When I heard that the City of Milwaukee was planning a $39 million tax incremental financing (TIF) district for PabstCity, I was naturally concerned that the House of Blues, the only announced leased tenant for the project, would have an unfair competitive advantage against locally-owned entertainment venues.
As I studied the facts, my concern turned to alarm, as I documented numerous instances indicating that the PabstCity project is not a good investment for Milwaukee.
The project began as an effort to save and revitalize historic buildings at the former Pabst brewery around 10th Street and Juneau Avenue. It also began with only a few of the 28 buildings being demolished.
Now, only a few buildings are to be restored. If the proposed demolitions are completed, there will no longer be a historic district. This means that the city will lose out on very generous historic tax credits.
The purpose of the development is to create what is being called an "entertainment district." What it is really turning out to be is government-sponsored taverns, restaurants and retail. The developers freely admit that this project cannot get off the ground without a city handout.
Yet, somehow places like East North Avenue, Brady Street, and Milwaukee Street have flourished without government assistance. How can we believe that a development that private financiers don’t fully support will be able to survive with a city cash subsidy?
The plan calls for the $39 million to be paid back over 22 years. During that time, the property will not contribute to the general property tax rolls. The developers indicate they have made guarantees for the repayment of the money, but all they have conceded is that the costs could be placed on the property’s tax bills. This simply means that the city would end up owning the valueless land if the project goes belly up.
Three anchors have been announced: the House of Blues, which has a history of walking away from project after project; Gameworks, a video arcade that has already gone bankrupt last year and had to renegotiate all of its leases after Steven Spielberg pulled out; and an out-of-state movie operator from Pittsburgh.
Who among us would invest their money in this project based upon these facts?
In addition, the city is also throwing in $2 million for job training. This is ironic, considering this is usually a cost covered by the developer. The city doesn’t need to wait for a development in order to invest $2 million in job training. That is like saying that the city is required to give away $39 million to a development before they can fund job training.
Moreover, after the development is built, what jobs will we have for our money? We already have wait-staff and bartenders, and these workers are working in our neighborhoods in private businesses. Will these businesses survive the government-sponsored competition?
Our mayor doesn’t seem to care.
Peter Jest is the owner of Shank Hall, a small concert venue on Milwaukee’s east side.
June 10, 2005, Small Business Times, Milwaukee, WI
