Bigger bucks: Increased price tag, new opposition to Bucks arena project

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A lively Milwaukee Common Council committee hearing over public financing for a new basketball arena revealed a higher price tag for the city’s contribution to the project and new opposition from the community activist group Common Ground.

On Monday afternoon, Milwaukee’s Development Commissioner Rocky Marcoux, Comptroller Martin Matson, and Bucks President Peter Feigin laid out how the city plans to generate its share of public money for the project. That figure consitutes the city’s portion of a $500 million financing puzzle to build a new arena for the Milwaukee Bucks.

The Wisconsin Legislature and Gov. Scott Walker have approved a plan that calls for taxpayers to contribute $250 million to the arena over 20 years, although that commitment will grow to more than $400 million with interest. A go-ahead from Milwaukee’s Common Council would allow the city to keep a team that has called the area home for nearly 50 years.

Included in the $250 million is $47 million from Milwaukee. The current plan calls for the city to create a new tax increment finance district and amend an existing district to come up with its contribution to the project. In general, TIF districts collect taxes generated by rising property values and new developments in a particular area and set the money aside to finance projects in the same place.

In his testimony Monday, Matson stood by his Aug. 24 recommendation that the Common Council agree to the use of tax increment financing for the project. But he also noted several additional costs that would actually raise Milwaukee’s price tag on the project to $76 million.

The higher figure includes $17 million in interest payments to pay off bonds generated by the TIF districts; $7.4 million for the value of a current parking garage at 4th Street and Juneau Avenue, owned by the city, that would be demolished by the Bucks; $4.3 million in infrastructure improvements; and $200,000 as the value of a small parcel of land the city would relinquish.

Matson noted, however, that the infrastructure improvements would probably be scheduled anyway in the city’s regular course of business, and the lost parking structure would be offset by a new $35 million parking garage that will be constructed as part of the deal. Current plans will let the city receive half of the resulting parking revenue.

Finally, both Matson and Marcoux said that the proposed tax increment financing would be a success and pay off the incurred debts as developments and an influx of residents generated new tax revenue. That prediction will hold good, they said, even using conservative assumptions that leave out much projected later development. Matson and Marcoux both shared this view even though they each forecast slightly different interest rates on the bonds, resulting in Marcoux estimating that interest payments would ultimately total $18 million, as opposed to Matson’s $17 million.

The meeting also marked the first opportunity for the public to formally comment on the plan. Supporters and opponents of the project alike often sat side by side in a packed hearing room, waiting for their turn to testify.

Each argument for or against the project seemed to generate an equally forceful and persuasive counterargument. Cries over corporate welfare to billionaires were met with pleas to allow development that would make Milwaukee a “destination” and prevent the team from leaving. Claims that the project would create numerous construction jobs and lure commerce were met with theories that the new development would cannibalize existing businesses and arguments that money could be better spent reducing the cost of obtaining an education within the state.

More specific arguments were also given equal weight, and counterweight. Critics worried the arena district would become a bland “Anytown USA,” while supporters and even some partial critics and skeptics, like Alderman Joe Davis, were more interested in how to ensure minority-owned businesses could open and thrive in such spaces.

Some wanted only for the arena to be built and for the county to maintain the Park East land; but the land has sat empty for over a dozen years and the city’s proposed TIF districts, even under a conservative analysis, rely on the Bucks’ planned developments to help pay themselves off.

Officials from Common Ground were also present and explained their new line of opposition to the arena, citing a lack of money for children and schools as a greater priority. The volunteer leader Jennifer O’Hear said group members consulted with their own economist, who estimated the total cost to the city at $80 million, and would demand $80 million next year from elected leaders who support the arena plan.

Still, most of the sort of money Common Ground demands would come from property tax revenue. Earlier in the hearing, responding to a question by Alderman Terry Witkowski, Marcoux and Matson confirmed that no existing property-tax revenue would contribute to the public financing of the project.

Common Ground’s new demands also come after city officials announced an agreement Friday with a mortgage-servicing company connected to Wesley Edens, an owner of the Bucks franchise. The company, Nationstar Mortgage, has agreed to contribute more than $30 million as part of a plan to shore up Milwaukee’s dilapidated housing stock. Common Ground has long pushed for the company to do something to combat Milwaukee’s dilapidated housing stock and argued the Bucks deal provides “leverage” to obtain the sought-after assistance.

“When groups like Common Ground use this as leverage towards their projects, that opens the floodgates for other groups to say ‘Well, if they want this done, I want that done,'” said Paul Henning, founder of Save Our Bucks, a fan-based grassroots organization dedicated to keeping the Bucks in Milwaukee.

Aside from those firmly committed to one side, a few people confessed more mixed feelings as well.

“I like the idea. It’s exciting having a new sports arena here. And I like the Bucks,” said Darren Olsen, a Wisconsin resident who works as a construction laborer. “But there has to be language that they’re going to pay a living wage. A prevailing wage… not just for construction workers, but for the workers who work there afterwards.”

Bucks President Peter Feigin, who testified at Monday’s hearing, said there was no information yet about developments on this front, but information would be forthcoming as the project moves forward. Follow @MatthewTaub1