Financing strategy behind $66 million Domes restoration plan unrealistic, county officials warn

The Mitchell Park Domes

Last updated on September 15th, 2021 at 01:10 pm

A $66 million plan drafted two years ago to restore the Mitchell Park Domes contains now-outdated cost estimates and an unrealistic financing strategy, county officials said in a recent report to the Milwaukee County Board.

The business plan, drafted by a Montana-based consulting firm and endorsed by a county Domes task force in August 2019, called for making investments over the next 10 years to rehabilitate the Domes structure and add a host of new features to the park to make it a more regional attraction. It also proposed that a new nonprofit entity partner with Milwaukee County to operate the park.

The plan called for a public-private financing strategy. The proposed financing mix included $27 million that would be evenly split between a private sector campaign and general obligation bond financing, with the remainder coming from a combination of historic tax credits, new market tax credits, PACE and opportunity zone investment, according to the plan.

However, county officials in a new report raise several issues with the plan, saying it’s highly unlikely to succeed.

Nearly half of the plan’s projected funding ($29 million) would come from tax credit sources and investment-based revenue that would require the county to work with a private partner. The county isn’t eligible to receive tax credits, so finding a for-profit operator would allow the project to draw down more revenue.

But, county officials advised caution in moving forward with a private partner, saying the plan’s timetable is “extraordinarily aggressive” and it would take the project’s success out of the county’s hands and instead rely on third-party developers, partners, the IRS, granting entities and the fundraising capability of an affinity friends group. It would also require the county to be the first to fund and the funder of last resort.

Those concerns are being raised by the county’s grants and special projects and facilities management divisions. The county Parks, Energy and Environment Committee is scheduled to discuss the report today.

County officials say the 2019 Domes business plan also overshoots on its new market tax credit projections. The plan estimates the $66 million project could secure $15 million in those tax credits, or nearly 23% of project costs. However,  new market tax credits are typically awarded at around 5-7.5% of project costs, according to WHEDA estimates.

The report also raises questions about the Domes project’s eligibility for some of the proposed funding sources. New market tax credits and opportunity zone investments, for example, are generally directed to new programs and services, not restoration activities.

A rendering of the reimagined Mitchell Park Horticultural Conservatory campus.

Meanwhile, the cost projections of the proposed $66 million revitalization plan are too low given the two-year gap from when the plan was published and the continued deterioration of the structure since then, county officials said.

The county faces a short timeline to make decisions regarding the Domes. A 2018 report from ConsultEcon estimated a five-year horizon for addressing deferred maintenance will end in 2024. Current board policy calls for extending the useful life of the Domes to the “maximum” length.

The 2018 ConsultEcon report called for razing the existing domes and building new, but new construction would mean forgoing historic tax credits as a revenue source and likely limit the county’s fundraising options, as many donors want to see the historic Domes preserved.

The need for a solution to the aging Domes has loomed for years, but when concrete chunks began to crumble in 2016, it prompted immediate safety concerns and more serious discussions about the fate of the structures.

The county is now seeking analyses from accounting and legal firms on proposed revenue sources and partnership structure options. Officials are also seeking updated estimates from Milwaukee-based engineering firm GRAEF on how much it would cost to make repairs.

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Lauren Anderson covers health care, nonprofits and education for BizTimes. Lauren previously reported on education for the Waukesha Freeman. She graduated from the University of Wisconsin-Madison, where she studied journalism. In her free time, Lauren enjoys hiking, kayaking, and seeing live music.

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