Many ‘moving parts’ ahead for Bucks arena project (UPDATE)

As the public continues to argue over a new proposed arena for the Milwaukee Bucks, supporters will soon find themselves contending with various “moving parts” as the proposal makes its way through an obstacle course of governmental agencies.

The Wisconsin Legislature and Gov. Scott Walker recently approved a financing plan that calls for taxpayers to contribute $250 million to the $500 million arena project. For the project to actually begin, though, various other governmental officials still must sign on in fairly quick succession, said Martin Matson, city comptroller.

The next immediate steps will have the plans before the Milwaukee Common Council’s Zoning & Neighborhood Development Committee on Sept. 15 and the full Common Council on Sept. 22. If approved at each of those stages, the proposed arena will next go to the mayor and then the city’s Joint Review Board — a committee that gets a say on the tax increment financing district that is proposed to be used for the project.

The review board already agreed to the plans July 2 but is always given two chances to turn down TIF proposals.

Afterward, an “intergovernmental cooperation agreement” would have be executed between the city and the new entertainment district that has been established to manage not only the new arena, but also various other sports and theater venues in downtown Milwaukee. Before that step can occur, though, the new district’s board must still be filled out.

One of the few officials already appointed is Scott Neitzel, secretary of the state Department of Administration. He has been named president of the new board, which will eventually have 17 members.

Once all the appointments are made, a “transfer agreement” will have to be reached between the Bradley Center and the new arena district. Then will come a negotiation concerning the terms of the Bucks’ lease of the arena space. A “term sheet” governing the proposed deal requires that the lease last for 30 years and gives the team and its affiliates an option for two extensions of five years each.

The lease negotiations have been placed in Neitzel’s hands.

“Secretary Neitzel has met multiple times with officials at the Wisconsin Center District, talked to representatives from the Bucks organization, and assembled a core team to work through these items,” said Cullen Werwie, the DOA’s communications director. “Moving forward, the secretary and the core team will bring on board additional experts to help settle these outstanding items quickly through negotiations.”

Some government officials have pointed to the exponential rise in the team’s value over the past three decades and argued that, even with a new arena, the Bucks owners might be tempted to sell the team.

But Jake Suski, Milwaukee Bucks senior vice president for communications and broadcast, said contentions of that sort are grounded in error. Suski noted that the Bucks have already signed on to an “iron clad” agreement that allows a judge to order the team to remain in Milwaukee until the end of the 30-year lease.

Suski also cast doubt on the notion that the Bucks owners could make money by moving the team.

“Any relocation payment is the property of the league’s 30 teams equally,” he said. “The Bucks ownership would not be able to capture the benefit of that relocation value.”

With a lease in place, the arena district could move forward with a development and construction agreement, as well as the selection of a general contractor. Bucks President Peter Feigin, who testified at Monday’s hearing, said there was no information about developments on that front, or whether the arena district, the Bucks, or some other governmental person or body would be charged with the selection of the lead construction company.

After a general contractor is selected, Milwaukee County plans to sell 10 acres in the Park East corridor, which lays just north of the site of the new arena, to Head of the Herd LLC, a developer affiliated with the Bucks. Zoning approvals would then be required for several lots the Bucks plan to develop.

The entertainment district managing the arena would issue bonds to contribute the bulk of the public’s $250 million portion of the project. Of the bond total, $93 million would be paid off using an extension of taxes now collected on hotel rooms, car rentals and food and drink sales. The rest of the bonds would be paid off by the state and Milwaukee County.

New bond counsel and financial advisers will also have to be brought on for the city and arena district. Those who hold those positions now also represent the Bucks and thus have a conflict of interest.

A request for proposals has gone out and has already elicited responses, Matson said. The city plans to select people for those roles soon, he said.

Finally, Matson said his office has hired Georgia-based HSV Consulting Group LLC to provide an economic analysis of the arena plan. One goal will be to compare the proposed financing with similar arrangements used by two other cities, which have yet to be chosen.

Matson said he plans to have the results ready to present in time for the Common Council’s Sept. 22 meeting on the arena.

“I believe this study is drawing the line in the sand,” Matson said. “So that in 10 or 15 years from now, somebody’s going to go back and tell us … whether we made a great choice, or we made a mistake.”