MMAC forming task force to develop financing plan for basketball facility

The Business Journal of Milwaukee
by Rich Kirchen, Senior Reporter
Nov. 2, 2012

The goal is a new NBA arena for Milwaukee, but formulating a plan on paying for such a facility is likely to be controversial because it would include taxes.

Nevertheless, Milwaukee’s top business organization is forming a task force to recommend the size and location for a new National Basketball Association arena before the end of 2013. The private-sector task force of the Metropolitan Milwaukee Association of Commerce will need to make the case for how an arena for the Milwaukee Bucks would boost Milwaukee’s quality of life and its economy.

Ultimately, the decision will be up to voters in the city of Milwaukee and possibly Milwaukee County, said MMAC president Tim Sheehy. He predicts a referendum will be held on the question of public funding for an arena and Milwaukee County cultural attractions. Bucks owner Herb Kohl has said he would pay for a portion of the costs of a new arena, but has not put an exact dollar figure on what he would contribute.

“We’re under no illusions that this is going to be easy,” Sheehy said in an interview with The Business Journal.

Any new tax for an arena and cultural institutions such as the Milwaukee Art Museum, the Milwaukee Public Museum and the Marcus Center for the Performing Arts likely would not be assessed in the five-county region that has funded construction and maintenance of Miller Park, Sheehy said. That would rule out a new tax in Waukesha, Ozaukee, Washington and Racine counties, he said.

Launching the task force follows the Oct. 22 announcement that the Bucks extended their lease through Sept. 30, 2017, at the 24-year-old BMO Harris Bradley Center. The Bucks signed the lease after the MMAC spearheaded an effort to add $18 million in sponsorships at the facility, led by naming-rights sponsor BMO Harris Bank.

Sheehy said the task force will include representatives of the private sector, but its recommendations would be transparent to the public. He said the task force will consult with the Bucks and the BMO Harris Bradley Center board.

The MMAC task force, which Sheehy has yet to appoint, will begin meeting in January 2013. If the community decides to go ahead with funding a new arena, construction would need to start by 2015 so it is completed by 2017, he said.

Milwaukee Mayor Tom Barrett commended the MMAC for addressing the issue of the city’s arena needs. However, Barrett said he would not support a new tax in the city of Milwaukee and he advised Sheehy to proceed with extreme caution on the subject.

“Clearly any discussion of a tax is very premature,” Barrett said.

Ald. Michael Murphy, chairman of the Milwaukee Common Council’s finance and budget committee, also said a new tax in the city would be a nonstarter. City taxpayers place a much higher value on maintaining public safety, for example, than on supporting an NBA franchise, he said.

“It would be a substantial uphill battle,” Murphy said of a new tax. “We’re furloughing police officers in this year’s budget.”

On the other hand, Milwaukee County Executive Chris Abele said he welcomes the MMAC task force and said it is important to develop a plan before it’s too late. Abele, who is a Bucks season ticketholder, said he sees value in keeping an NBA team here.

“I’m very glad (MMAC is) convening it because they’re a group with no inclination to waste taxpayer money,” Abele said.

Clock ticking

Milwaukee attorney and Bradley Center board chair Marc Marotta said the clock is ticking on planning for a new arena or a major renovation of the Bradley Center, 1001 N. Fourth St. He reiterated the long-running argument that the facility already is outdated compared with its NBA peers.

Milwaukee needs to look to the example of other similar-size communities and how they have been able to finance sports venues, Marotta said. Barrett, Sheehy and Milwaukee business leaders have visited Oklahoma City to learn more about a 1 percent sales tax that funded a basketball arena, a convention center, a downtown trolley system and other projects.

Oklahoma City officials credit the tax, which is charged only on purchases within the expansive city, with reviving a failing downtown and surrounding neighborhoods since the program debuted in 1993. The tax has been extended twice by voters in referendums.

“Ultimately this is a decision that the community is going to have to make if there is public money going into it,” Marotta said.

Milwaukee has provided no public funding for a downtown sports facility since the Milwaukee Arena (now the US Cellular Arena) opened in 1950, Marotta said. The arena across State Street south of the Bradley Center is publicly funded through the Wisconsin Center District, which receives revenue from a tax on car rentals, hotel rooms and restaurant food and beverage sales.

The state of Wisconsin has given the BMO Harris Bradley Center two $5 million grants for maintenance in the past three years.

Gov. Scott Walker’s office did not respond to emails seeking comment on the MMAC task force.

Tax revenue for an NBA arena most likely would come from the city of Milwaukee, where the arena would be located, Sheehy said. He did not rule out a Milwaukee County-wide tax on cultural and entertainment venues, but believes a tax in surrounding counties is a nonstarter.

“The (tax) geography is much different for the (Bradley Center),” he said. “This is going to necessitate some kind of private/public partnership.”

Sheehy believes a selling point of a tax for an NBA arena is that proceeds would go only toward construction and not operations and would sunset when the project is paid off.

The MMAC task force study will explore the costs and benefits of a new arena and possibly a larger development that would include an arena, Sheehy said. The task force will determine costs, location and financing, and release its report by mid-2013, he said.

A community consensus will be necessary — likely through a referendum — that the Bucks provide both entertainment and economic development value, Sheehy said.

“This is not a decision by the business community alone,” Sheehy said. “The community at-large will need to decide how to finance it.”

November 02, 2012