballet, art museum). That would help explain why business leaders from Waukesha are pushing their politicians to support a tax to help pay for a new NBA arena, as Rich Kirchen and the Business Journal reported. This is one of at least four possible solutions to the problem. Do any have a chance of success? Let us consider the question.
A Regional Tax: The Metropolitan Milwaukee Association of Commerce has been trying to sell the idea of a four or five-county tax to pay not just for an new NBA arena, but for other county cultural and entertainment facilities, like the Milwaukee County Zoo, Milwaukee Public Museum and Marcus Center for the Performing Arts, that draw most of their audience from beyond Milwaukee County.
I have long felt a regional tax is needed for regional cultural attractions, but I don’t see this effort going anywhere. Republicans lost control of the state senate in the 1990s when GOP state senator George Petak was recalled from office for supporting a tax on constituents for Miller Park. Some Republicans felt the Democrats politically exploited the situation.
And that was back before this metro area became the most polarized community in the U.S., as Milwaukee Journal Sentinel reporter Craig Gilbert has amply documented. In short, this could be the one metro area in America that’s least likely to work together and where the two parties most distrust each other.
County boards in Waukesha, Ozaukee and Racine counties have already passed resolutions opposing any regional tax. Getting Racine to support the Bucks might be really tough, as 22 percent of the fans there actually support the Chicago Bulls, compared to 19 percent who support the Bucks. (See the map created by the New York Times.)
The odds are much better in Waukesha County (42% support the Bucks, 11% favor Bulls), Washington County (37% Bucks, 11% Bulls) and Ozaukee County (33% Bucks, 11% Bulls). By the way, at least 10 percent of fans in all three counties root for the Lakers. The horror.
Expand Convention Center in Conjunction with New Arena: My colleague Michael Horne has reported the details on this. This has one great attraction. The Wisconsin Center has taxing power and the legislature might be induced to “stick it to Milwaukee,” letting county residents (along with tourists to the city) shoulder the entire subsidy of a new arena by upping the current 2.5 percent Milwaukee County (hotel-motel) room tax, 7 percent room tax in the city, 0.5 percent countywide food and beverage tax and 3 percent county car rental tax.
But it would take one hell of a hike to pay for both a new arena and expanded convention center. And right now the Wisconsin Center and its U.S. Cellular Arena compete for bookings with the Bradley Center. Any merger here would have to include razing both arenas, which the Wisconsin Center board might oppose. And will the new owners of the Bucks want an arena controlled by a governmental entity? By contrast, the Bradley Center’s board is basically run by business leaders, who have required other tenants, like the Marquette Golden Eagles and Milwaukee Admirals, to subsidize the Bucks. The new owners will want the same sort of deal. I don’t see this plan happening.
A Super TIF: It’s big, it’s bold, it sounds like a character out of Marvel Comics. The ever-busy MMAC has also floated this super-sized solution. A TIF or tax incremental financing district has been used to support new development: the local government creates a TIF district, grabs all property taxes from the district to support the development and then repays the money from future tax revenues spun off by the development and surrounding TIF district. A Super TIF would add other taxes collected in the district, like the sales and income taxes, and make them part of the package.
Milwaukee Common Council President Michael Murphy requested a report on Super TIFs in Rochester MN and Allentown. The latter seemed the most relevant: its “Revitalize Downtown Allentown” plan covered a 130-acre area and included funds for a $177 million, 10,000-seat arena, as Kirchen and the Business Journal reported. This sweeping plan grabbed the state corporate income tax, state personal and local income tax, state sales tax and various other taxes.
Super TIFs have also been used — and have generated criticism — in Missouri.
The Super TIF has one huge advantage: its sheer complexity. As it is, no one understands a TIF and the super-sized version is even more complicated. It short, it could be the perfect stealth tax, that the legislature quietly passes into law — overnight — with no discussion.
But it looks like the legislature won’t go quietly on this one. Assembly Speaker Robin Vos (R-Burlington) has already expressed skepticism, noting that any income and sales taxes in the TIF district that didn’t go back to the state coffers, per usual, might leave other municipalities wondering why they couldn’t have the same opportunity.
A Privately Financed Mini-City Development: This has barely gotten any discussion, yet might be the most realistic. Some community leaders see the new arena as the centerpiece for a downtown entertainment district that could attract a new hotel, restaurants and bars, including some with a basketball theme. Then you add in the fact that new owners Marc Lasry and Wesley Edens are two of the wealthiest hedge fund plutocrats in America, and Edens has experience doing real estate projects.
“Edens and Lasry also have sent signals that they will entertain local investors both in the team and in an arena project,” writes JS reporter Don Walker. “That not only provides additional private capital, but gives credibility to the overall project. And Hammes Co., which is advising the MMAC arena committee, has had experience linking new arenas with new development.”
One huge advantage here is the developers would be painting on an empty canvas. The Bradley Center has been quietly buying up property around it, and now controls almost all of the land between N. 4th and 5th Sts., between W. Highland Blvd., and W. Juneau. There is also empty land in the adjoining Park East area. And the Park East land west of river is considerably cheaper. The city could perhaps pay for the land needed and create a traditional TIF, the sort it has done for other business developments.
Why would the owners basically pay for the development themselves? Well, they will get a $100 million subsidy from longtime owner Herb Kohl. Kohl, I suspect, will do everything to keep the team in Milwaukee. And there is an advantage to having total control of a business, rather than dealing with some board’s oversight, even one stacked with business leaders. There is also an advantage to moving quickly rather than waiting for the right tax subsidy, not getting it, and then moving to Seattle in 2017 (the deadline by which Milwaukee must have a new NBA arena) and starting the process all over.
All signs suggest the value of an NBA franchise will only continue to rise, as the sport becomes ever more popular internationally. Maybe a new arena actually makes more sense as a business proposition than as a charity.
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- Murphy’s Law: Taxpayers Make Bucks, Brewers Rich - Bruce Murphy - Apr 16th, 2019
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