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A concept under consideration by a Metropolitan Milwaukee Association of Commerce arena task force calls for creation of an enhanced tax-incremental financing district to pay for both a new sports arena and possible other development.
Sources with knowledge of the plan told the Journal Sentinel that the super TIF, as it has been referred to by some, would be large geographically and could include development of new retail, restaurants, hotels or business offices.
Timothy Sheehy, MMAC's president, said such TIFs had worked in other markets, but said no specific recommendation has been made. "There are a lot of possible ways of doing it. But local politics and local economics define how successful a path is," Sheehy said.
Sheehy said he had not heard the term "super TIF." "Any TIF is super if it pays off the debt and it generates additional revenue. That is a super TIF," he said.
The idea of a super TIF to finance a new arena has a connection to the Hammes Co., the highly successful, Brookfield-based firm that provides planning, facility development and real estate advice to the health care industry. Hammes also has a sports development arm and has been retained by the MMAC task force for advice on financing an arena.
Hammes provided advice to at least two high-profile projects in Rochester, Minn., and Allentown, Pa., both of which included a public spending component.
Traditionally, a tax-incremental financing district borrows money to pay for public improvements and other expenses linked to a commercial development such as an arena or hotel. Generally, property taxes from the new development pay for the financing.
In the case of the super TIF, the district also would capture state income taxes and state sales taxes generated within the district to repay that debt.
Because the proposal would take state income and sales taxes, the idea would need approval by the state Legislature and Gov. Scott Walker. At the same time, the idea of tapping state taxes could make it more palatable to opponents of a regional tax to fund a new arena. County boards in Ozaukee, Racine and Waukesha counties are on record in opposition to any kind of regional tax to fund a new arena or expand the Wisconsin Center convention center. Walker spokeswoman Laurel Patrick said the MMAC had asked for an opportunity to brief the governor on its ideas for the future of the arena.
"There's a lot being kicked around," said one source with knowledge of the talks. "If we go down this path of a super TIF, it has to be more than just an arena."
While emphasizing much work needs to be done forging a financing plan, Sheehy conceded a larger TIF was an intriguing possibility. "TIFs are complex. It's all very interesting in theory. I understand the attraction of it but it needs a lot of detail," Sheehy said. "This could produce a wonderful option for development of a new facility, or it might not pencil out."
While a TIF could stand for a public financing option, former Sen. Herb Kohl, who has owned the Milwaukee Bucks since 1985, has said he will contribute a significant amount from his personal fortune toward a new arena. Mark Attanasio, principal owner of the Milwaukee Brewers, also has indicated he would be interested in providing financial support for a new arena.
Talk of a possible super TIF sparked a strong reaction from Common Ground, a community organization that has vigorously campaigned for improved playgrounds, athletic fields and parks in Milwaukee County. The group has said it will oppose using tax money for a new arena unless $150 million to $250 million is set aside for public recreational improvements.
"We believe that Ted Kellner and his business buddies will ask Governor Walker for legislation for a super TIF to fund the new Bucks arena. Super TIFs are hidden tax increases imposed on taxpayers with no public accountability," said Jennifer O'Hear, chair of Common Ground's Fair Play campaign.
Kellner, a prominent business leader in town, is chairman of the MMAC board. Kellner has been a strong advocate for a new arena and told the Journal Sentinel recently that it made no economic sense to retrofit the BMO Harris Bradley Center. The BMO Harris Bradley Center opened in 1988.
The city has more than 60 tax incremental financing districts to leverage private development investment. The districts have been used in conjunction with the new headquarters for Manpower International, the Harley-Davidson Museum and the Menomonee Valley Industrial Center.
Left unclear is how the district would be administered, though the City of Milwaukee presumably would play a large role.
Rocky Marcoux, commissioner of the city's Department of City Development, declined to comment.
Hammes has been a successful partner in sports-related projects. Its sports development arm advised the Green Bay Packers on Lambeau Field improvements. In addition, Hammes worked on the $1.6 billion MetLife Stadium in New Jersey; Ford Field in Detroit; the Kohl Center in Madison; and, in the early stages, Miller Park. Most recently, it was named the owner's representative for the $975 million downtown stadium for the Minnesota Vikings.
The sources said Hammes' work with the arena task force borrowed ideas from two projects. One, called the Destination Medical Center in Rochester, Minn., is a $6 billion Mayo Clinic project that would turn Rochester into a destination for medical patients and providers.
The project includes a public spending component: the Minnesota Legislature approved $585 million to build infrastructure for the Rochester project.
The other project is in Allentown, Pa., where Hammes was involved in a project where a Neighborhood Improvement Zone diverts future state tax revenue generated within the zone to help pay bonds for development in the city's downtown. A new arena for the city's American Hockey League franchise is part of the development and Hammes is the developer.
Sheehy said much work needed to be done on the arena task force. He also put the study and work into a larger context.
"We have stated that our game plan is to fund solutions for all institutions," he said, referring to the Cultural and Entertainment Capital Needs Task Force, which is meeting to discuss the capital needs of other major institutions. "We want a solution that works for all of our assets."
Copyright 2014, Journal Sentinel Inc. All rights reserved. (Note: This notice does not apply to those news items already copyrighted and received through wire services or other media.)
Copyright, 2014, Journal Sentinel, All Rights Reserved.