Should City Approve Subsidy for Bucks Arena?
The costs keep rising. And the benefits seem iffy.
Arena Development Live Block View
Next week the first of three different committees of the Milwaukee Common Council will hold a hearing on the city’s contribution to the Milwaukee Bucks new arena development. A vote by the full council is expected to occur on September 22.
Milwaukee Comptroller Martin Matson has issued a report to the Common Council that concludes the city’s plan to subsidize the Bucks is financially “achievable.” That opinion was based on a review of various funding streams including bond borrowing, tax-incremental (TIF) financing, an $8 million loan from the Bucks, and other sources of funds.
But while it may be achievable, the question remains, is it desirable, does it have any benefits for taxpayers? Matson offers the hedged conclusion that the project “may reflect the beginning of an even larger economic development opportunity,” but a broad consensus of economists agrees that new sports arenas and stadiums have little or no economic impact and the money spent by consumers would be spent on other local entertainment in the absence of the facility, achieving a comparable impact. And the Bucks’ development of new bars and restaurants may actually cannibalize current taverns and dining places in the area.
The known costs for the city include:
$35 million to build a new, 1,243-space parking garage;
$12 million to build a “public plaza” between the Bucks entertainment mall and the new arena;
$8 million to build a canopied courtyard within a U-shaped entertainment mall;
$4.1 to $4.6 million for additional street work;
$17 million in interest on TIF-related borrowing;
$1.2 to $1.5 million from city to cover demolition of parking garage with 980 spaces;
$1 million (appraised value) for the one-acre Sydney Hih parcel (W. Juneau Ave.and N. 3rd St.) the city will give the Bucks;
That brings the total cost for the city to more than $78 million.
Other undisclosed or yet-to-be estimated costs:
City has agreed to pay to replace sewers and remove freeway pillars on the Park East land the county has agreed to give the Bucks for $1. Cost for city is unknown.
Lost parking revenue: the city will get 50 percent of revenue from new parking garage, which equates to 621 spaces, versus current lot’s 980 spaces. No analysis of lost revenue to city over likely 30-year life of new arena has been done.
The city gets an $8 million “loan” from the Bucks which it must repay at 4.5 percent interest over 25 years to help build the new parking garage which spins off half of the revenue to the team. It would take a very smart economist to estimate the net value of this to the team.
Additional, un-estimated interest on non-TIF borrowing by city.
According to the comptroller’s analysis, the costs of sewer work on Highland, as well as costs for Park East sewer work and other site preparation to remove freeway debris have not been determined. (The city, state and county will share these still-to-be-determined costs.)
Add these costs, plus the property tax exemption on the new arena and the total 30-year bill is likely hundreds of millions of dollars for city taxpayers.
Economic impact of the arena:
Downtown has no shortage of entertainment located close to the proposed arena. Bars and restaurants on Old World Third Street connect to those on Water Street by way of Juneau Avenue’s block of taverns.
Water Street has been cited as a national success story and favorably compared to New Orleans’ Bourbon Street and Memphis’ Beale Street by urban design professor Brent D. Ryan.
Milwaukee arguably already has a downtown entertainment zone:
-There are 60 “walkable” bars and restaurants within a half-mile of the Bradley Center. (This does not include coffee shops, George Webb, or a dozen eateries inside the Shops at Grand Avenue, the latter of which are not open at night.)
-There are 15 official “Bucks bars” on Third Street and Water Street alone, plus 30 more throughout Greater Milwaukee, that are all part of a cross-promotional network.
-This compares to Columbus, Ohio’s Arena District, considered a successful model of planned mixed-use development, which has just 19 bars and restaurants interspersed within its 75 acres.
-Even the entertainment districts cited as models for the Bucks’ development have far fewer restaurants and bars than Milwaukee’s downtown entertainment zone: Kansas City Power & Light District has 35 (including 15 within KC Live!) total restaurants and bars while Louisville’s 4th Street Live! has 21, L.A. Live has 20 and in Baltimore’s Power Point Live! has 15.
-Milwaukee’s Water and Third streets already have more sports bars, Irish pubs, cowboy joints, dueling pianos, breweries, beer gardens, steakhouses, and music halls than those other packaged districts.
In short, there is no great need for city or county government to subsidize the Buck’s plan to build more bars and restaurants.
Moreover, the kind of “urban entertainment destination” run by sports teams and on which the Bucks’ plans are modeled is controlled by a single developer or corporate umbrella. The result is less variety and originality in bars and restaurants, and more of the national chains that you can find in any city in America. And while the Buck’s bars and restaurant outside the arena will pay property taxes, the team’s entire operation is heavily subsidized, which arguably gives the Bucks’ entertainment district a distinct economic advantage over other local businesses. Moreover, the goal of these entertainment destinations is to create a captive audience within an entertainment monopoly, along the lines of casinos and theme parks, to prevent any loss of dollars that might be spent on other businesses in the city.
The Council does have options—and leverage for how it offers any funding. Council members could vote “No” to the proposed mall/garage package, or they could delay a vote and take time for due diligence and public input. Economic impacts and other implications of the proposed mall and garage teardown are still to be determined.
Mayor Tom Barrett has several times expressed concern about jeopardizing future convention and tourism business if the Wisconsin Center District is forced to borrow $93 million for the arena. The council could actually do something about that by designating that the $35 million from the city be used to defray the onerous “burden” placed on the WCD rather than spending it on the proposed mall and garage scheme.
Those details could all be worked out in a two-way negotiation process, which is much cleaner now that the state and county have already settled on their contributions. The mayor wisely arranged for the city to vote on a free-standing deal and the council can take advantage of that. Finally, it’s worth noting that sports bailouts are hot-button issues for taxpayers. They will be watching what council members do.
PUBLIC HEARINGS: Room 301-B of City Hall, 200 E. Wells St.
Mon., Aug. 31 at 4 PM Steering Committee. Comptroller’s report on subsidy costs.
Tues., Sept. 15, 9 AM Zoning, Neighborhoods and Development Committee
Wed., Sept 16, 9 AM Finance and Personnel Committee
Tues., Sept. 22, 9 AM Vote by Common Council in its chambers, Third Floor, City Hall
Dining & Bars Near Downtown Milwaukee Arenas
60 Options for Every Taste & Price Point Within .5 Mile.
Old World Third Street/Westown
Agave Southwest Bar & Grill
Ale Asylum Riverhouse
Applebee’s Grill & Bar
BB’s (Build-A-Breakfast, Build-A-Burger)
Benihana Japanese Steakhouse
Bistro/Bar 333
Brick 3 Pizza
Buck Bradley’s Eatery & Saloon
Buckhead Saloon
Calderone Club
Capital Grille
Carson’s Ribs & Steaks
Comedy Café
Cousins Subs
Kiku Japanese Restaurant
Lucille’s Piano Bar & Grill
Mader’s German Restaurant & Knight’s Bar
Major Goolsby’s
Miller Time Pub & Grill
Milwaukee Brat House
Mo’s…A Place for Steaks
Old German Beer Hall
Port of Call Bistro & Beer Garden
Rock Bottom Restaurant & Brewery
The Brown Bottle Restaurant
The King & I
The Loaded Slate
The Pub Club
Turner Hall Restaurant
Tutto Restaurant & Bar
Uber Tap Room & Wisconsin Cheese Mart
Ugly’s Pub
Upper 90 Sports Pub
Who’s on Third
WXYZ Lounge
Water Street District/East Town
AJ Bombers
Bar Louie
BarNone
Brothers Bar & Grill
Buffalo Wild Wings Grill & Bar
Colour Palate
Duke’s on Water
Ian’s Pizza
Kil@wat
McGillicuddy’s Bar & Grill
Newsroom Pub
Pourman’s Pub
Qdoba Mexican Grill
Red Rock Saloon
Rogues Gallery
Rosie’s on Water
Rumpus Room
Scooter’s Pub
The Harp Irish Pub
The Safe House
Trinity Three Irish Pubs
Vagabond Mexican Restaurant
Water Street Brewery
Zenden Bar & Lounge
Coming Soon: Novo on Water Street, a Brew Pub on Old World Third Street, and a Tavern at 4th Street’s Hardware Headquarters
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Still trying to kill the deal I see. At least its reached critical mass at this point. No stopping it now!
Or you could always follow Bauman’s lead and place a new tax to help pay for everything like he wants to do.
I think the owners of this site need to change the about section which currently states:
Urban Milwaukee seeks to provide an informative and open dialogue on the issues, events, and people affecting Milwaukee’s most urban neighborhoods, and to promote urbanism within the city of Milwaukee.
Too the following:
Urban Milwaukee seeks to provide an informative and open dialogue on the issues EXCEPT ANYTHING BUCKS RELATED WE HATE THEM, events, and people affecting Milwaukee’s most urban neighborhoods, and to promote urbanism within the city of Milwaukee UNLESS IT’S BUCKS RELATED – WE’RE 100% AGAINST ANYTHING BUCKS…
We get it – you hate the Bucks, the owners of the Bucks, and anything related to the Bucks… For the love of god stop even posting these articles if all you’re writing is the same old anti-Bucks talking points. How about offering just one Pro Bucks article a week to counter the 15 anti-Bucks articles. Maybe something about how alive the city was during 2001 when the Bucks were 1 game away from the Finals? Or maybe an article about all the good work the team and players do in the intercity school systems? Or how…. nah never mind – I’m delusional to think this is an actual news organization that cares about reporting all sides of a story….
These same points about government subsidized entertainment districts were brought up during the Pabst City proposal. The downtown business owners came out in full force opposed to that.
@ Ryan & Bogey
This article is not trying to “kill the deal” and certainly doesn’t hate on the Bucks. It brings up pretty valid negotiation points the city should address, namely that the area immediately around the proposed arena is doing pretty well and doesn’t need a new “entertainmet district” subsidized by the city.
I’ve seen examples of these entertainment districts in other cities such as Kansas City or Columbus and they don’t impress. I don’t want a faux-town Bayshore Mall in downtown Milwaukee. I don’t want something that will be Anywhere, USA.
While I am not thrilled by the deal as it stands currently, I’m happy to see the Bucks are undoubtably staying in Milwaukee. You both sound lke you work for the Bucks with your comments. Most of the city doesn’t work for the Bucks however and hopefully our collective voices will carry the day during the upcoming negotiations and that a deal is struck that favors the City of Milwaukee and creates something unique to our city.
The large, swooping wall/roof overhang of the stadium reminds me a little too much of the In-N-Out logo. If ecomonic impact means bringing the burger chain to Milwaukee, im all for everything (kidding).
I overnight park at the garage that is going to be leveled, so that is a bit of a hastle for myself and maybe 50 others. The $1 plot of land is an interesting issue, I assume that all of the costs to take care of the land and issues underground are not tocuhed by the City.
These are legitimate concerns. If a new entertainment district is built is it a case where the rising tide lifts all boats or is it a case where it simply cannibalizes development that is already there. I would lean towards the latter being the case.
I would also say the only reason Urban Milwaukee comes across as negative on this is because every other media source in Milwaukee is completely 100% on board with doing this and isn’t asking these kinds of questions.
Mike, a big reason why they come across as negative over say the Journal-Sentinal is that the journal is just reporting the facts in their main articles whole UrbanMilwaukee is posting opinion pieces from pundits trying to away people a certain way. Which is fine, except they try to make you think it’s an objective look by saying “this is what’s happening and this is how you should feel about it”. Luckily they shouldn’t be able to screw up the city approval.
Yes.
…oh and you got your dates wrong. One committee meets next Monday, the 31st. The other two don’t meet until two weeks later, on the 15th and 16th. The CC vote is the following Tuesday the 22nd.
Then it will be all over. Groundbreaking to follow shortly.
Besides Urban Milwaukee, national media have been looking more critically at this whole story:
http://www.nytimes.com/2015/08/15/sports/bucks-new-owners-get-house-warming-gift-of-public-money.html?smid=nytcore-ipad-share&smprod=nytcore-ipad&_r=0
Other stories have been in ESPN’s Grantland, Salon, TruthDig, Washington Post, etc.
The Milwaukee Journal has tailored all of its reporting of “facts” to ensure that this deal gets done, no matter what the cost to taxpayers is. It clearly stated its opinions on this all along in its editorials and by what they DIDN’T report on. But they sell newspapers based on sports coverage more than anything else, so their bias is understandable.
Isn’t one of the most important jobs of the media to investigate things and ask questions? I know that by and large the other media outlets are either just reporting whatever the Bucks say and some others are just flat out cheerleading for it.
The article here asks a legit question. There are 2 entertainment districts within walking distance of the arena. Is there a reason a 3rd one needs to be subsidized and if so will it draw enough extra visitors to the area to enhance what’s there or cannibalize what’s there.
I get that if you ask these questions you’re called anti-Milwaukee, but these things should be asked and answered and so far I don’t see anyone refuting the article. Instead they are attacking the writer, which is a pretty good indicator that the writer is asking some pretty good questions.
It’s not about asking questions, it’s the fact that every single article about the Bucks arena on this website has been negative. This website is positive about everything in Milwaukee EXCEPT the new Bucks arena. It’s bizarre.
Why do you people keep thinking this is going to destroy or steal business away from Old World 3rd St. and Water St? The new arena will complement these areas and vise versa. I also doubt that the arena district is going to rival Water St. in size. I think it will probably offer a different experience—sports bars, higher end restaurants, clubs, etc. Water St. is mainly young people, college kids, and sort of low-brow drunken scene. Old World 3rd St. is bit more diverse and attracts a slightly more older crowd. The new arena district would complement/extend Old World Third St. and wouldn’t harm Water Street, in my opinion. It will also tie the Pabst Brewery to the other districts.
This will be a net job loser. This new entertainment center will damage existing businesses barely holding on. I’m still concerned with the benefits of the Bucks staying. When I’ve run the numbers, no arena has ever broken even or been a net gain to the community where they’re replacing an existing facility. In the short term, the NBA is powerful but as they continue to be a smug private club for billionaires who feed off the taxpayers, I see their product being more trouble than it’s worth in the long run. With taxpayers wasting a billion on this, I hope it doesn’t collapse any time soon. But we don’t need either…
Maybe I missed something, this is the first time I’ve read that the State/County/City are paying the costs for sewer relocation and freeway abutment removal within the $8 million Park East land the Bucks are buying for $1. These unknown costs have been repeatedly stated to be the justification for the $1 sale price, because the Bucks would be spending millions for cleanup. If the State/County/City are paying for cleanup, then the Bucks should be paying $8 million, not $1.
Additionally, this article well-demonstrates that the City has not been forthcoming as to the true costs which will be shouldered by taxpayers and local business. Compared to the Packer’s Titletown, the Bucks’ “entertainment district”, i.e., outdoor drinking mall, and resulting Milwaukee taxpayer burden is a heart-breaking lack of leadership by city officials.
Do you think those bars will miss the 600,000 people who won’t be coming in to attend the 40+ Bucks home games? Oh, what was I thinking? Water Street already compares favorably to Bourbon Street. Let’s get real. Today’s urban areas are of necessity cities of spectacle. Bur the most important questions are how much of the arena development will help the city of desperation? How many of the construction jobs will be minority set asides? How many of the firms will be mandated to be from Wisconsin? The Common Council can have a decisive say in this.
Milwaukee is in crisi with crime, heroin deaths, human trafficking, prostitution, abandoned houses, bad roads, corruption, MPS worst in country, only 15% of kids in third grade read proficiently, 30% in tenth grade, 57% youth unemployment, worst poverty ,worst management, high taxes, and they want to spend money on a basketball team and more bars. Biggest bunch of dummies in country.
The white, male liberal, racists that run city, want a basketball team, MMAC, bought the legislature for them, the Realtors want money and this will get them money and the lobbyists bought dems and GOP with money. Over a million spent, but they get 500 million. WE had them right by the whatchmcallits and they got ours. Bad deal. WE should not have spent more than 100 million total on this.
Thank you again to Urban Milwaukee for asking the serious questions about this massive city subsidy to some billionaires’ profitable enterprise. The fact that people in the comments are running scared when these massive (and because this whole project is so secretive, unknown) costs are brought up really shows how absurd this deal is. I’m wondering if anybody who is so pro-Bucks as to demand we placate these NYC fat cats is able to really back up their claims that this is worth the money, because all I see is conjecture on their part.
Before anybody accuses me of hating Milwaukee or something stupid, I’ll say that I love this city, and am one of those precious “millennials” that this deal is supposed to cater to. But the truth is that the Bucks have nothing to do with my enjoyment of Milwaukee – it’s the lake, parks, festivals, food and drink, minimal congestion, affordable rent, diverse neighborhoods, and ease of access to other destinations in beautiful Wisconsin and megatropolis Chicago that make this a great place to live. We’re nothing like Des Moines or Kansas City, and the Bucks are not the reason why.
An NBA team and a Chili’s in downtown are not going to improve this city, which already has a vibrant, authentic, and booming urban culture. Improved schools and transit options will grow this city far more. Because once I hit 30 and have kids, I can’t justify living in a city with poor public schools and limited options for my kids to grow safely and independently. Anecdotal, but many of my peers express this same sentiment. To see the city putting so much money into something so dubious really shows how misguided and shortsighted our leaders are when it comes to smart growth of the City. People forget that downtown is already succeeding, despite the fact that the majority of our city exists outside of it in a gigantic ghetto that all this arena money be used to fix. The city, state, and county went all-out and miraculously came together for this project, but concerted efforts to improve Milwaukee life in non-superficial ways don’t exist. In ten years, your Jabari Parker bobblehead won’t keep you warm and safe at night.
Just to address the question of the we ran the story: it’s been repeatedly reported that the city cost for the Bucks project will be $47 million, but it would appear the costs will be a good deal higher. That seems newsworthy. The fact that there are 60 bars and restaurants within a half mile of the Bradley Center, was frankly, quite a revelation to me. That seems newsworthy. As for being a proponent of the city, Urban Milwaukee does consider itself a champion of the city and of urbanist solutions, but the issue of how to build a great city is open to many different solutions and interpretations — there’s no way good way to create a great city. We would — and have — happily run op eds disagreeing with stories we’ve run.
In the sake of fairness, here’s the pro-arena study that so many like to cite. http://www.scribd.com/doc/267115581/Arena-Impacts-Paper-by-Dr-Anthony-Pennington-Cross This is by a Marquette finance professor (sponsored by the MMAC, who is pro-arena). A great look at a supposed “academic” paper that people like to claim supports the arena. Don’t forget that Marquette has a huge stake in this arena as well. Any quick glance and you’ll immediately notice that this paper is totally bogus and could never survive any serious academic review. I wrote better papers in undergraduate economics than this – longer ones too.
This thing is heavy on rhetoric (talks about the ancient use of arenas… OK), almost no actual statistic figures, no methodology, and is… 15 pages long. So using bunk figures (the paper literally takes the possible developments’ square footages and calculates workers based off that, to say nothing of substitution effect, or the fact the figures are are from one source’s national average figure and are not “true” in any sense) it projects a total of 1,422 new, permanent jobs from the arena AND ancillary development including office space that could easily be built without an arena. Let’s just take this on face value, although we shouldn’t. At a tag of $250 million that’s $175,808 of taxpayer money per estimated job “created”. At a potential $1.1 billion, which factors in hidden costs like tax exemptions and ancillary costs that could be viewed as $773,558 per job. Either figure is an outrageous bill for a jobs program. A typical MKE news station headline about this article says “Marquette Study says Bucks Arena is good for jobs”. Well, so is prostitution…
whoops, I meant to say there is no “one” way to build a great city.
Someone mentioned the Titletown District, which was reportedly approached completely differently. They are creating a mixed-use district around a stadium in the boonies. They will have a large anchor restaurant, Hinterland, based on Green Bay (which has an outpost in the Third Ward). Kohler Company will build a hotel–because there is none near the stadium. They will build a 10-acre park with year-round recreation options–based on community input about what would best serve both locals and visitors. They paid full value for all the land they acquired. They are not handing over public land for private development.
Any development can be done smartly or foolishly. Milwaukee often does it well, including with strong community input (Historic Third Ward, East Side, Menomomee Valley, Bay View, etc.). If city officials want to grow downtown it will be wise to consider the needs and interests of current and potential residents, workers, businesses, etc. It will not work to try to ram through the Bucks’ agenda for an entertainment monopoly and ignore everyone and everything else (including building convention and tourism business).
MKE has one third more performing arts seats than Chicago (and great bookings). We also have fifth most bars of U.S. cities. We’ve got entertainment covered, and state and county sealed the deal on a new arena. Now it’s time to focus on other ways to improve Milwaukee. I hope some civic and elected leaders step up to the plate.
I dont get the argument that the new stadium will be a hindrance to already existing businesses. If that were the case than why are so many new restaurants/biz moving to 3rd street? What would happen to pre-existing biz if the bucks left?
Tom–Great observations! An article in TruthDig about arena lobbying by both Dems & GOP (traced all the way to federal politicians & national PACs) also called out the Pennington-Cross paper for its lack of credibility and dubious ethics. One stat: He counts 55 jobs to be created by a Bucks practice facility–including Bucks players and staff! You don’t need to be an econ major to spot double-dipping (or pulling numbers from thin air).
Here’s some related (and credible) academic research worth checking out:
Marc Levine of UWM’s Center for Economic Development reported on PabstCity projections for an entertainment district that was rejected. The same claims (though less specific) are being made and the same economic principles apply:
http://www4.uwm.edu/ced/publications/pabstcity605.pdf
A paper by Harvard & Morgan State urban planners highlights the role of Water Street downtown Milwaukee’s revitalization and warns of specific threats to continued vitality, including by a packaged entertainment district.:
http://web.mit.edu/bdr/www/JUD_Campo_Ryan_Oct08.pdf
But do politicians (or other “leaders”) pay attention to input from economists, urban planners and other experts?
Will, people are not concerned about a new stadium hindering local businesses–only an entertainment mall with however many new businesses. An arena draws thousands for events, with some pre- and post-event spillover to nearby businesses. The goal of the Bucks mall is to “increase revenue streams” by capturing much of that spillover. The argument that a mall will attract new visitors when there are no events seems based on wishful thinking. Show us some stats. These places are often ghost towns when there are no arena events.
“Entertainment” markets all have finite pools of patrons. Downtown bars say they have lower traffic during Summerfest, but some get a late-night spillover bump. Some bars run shuttles to Miller Park to draw spillover.
There’s always room for market growth, but that only works if you don’t flood it. I’ve not heard about any specific new type of “entertainment” the Bucks plan to offer. It sounds like it will just create more cut-throat competition among similar venues.
@Will
Most people aren’t advocating for the Bucks to leave at this point, I know I’m not. The deal is essentially done and they are here to stay. What many, my self included, are advocating for is the best possible deal for the City of Milwaukee.
I don’t think the Bucks’ planned and city subsidized “entertainment district” is a good idea and city leaders should play hardball on the details of this proposed project.
I’ve been attending Milwaukee Bucks games since the first season in 1968. Like Gerald Ford did, I read the sports section first every morning. I’m the owner/caretaker of the “Green Bay Packard ” rolling shrine. My interest in sports rivals only my interest in the public good and the community I’ve called home all my life.
I’ve always believed that sports teams must pay their own way. They’re not “entitled” to public funding unless they are owned by the fans like the Green Bay Packers.
If a billionaire-owned team connives to suck the financial lifeblood out of this community, of what real value are they to us? Why would we willingly continue to support such injustice?
The door has been cracked open for equitable negotiations to begin, and for civic and elected officials to hear from more people than Astro-turf happy-talkers. Whose city/community is this anyway? It’s up to Milwaukeeans to make their views known to their Common Council members.
More than a majority of Milwaukee citizens cannot afford to attend a Bucks game. There is more than 52% black male unemployment in Milwaukee. When education, public worker wages, worker rights and freedom, etc. are cut, and drug testing poor people to allow them to eat food, then public fund supporting an arena for billionaires so they can reside in suite seats so they do not have to mix wit the ordinary citizen rabble is actually insane and opulent. This is supporting luxury for the very few instead of necessities for the majority.
I have enjoyed the Bucks and associated downtown development progress over the decades but less so as I have reached elder status, and I realize how so many people have placed sports in general on a pedestal as if worshiping a false god. I do not have a problem supporting arenas, but it should not be at the expense of so many other needs of the majority.
Just to be clear, I’ve come to agree that the poorly designed Bradley Center needs to be replaced. But there’s no good argument for constructing a cockamamie bar mall at the public’s expense.
Now that funding for the arena itself has been approved, the proposal for this “entertainment” mall can be judged for what it is and what it is not. Milwaukee does not need this, and it will siphon from downtown’s thriving hospitality business. How will it not?
Also, any plans to upgrade the convention center, and thus attract more visitors, will be DOA for a generation with the Wisconsin Center District’s crippling arena debt of $93 million. Rather than “expanding the pie,” such an outcome will obviously shrink this market. These are not issues to be addressed piecemeal or, worse, glossed over.
It is very legitimate for Urban Milwaukee to weigh in on the Bucks deal and suggest improvements. What is illegitimate is under reporting on what a TIF is and what it is designed to do. Those (like myself) who have helped design TIFS and get them approved understand they are often a win-win for the city. The city creates a TIF in order to have a means to rapidly amortize the debt it incurs for supplying infrastructure to a project. How so? By keeping all tax receipts from all local taxing entities during the life of the TIF. After the TIF terminates, the city still gets its portion of the tax pie, but the assessed valuation of the district has increased, so that portion has increased accordingly. That is why city’s create TIFS and the other taxing entities often hate them. Question?
Oh, hell no.
What it all comes down to, is that in the four county area, 3 counties refused to give even a penny for helping build an arena even though it is many of their citizens that hold season tickets and can afford to go to the games. Why did the state, city, and Milwaukee county let them get away with it?
It’s not economics, it’s power politics. Pure and simple. Those 3 counties have powerful Republicans and Republican public officials that are exempt it seems from the pressure that the MMAC and the Bucks/NBA put on everybody else.
If our Milwaukee Alderman and Mayor could extract more from the Bucks, for having the pleasure of their company, it would be great. But they are an island in the larger sea of power that is the State of Wisconsin and suburban counties. Shame on them.
Once again, it is the governing units with the least resources and greatest poverty in their areas, that will subsidize recreation for the middle and upper classes who chose not to live here. What else is new?
Milwaukee
Why does anyone keep thinking that it won’t? Imagine you are going to a Bucks game. Are you going to eat three times? Once on Water St, once more on Third St and then again in the new “bar mall” they just built next door? No, of course not. You’re going to go to your favorite place — and it could be in any one of the three areas — but unless you’re 21-23 years old and bar-hopping, you’re not going to go to all of them. So unless there is a net gain of visitors, which we’ll probably have a for a bit while everyone comes to see the new stadium in all its glory and just maybe we’ll see sustained if the bucks are winning, the existing businesses are cannibalized by the new businesses since the majority demographic will probably go to the place closest to the parking garage.
Also, nice to see comparisons to PabstCity on here. Nearly the same proposal then as now (the subsidized entertainment district), and that one died quick death, mainly because of opposition from existing businesses. So either they see this deal differently or are more (blindly) optimistic because of the sports team connection.
@Greg C,
It doesn’t sound like the issue here is about TIFs, but whether a redundant bar mall and garage are a wise use of one. Of course TIFs have value. How will this mall be an appreciating asset? How does a plaza built to “increase revenue streams” for the Bucks provide worthwhile infrastructure? The CC can designate that the city’s subsidy be used only for the arena–and reduce the WCD debt so WCD is not hamstrung indefinitely. It sounds like Mayor Barrett got cornered into this plan. He said he wishes it could be better. The CC can help him out. Tearing down a perfectly fine garage is completely unsustainable (more like how billionaires roll…)
UWM economist Marc Levine should be heeded on these issues. He sounded a warning to civic officials in May about the limits of entertainment to jump-start MKE’s economy (and Baltimore’s).
ttp://www.jsonline.com/news/opinion/the-failure-of-economic-development-in-baltimore–and-milwaukee-b99504153z1-304738911.html
He also wrote the report cited above about Pabst City. I would hope city officials might be grateful to all who helped MKE dodge a potential self-inflicted wound with Pabst City. Just weeks ago, execs from The Brewery project, a huge success, noted how many “entertainment districts” have failed. That rejection made a smart mixed-use development possible instead. Let’s repeat that history!
Rich,
Responding to you Q about local businesses not raising a fuss about this repeat of PabstCity. I’ve heard through the grapevine that they have been cowed by the Deer. No business can afford to be black-balled as “anti-arena” by not going along with the Bucks’ every demand. If I owned a business, I’d probably hold my fire too. Look how state reps (Bowen and Brostoff) have been savaged for trying to get the Bucks to split the naming rights money.
So the Common Council needs to know that people may be pro-arena but anti-bar-mall.
@Marie:
I reiterate: improvements to the Bucks deal that the City may be able to negotiate are all to the good. My point is simply this: the City would in no way agree to be contributing to this project what it is without a TIF district being in place. To the extent this deal works for the City, it is the TIF financing component that makes it work. I am assuming that City officials like the comptroller and Grant Langley in the City Attorney’s office would not be giving this agreement a thumbs up if they thought the TIF would not amortize out within the allotted period. In fact, on a personal note, I never gave my blessing to the creation of a TIF district unless I was convinced that it would amortize in much less than the statutory time period.
Ah yes, TIFs. Everything development gets a TIF, because it’s magic money! How about every municipality TIF everything they can to spur development in these oh so troubled times? We can TIF every city block, as long as the numbers work. I’d like a 16K TIF for my porn shop, please! The math checks out! How did ancient humans survive in the pre-TIF Era, when cities didn’t throw untold millions at private businesses so they could make private profit?
Seriously, TIFs and other tricks are so commonplace nowadays, they’re not even effective. If the private business won’t succeed without a huge subsidy, then why are we supporting it? FYI I’ve worked on TIF projects and know that while cities’ TIFs will amortize ok for them, developers want to extract every last penny from the city, which is often ill-equipped or too weak to say no. How do you know that the developers NEED that TIF and all that money? It’s a bargaining tactic, not manna from heaven.
Plus the whole thing is not a TIF.
I am going to enjoy watching world class basketball in this warm, modern building while the rest of you are hanging out at the ARTery or the Swing Park in December.
Tom D, Greg C. and other wonks:
Here’s are Comptroller Martin Matson’s reports on existing and new TIFs that would support mall plazas and a new garage. Like the arena, all property would be leased/operated by the Bucks. Plazas would be used exclusively by the Bucks to increase revenue streams. City would split 50-50 all parking income with Bucks after expenses.
This number analysis concludes that the city can pay back its borrowing with 25 years. It does not dissect whether a bar mall or adjacent commercial plazas will benefit taxpayers, or if how half of new parking income would compare with current income from 4th garage.
https://mail.google.com/mail/u/0/?tab=wm#search/Martin.Matson%40milwaukee.gov/14f67e9960426d9b?projector=1
https://mail.google.com/mail/u/0/?tab=wm#search/matson/14f67e9960426d9b?projector=1
https://mail.google.com/mail/u/0/?tab=wm#search/matson/14f67e9960426d9b?projector=1
@ D
Not sure of your meaning…gloating over being able to afford tickets for events in a public-funded Bucks arena while less-flush Milwaukeeans will have to settle for public parks?
Are the swing park and ARTery not worth funding?
Afford tickets? It costs like $12 to go to a Bucks game right now. By those standards, many people couldn’t afford to go to the Zoo, Public Museum, Milwaukee Symphony Orchestra, Summerfest, the Domes, or anything else. Spare me this crap about people not being to afford things. My tax dollar pays for their welfare and healthcare, at least give me something to do on the weekend in return.
An additional amount is the $11+ million collected through the City’s room tax that is paid over to service the Wisconsin Center District’s debt, which currently will be paid off in 2032. After that date, the City could keep the room tax revenues without causing the District to become insolvent.
However, the new arena’s funding legislation requires the Wisconsin Center District to pay over approximately $217 million ($93 million principal + $124 million interest) over 20-years. As a result, the District’s current tax funding mechanism has been extended indefinitely, and the City’s room tax revenue will be used to pay the arena debt.
http://legis.wisconsin.gov/lfb/publications/miscellaneous/documents/2015_06_29%20milwaukee%20sports%20arena.pdf
Further, the District is required under the arena funding statute to sell the Bradley Center to the Bucks for a “nominal” amount. No opportunity to sell for fair market value, and pay debt obligations.
http://docs.legis.wisconsin.gov/2015/related/proposals/sb209.pdf
Also, because the Wisconsin Center District will be carrying a heavy debt, there is no money to expand the convention center. As a result, the City will be foregoing the possibility of increased revenues resulting from an expanded convention center, such as the Marcus Corporation’s stated plans to expand the downtown Hilton by 200 rooms, if the convention center is expanded.
http://www.jsonline.com/blogs/business/306417911.html
http://www.bizjournals.com/milwaukee/news/2015/05/18/marcus-corp-could-add-200-rooms-to-downtown-hilton.html
D,
Your tax dollars also support the other amenities you name (the symphony through Marcus Center funding from the county). Perhaps you sometimes enjoy them as well. They all add to our quality of life and the area’s appeal to visitors.
However, Milwaukee already has abundant bars and restaurants–which were created without public subsidies. The arena and the bar mall should NOT be conflated. The new arena will include more lounges, eateries an suites–and 1,700 fewer seats. No one will go unserved inside or outside the arena.
A over-reaching sense of entitlement by team owners is driving the demand that taxpayers fund their ancillary private enterprise. Exploiting fan loyalty–and using extortion tactics–is craven.
Not subsidizing a massive Anywhere USA mall will not lessen anyone’s fan experience. However, it will keep local watering holes from unfair competition–and maybe another white-elephant mall from being created!
You are blowing this thing out of proportion. The ‘mall’ looks like a single block from the renderings that will be completely connected to Old World Third St. I really don’t see any advantage to the businesses that would be located in the Bucks entertainment district, mere steps away from the established bars. With all the new residential and hotels being built/proposed downtown, there will be more demand anyway. It’s not like you really see the bars and restaurants opposing this thing, at least that I have heard of. They realize that if the Bucks leave, they are screwed anyway. With the new arena (and additional competition), they at least have the possibility that a high tide will lift their businesses too.