Brewers Could Lose Money on TIF Deal

Back in 2004, the non-partisan Legislative Audit Bureau did a report on the Milwaukee Brewers’ finances that added a recommendation: that the team “should consider developing portions of the 265 acres of parking lots and vacant land around Miller Park,” as the Business Journal reported. “Commercial development could include restaurants and sports bars, a hotel, retail stores or parking ramps.”

“We raised the development issue because legislators have to be aware that a new owner of the team might put pressure on the state to allow for development,” said Janice Mueller, the state’s chief auditor from 1998 to 2011.

“It makes sense to explore development options,” said Mike Duckett, then the executive director of the Southeast Wisconsin Professional Baseball Park District.

At the time, the Brewers were being sold by the ownership team headed by Bud Selig. A group led by Mark Attanasio bought the team later that year.

And the Brewers might have needed clearance from the state because of a contract it had signed promising not to do any development until 2011, as part of a land swap with the CMC company. CMC had by 2003 sold its land to the Redevelopment Authority of the City of Milwaukee and a lawyer for CMC said that would invalidate the contractual promise not to develop the land.

But that interpretation was never tested as the Brewers didn’t move to do any development. It was sometime after 2011 that team officials met with then-Mayor Tom Barrett to discuss a possible development with a hotel and theme park, as Barrett’s then chief of staff Patrick Curley recalled in a recent story by Urban Milwaukee.

But nothing happened and the team never broached the subject again, even after stories by Biz Times in 2018 and the Business Journal in 2019 pushed the idea of an entertainment district. Yet when newly elected County Supervisor Peter Burgelis offered a proposal that officials in Milwaukee and West Milwaukee meet with the baseball district to pursue the idea of creating a TIF (tax incremental financing district) to fund an entertainment district to generate revenue for the Brewers, the media jumped all over the idea, with stories by print, radio and TV outlets.

But the entire idea is based on a misunderstanding of just how all-encompassing the tax exemptions granted to the team are, something only Urban Milwaukee has reported. The stadium and all 265 acres leased to the Brewers are tax exempt, which has tremendous value for the team. Over the presumed 40 year life the stadium, (though it could last longer), the exemption on the stadium will save the team nearly $217 million in taxes and the exemption on the land will save the Brewers $483 million.

But that’s not all that is exempt. The state law funding the stadium includes a property tax exemption that “is very broad,” noted Ryan LeCloux, of the nonpartisan Legislative Reference Bureau, when asked by Urban Milwaukee to analyze the law. The property that is exempted “includes but is not limited to: ‘parking lots, garages, restaurants, parks, concession facilities, entertainment facilities, transportation facilities, and other functionally related or auxiliary facilities and structures,’” LeCloux noted.

“Because of this, a hotel developed on the stadium property would become ‘property consisting of or contained in a sports and entertainment stadium’ and not subject to taxation,” he explained. As for, say, building an apartment complex on the land nearest to the Menomonee River, that, too, “would fall within that exemption,” he said.

Moreover, should the Brewers work with another developers to build any such facilities they would still be tax exempt: “leasing or subleasing the property; regardless of the lessee, the sublessee and the use of the leasehold income; does not render the property taxable.”

With a tax exemption that sweeping, why would the Brewers want to make some of its land taxable, in order to generate funding from a TIF district that would then be paid back through future property taxes paid by the team? As a top local developer told me, no TIF or other such deal would compare to a total property tax exemption: “If you can develop without any tax liability, that is the best-case scenario.”

Moreover, why would the Brewers want to establish a precedent for taking away some of its sweeping property tax exemption, or lose any control over its development options?

LeCloux added one caution, that the state Department of Revenue and the local assessor implement and enforce the state statutes and would be the parties interpreting and enforcing the exemption. But to date, none of the land or improvements have been taxed.

The idea that the Brewers or their near-billionaire businessman owner need help from a county supervisor or others on how to maximize the team’s revenue was basically shot down in remarks by Attanasio just before the Brewer’s Opening Day game. Attanasio said the team wasn’t looking to reinstate the five-county sales tax that ended in 2020, but was collecting facts and information on alternative funding sources, with a view to adding the best and newest features found in other Major League Baseball stadiums, as Margaret Naczek reported.

“My expertise is in finance and credit,” Attanasio said. “I will figure out the most efficient, smartest way to do this. I’m quite confident of that.”