Bucks arena supporters rally at budget hearing, financing plan heading in new direction?

It's been almost five weeks since I last wrote about the Bucks' ongoing pursuit of a new downtown arena, and I'll be honest: I was hoping that the next time I felt compelled to write something about this, we'd be talking about the release of the Bucks' long-awaited formal project proposal. You know, the official confirmation of where the project would go (as if we don't already know), how much it would cost, what it might look like (artist's renderings, huzzah!) and some specifics on how the Bucks expect the dollars, dates and details to line up.

Alas, today is not that day.

Still, it's not to say recent weeks haven't seen a fair bit of movement (and perhaps even progress?), mostly on the hot topic of public funding from the state. Arena proponents rallied ahead of today's first public budget hearing at Alverno College, and with the legislature's Joint Committee on Finance set to begin review of Gov. Scott Walker's budget in early April, Bucks president Peter Feigin indicated on Tuesday that the team would have a proposal ready for committee review within a couple weeks.

The Bucks had previously announced the hiring of three architectural firms for project design in late February, and it seems a foregone conclusion that the project will be sited on land just north of the BMO Harris Bradley Center. That's good, because they really don't have much choice but to put something in front of the finance committee when it begins review of the governor's budget next month. So what happens between now and then? Don Walker at the Journal-Sentinel lays it all out rather succinctly in his latest piece:

The source familiar with the Bucks' plan said the team is expected to come up with better cost estimates in the next week or two. That, in turn, will give the city and county an opportunity to fine-tune their own plans.

The city's contribution is expected to be in the form of tax-incremental financing that would be part of the overall development — money for road improvements and the like. In addition, the Bucks and the city have discussed the future of the city-owned parking ramp at the corner of N. 4th St. and W. Highland Blvd. as a possible future revenue source.

There are also discussions underway with both city and county officials involving other pieces of land, including land in the Park East corridor. The Bucks are still targeting land just north of the BMO Harris Bradley Center as the primary location for the new arena.

While the presumed site might not be as ideal location-wise as on the once-preferred Journal Square option, it would represent a much easier needle to thread from a site control and demolition standpoint -- rather important considering the Bucks are (at least publicly) still holding out hope of completing the new arena in time for the fall of 2017. So in theory it might go like this: The county provides some of the vacant Park East land it owns, the city funds infrastructure upgrades with a TIF, the Bucks round up some more private money, and hopefully those things add up to a number big enough to satisfy Madison's requirement that the locals pull their own weight.

Then again, whether the legislature will depart from Gov. Walker's proposed $220 million bonding plan is also an open question, with Majority Leader Scott Fitzgerald suggesting this week that a different approach avoiding bonding altogether is in the works. Fitzgerald -- brother of Bucks lobbyist and former Assembly Speaker Jeff Fitzgerald -- has gone so far as to call Walker's original plan "pretty much dead," though he also made it clear that he's working with other state republicans in addition to the county and mayor's office to figure out an alternate solution. It's not clear what that might be, but so long as everyone wants to get something done there's reason for continued optimism.

Among those involved in the Fitzgerald discussions is Assembly Speaker Robin Vos, who indicated last week that his caucus was "comfortable" with a package of at least $120 million. Rich Kirchen of the Milwaukee Business Journal reports:

"We're going to spend $120 million to keep (the Bucks) here or to see them leave," Vos said. "That is a bottom line number I think is reasonable.

"Is there a number beyond that? $120 (million) to $150 (million) — maybe a little bit north of that. But I think our caucus is comfortable in that range because that's what we'd spend anyways."

Recall that Bradley Center Chairman Marc Marotta suggested a year ago that maintaining the aging BC would require $100 million over the next decade, a liability that wouldn't go away if the Bucks were to move. The good news for arena proponents is that Vos and his caucus members are viewing the BC obligation as an effective floor for new arena funding; not surprisingly, most everyone would prefer to put that money into demolishing the BC and building a new arena rather than simply keeping the BC on life support. And while the $120 million figure might not be as generous as the $220 million in Walker's original plan, it's still a big chunk of money that, along with private funding and local contributions, should make a grand arena bargain eminently doable.

Moving away from the bonding approach could also quiet concerns raised this week about potential limitations on tax exempt debt, which the Legislative Fiscal Bureau assumed in their analysis of Walker's bonding plan. As you may have heard this week, President Obama's 2016 budget proposes to close the loophole allowing tax exempt municipal debt to be used for arena financing (among many, many other things). That on its own doesn't necessarily kill Gov. Walker's bonding plan; the loophole won't necessarily be easy to close in the first place, and it's not as if tax exempt debt has to be used anyway. Consider that Sacramento isn't using tax exempt debt for the Kings' new arena, which adds some flexibility but comes at the cost of higher interest payments. For example, some basic excel work will tell you that $220 million in 30-year bonds at 5% interest would require around $48 million more in total interest payments than the same total debt priced at 4%.

Don Walker's latest also suggests Bucks' ownership isn't ready to volunteer more than the $250 million already pledged for a new arena, which makes for a somewhat provocative headline but probably doesn't mean a whole lot at the moment. While it didn't come with a splashy announcement, the Bucks' proposed contribution has already been bumped once in recent months -- from $200 million to $250 million -- so from a negotiating standpoint you might guess that they're going to anchor at that amount for now and see how things play out. Depending on how things go with the state, city and county, they may well have to consider upping the ante at a later date.

In other words, we're a long way from anyone playing the "best and final offer!" card, especially when the Bucks have yet to even release their formal arena proposal. Though the up-front financing package is the first and most obvious challenge, don't forget that a multitude of other factors -- the rent the Bucks will pay, how concession revenues will be split, who owns arena naming rights, etc -- will impact how the project's value is ultimately dispersed among stakeholders. No one's talking about those details now -- but with any luck that may change soon.