I largely agree with Charlie Sykes’ points about the arena deal. It’s bad. Really bad. Structurally and for the taxpayers. Yes, there are tax increases and a $250 million price tag for the taxpayers – at a minimum – but it also has some glaring holes. These are the worst:
That revenue — $93 million — would not be available for 13 years.
[…]
The deal also relies on collecting $80 million in uncollected Milwaukee County debt.
[…]
There are apparently no plans for cost overruns.
And, of course, there is the fact that this project would be an estimated $50 million cheaper if the same people negotiating this deal would push through the repeal of the prevailing wage laws.
Let them go!
If we can’t stop subsidizing billionaires here, when will we stop subsidizing them?
Kevin,
I am happy to say I am in total agreement with Charlie Sykes, Owen and you. Finally, some common ground.
On top of that,
Hope you just caught Charlie Sykes and Mike Ellis 2 minutes ago. Classic!
When Mike Ellis is the voice of fiscal conservatism, the sky is truly falling!
Sorry guys but I’m on the side of Mark Belling (who supports it) and these guys as well….
http://saveourbucks.com/a-few-thoughts-for-sykescharlie-part-ii/
This is a decent business development deal for the State if you really understand the economics of it.
If the tax payers are going to shoulder the expense then we should share in the profits or at least have our tax burden reduced. They do this in Alaska (dividend checks) with oil revenues. We should start doing this with all our natural resources or publicly funded profitable ventures. I don’t mean in a spread the wealth socialist way but in a give us what is rightfully ours way. I do think downtown needs major revitalization especially with Thomas the tank engines approval connecting the a East Side to the Third Ward. Without some new downtown attractions it will all be for nothing. They probably should have thought of that before funding a train ride. Either way it should be at a limited expense to tax payers unless there is some tangible kick back besides for a ball game and a private shopping center. Increasing the tax base while increasing spending is the typical Milwaukee pattern. Time for some new ideas.
I suspect that the final deal, which has not been seen by the legislature yet, will contain the following provisions, or it will not get passed:
This deal gets the state out of the arena business, meaning that the BC gets knocked down or ownership gets transferred.
The city and county will need to guarantee their payments, thus if the bad debt purchase doesn’t throw off the $4 mil a year, then the county will have to make up the difference.
The state cannot be guaranteeing the payments of any of the other participants to the deal.
There needs to be a provision that if the Buck’s want to leave, then the taxpayers get their money back, and are off the hook for future payments.
The Bucks will need to guarantee any cost over runs, as I don’t see any of the taxing entities accepting that exposure.
If these provisions are met, then the state is better off making the deal, as they currently own the BC with $100 mil of deferred maintenance and $20 mil of debt. The deal as we know it now costs the state $100 mil, and the $6.7 mil of gpr tax revenue continues to come in, as well as the higher revenue when the new tv deal goes into place. If the Bucks leave, which I believe the owners would prefer to do, then we have a big hole in the state budget that will need to get dealt with.
We’ll know very soon if this deal will have any chance of passage or not.
Let’s see if I can address those three items:
The “good” news is that because the Wisconsin Center District will be issuing zero-coupon bonds, they won’t be making periodic interest payments and thus they won’t need to have dollar one until the bonds mature. The bad news is because there are no interest payments, the face value of the bonds required to generate $93 million in cash now is going to be higher than the total cost of financing traditional bonds. In other words, Milwaukee County diners, car renters and hotel guests will be on the hook for something north of $135 million.
That is a hell of a sticking point. The business-world equivalent gets scored as a cost to the entity assuming the obligation, not as a payment made by the entity unloading said obligation. How much debt, and what kind of debt, is being unloaded to the state to get to $80 million over 20 years? Who’s on the hook if the state comes up short? Who gets the excess if the state is too “successful”?
Don’t look at Edens and Lasry – they’ve said they won’t kick in a penny more than $150,000,000.00.
The good news is, contrary to earlier reports, the “jock tax” is back and slated to finance the state’s portion. The bad news is it’s appearing that the city’s contribution will be at least as much toward the ancillary development as toward the arena, and the $35 million parking garage is the reason the cost is now $500 million instead of $470 million.
Help me understand— Would Milwaukee County not be collecting this $80 million in uncollected debt if an arena is not built, and if not, why not?
Is the county so flush it doesn’t need these funds except for an arena?
Looks to me as though both the City and County have ZERO enthusiasm for retaining the Bucks. The City builds a garage which it gets to keep no matter whether the Bucks are here or not. The County tosses a pile of dung to the State, saying ‘make it into gold.’
That implies that the State’s involvement was a result of very effective lobbying.
Can you spell Metro Milwaukee Chamber of Commerce?
I’m not feeling particularly sorry for the Bucks. In 2016-17, the new NBA deal takes effect that will triple the TV revenues from the previous contract.
It’s not like the Bucks are going to pack up and move. Where is a viable market? Seattle has no arena. San Diego has no arena, and failed twice as an NBA town. St. Louis? Louisville? Kansas City?