Wisconsin Governor Scott Walker officially threw his political weight behind a new Bucks arena on Tuesday, detailing a new budget proposal that would earmark $220 million in state revenue bonds toward a new multi-purpose arena in Milwaukee. Billed as a means for the to Bucks to "pay their own way," the plan would freeze the current $6.5 million collected annually in NBA player income taxes and divert only incremental amounts above that towards debt service. As a result, the plan would neither require a new tax nor leave a hole in the current budget, all while assuring that the team's current economic contribution to the state is preserved long-term.
- The $220 million would only be released after all other funding for the arena has been secured ($300 million).
- The growth in income tax revenue due to future contracts and estimated pay increases would be used to pay back the bonds. No existing base revenues collected from the Bucks or visiting teams would be used. This protects the state taxpayers and keeps an economic development tool and job-creating engine in Wisconsin.
- The district would be governed by a nine-member board appointed by the Governor and confirmed by the Senate. Members would serve staggered, 7-year terms. Members shall be residents of the state and have executive and managerial experience. No member may hold elective office or be a candidate for office.
- If Milwaukee County provides funding for the arena, the county executive shall appoint a board member subject to confirmation by the county board.
- If the city provides funding for the arena, the mayor of Milwaukee shall appoint a board member subject to confirmation by the city council.
- The district may not issue bonds, levy, or impose a tax.
- The district can raise revenue through the operation of the arena and will assume any outstanding Bradley Center Authority debt.
The most notable point not mentioned previously is the prerequisite that $300 million in private funding be raised before the $220 million in public funding becomes available. That shouldn't be a big problem -- Marc Lasry, Wes Edens and Herb Kohl have already committed around $250 million, and we've long expected that minority investors, arena sponsorships, and other sources could account for at least another $50 million or more. Still, the matching component and the $520 million total figure hint at what to expect from the Bucks when they announce a site location and project details -- which will hopefully come rather soon (see note below). Rich Kirchen reports that legislators may "whittle down" the $220 million figure once all is said and done, though that could certainly be made up for with additional private dollars. All part of the negotiating fun, right?
During his speech Walker also noted that a new arena would mitigate the state's potential liability in maintaining the Bradley Center, a fact that shouldn't be lost in all of this. Bradley Center Board Chairman Marc Marotta estimated a year ago that maintaining the aging arena would likely cost upwards of $100 million over the next decade, a figure that goes away if the new arena cost includes a provision for demolishing the BC. Considering the likelihood that the arena is built north of the current BC and thus won't touch the UWM Panther Arena, it would seem a lock that the BC will be demolished once the new building opens. Economically that's a good thing for the state, though they may eventually face the same issue with the new arena. But hey, we can worry about 2045 some other time, right?
So what does the rest of the world think of the Walker proposal? Well, the Bucks are predictably fired up.
"We thank Gov. Walker for his leadership and commitment to building a transformative, multi-purpose arena that will help revitalize Milwaukee," said Bucks President Peter Feigin. "The governor's support brings Wisconsin closer to creating a new state-of-the-art venue and entertainment destination that will become an economic catalyst for the entire state. We look forward to working closely with Gov. Walker, the state legislature, local officials and the entire community to make this vision a reality."
Shortly after the announcement, Don Walker also spoke to Bucks co-owner Wes Edens, who not surprisingly touted the governor's proposal as a "great deal" for the state and expressed hope that an arena site location could "be buttoned up in a week or so."
State Assembly Speaker Robyn Vos issued a statement mostly praising Walker's proposal, though he also challenged local stakeholders to step up as well.
"This is a good starting point for the discussion on how to keep an important economic driver in Wisconsin. By asking the Milwaukee Bucks to pay their own way, we are protecting state taxpayers. However, it's important to note that in order for the state to be a partner in this endeavor, we would expect the city and county to be part of the equation as well. I look forward to discussing the proposal with the Assembly Republican caucus."
Speaking of the city and county, Milwaukee Mayor Tom Barrett also stated his support of the Walker plan, though it's not yet clear what that means for the county and city's involvement in the arena project. Here's the Milwaukee Business Journal's Alison Bauter writing after Walker's presser:
Barrett said he's met repeatedly with the team owners, and wants to have a conversation on partnering with them. Beyond that, however, the mayor was not specific.
"A lot of this is dependent on site acquisition," he said.
Barrett and County Executive Chris Abele probably aren't thrilled that Walker is coming off as the guy making everything happen, though they ultimately stand to benefit significantly from state tax dollars flowing into the downtown area. That said, Barrett is also right that the Bucks' final site decision will be critical to determining the specifics of what local officials can do to help. While Barrett has previously indicated a preference for siting the project closer to Wisconsin Ave., a decision to go with the county-owned Park East site would necessarily require significant local cooperation and support, and making any site work is easier when City Hall is fully on board. Needless to say, the time is now for the Bucks and local officials to get on the same page, and the good news is that everyone has an incentive to do so.
On the flip side, State Assembly Majority Leader Jim Steineke's reaction suggested he wasn't doing backflips just yet, a sentiment shared by some other members of the conservative establishment as well.