The city of Milwaukee would create a new tax incremental financing (TIF) district to provide $12 million toward the Bucks arena project, under the current proposal.
Last week state and local leaders announced a proposed deal for a $250 million public contribution for a new $500 million arena in downtown Milwaukee. The other half of the cost of the new arena would be paid for by the current and former owners of the Milwaukee Bucks.
As part of the proposed deal, negotiated on the city’s behalf by Milwaukee Mayor Tom Barrett, the city would provide $37 million for a new parking structure and $12 million in TIF.
The city’s $12 million in TIF funds will be used for a public plaza east of the new arena.
The parking structure would have about 1,240 spaces and would be built in the Park East corridor, northeast of North 6th Street and West Juneau Avenue. The revenue from the parking structure would be split by the Bucks and the city, which would use those revenues to help pay for the structure.
The city also plans to provide an additional $8 million in TIF funds to the Bucks owners for the ancillary development. Those funds will be paid up front by the Bucks owners and reimbursed by TIF dollars, but only after the city’s $12 million TIF contribution has been repaid first, Barrett said. That approach will ensure that the ancillary development around the arena does actually occur, he said.
All of the property in the arena district will be assessed property taxes except for the arena, the plaza and the parking structure owned by the city, Barrett said.
The new TIF district for the arena would overlap the city’s existing TIF district for the Park East corridor, which means the boundaries of the Park East TIF would be changed.
The area for the arena TIF district includes Park East blocks between McKinley Avenue and Juneau Avenue, west of the Aloft Hotel to West Winnebago Street. It also includes a block and a half north of the BMO Harris Bradley Center and its parking structure, blocks north of West Highland Avenue between the Milwaukee River and North Fourth Street, and part of the block northwest of McKinley and North Dr. Martin Luther King Jr. Drive.
All of that area is currently in the Park East TIF district, and would be removed from the TIF and placed into the new arena TIF.
Some Milwaukee County Board supervisors at a Committee of the Whole meeting on Tuesday commented that Park East land that the Bucks want to buy to do ancillary development around the arena would be in the arena TIF and that it would be years before the county gained property tax revenue benefits. But that land was already in the Park East TIF.
The Park East TIF district is not expected to recover its costs until 2028, according to the city’s annual TIF report. The district already has a tax increment of $120.6 million, which will be added to the general property tax base when the TIF is dissolved after its costs are paid for.
The TIF will be able to recover its costs without the land that it is would lose to the new arena TIF, said Department of City Development Jeff Fleming. Much of that land is vacant and government-owned and currently generates no property tax revenue.
In addition to the land from the Park East TIF district, the arena TIF district would also include: the current Bradley Center site, a vacant lot southwest of North 6th Street and West State Street, the Milwaukee Journal-Sentinel block, blocks south of Highland Avenue between the Milwaukee River, North 4th Street and State Street, and the north of the Park East corridor between McKinely, 6th Street, West Vliet Street and Old World Third Street.
When TIF districts are created the property tax revenue those goes from those areas to local governments is frozen at existing levels. As property values rise, the increased tax revenue (the increment) is used to pay for projects in the TIF district. Once those costs are paid for the TIF is dissolved and the tax increment is then collected by all local governments.
The arena deal is still subject to approval by the state Legislature and Milwaukee Common Council.