Mayor Tom Barrett has put together another tax subsidy deal that is arguably worse than PabstCity, but there hasn’t been much outcry about the situation.
The city will provide a $25 million tax subsidy to Manpower Inc. to move its headquarters from Glendale to Downtown. In return, the city will get an anchor tenant for the RiverBend Place development and about 1,000 Manpower employees working Downtown on weekdays. That’s a cost of $25,000 per employee.
The Journal Sentinel quickly gave the deal one thumb up, saluting it for strengthening Downtown while conceding that Glendale might be miffed. Indeed. At a time when we’re working for (and the JS is editorializing for) regional economic cooperation, what is the payoff for spending millions to move a company a few miles?
The plan involves tax incremental financing, meaning the city borrows money that is then repaid over a period of 20 years from increased property taxes generated by the development. That means that for two decades, until the TIF is paid off, no property taxes on this real estate will go to Milwaukee County, Milwaukee Public Schools or Milwaukee Area Technical College.
But it gets worse. The city has agreed to create a parking structure that will provide free parking – forever – for every Manpower employee. Barrett’s chief of staff, Patrick Curley, estimates the garage will have about 1,270 parking spots and that very few will generate rental revenue, since most go for gratis to Manpower employees. In short, even after the TIF district is paid off, the city will continue to subsidize Manpower.
It goes without saying that Barrett’s predecessor, John Norquist, who was anti-car and relatively stingy about subsidies, wouldn’t have approved this plan. Nor is it clear it was needed. “We didn’t approach Manpower,” Curly notes. “They made it pretty clear they wanted to come Downtown.”
That’s because Downtown has become a very cool place to live and work. Manpower Chief Executive Jeffrey Joerres said the new location will stimulate creativity among workers and also help recruit employees because they would be nearer to attractions like the Milwaukee Art Museum.
So why was any subsidy offered? Yes, Manpower would have to pay more for parking in Milwaukee (given lower land prices in Glendale), but did the city have to lower the cost to zero? This hardly seems like tough negotiating by Barrett, as Curley claims.
The site in question is on the river, a much desired location for residential development. What would be the loss if Manpower stayed in Glendale and more condos moved along the river? Wouldn’t that result in more people paying city property taxes and going to Downtown restaurants and shows?
It would be one thing if this were a manufacturer offering new family-supporting jobs for unemployed central city residents. But this is a white-collar company where 70 percent of employees live outside the city, according to Curley.
Where does this leave Barrett the next time a company wants to move Downtown? If 1,000 employees gets you $25 million and free parking forever, what does a 3,000-employee company get: $75 million and free office space in City Hall?
“I’m a little concerned about what we say to the next company,” Ald. Michael Murphy observed.
He’s not the only one.
Why Journal Sentinel Sportswriters Hate Politicians
Journal Sentinel sports writer Michael Hunt wrote an incoherent rant last week condemning local leaders for not rescuing the Milwaukee Bucks franchise. The column would hardly merit attention but for how it exemplifies the shallow way the sports section covers such issues.
During the years of negotiations over Miller Park, it was common for JS sportswriters to condemn politicians for not leaping to bail out the Milwaukee Brewers. The tone of the analysis was always the same: These craven operatives were simply playing politics.
The reality could hardly have been more different. This state’s voters defeated a referendum to create a sports lottery, opposing even the use of gambling proceeds to bankroll sports teams. Yet a majority of legislators and former Gov. Tommy Thompson dared to approve a tax for Miller Park. One can disagree with their decision (I did), but you’d have to admire their courage. Former state Sen. George Petak was recalled from office and former Rep. David Prosser lost his bid for U.S. Congress because they supported the tax. Many other legislators squeaked out a victory despite voting against their constituent’s wishes.
Hunt heaps scorn on the City of Milwaukee for “wringing its indecisive hands” before accepting the “gift” of the Bradley Center from the late philanthropist Jane Pettit in 1986. Had Hunt bothered to investigate, he might have discovered that the city was being asked to buy the land on which the Bradley Center stood. The city helped out with creating the parking structure and paid for some infrastructure. With interest on the bonds for this, then-comptroller James McCann calculated the full cost for taxpayers would be $33 million.
That, however, didn’t include an agreement whereby the arena, then run by the city, was required to hand over 15 percent of all proceeds from its bookings to the Bradley Center for the new facility’s first 10 years of operation. This allowed the Bradley Center to funnel more revenue to the Bucks and took money from the arena and convention center, which increased costs for city taxpayers. All told, former Mayor John Norquist once estimated, the total subsidy for the Bradley Center might have been as high as $50 million.
In essence, the poorest taxpayers in the metro area, those in the city, subsidized a palace for suburban sports fans and millionaire ballplayers and owners. About 55 percent of Bucks fans come from outside the four county area, Bucks officials estimate. In short, a minority of the basketball arena’s users were paying 100 percent of the subsidy. It would have been completely irresponsible for city politicians not to scrutinize this deal. But apparently, they were supposed to be more concerned about sports fans like Hunt, who lives outside the city and has paid none of the subsidy.
It’s irrelevant if millionaire ballplayers benefit from such handouts, Hunt contends. It’s an investment in Downtown quality of life, no different than spending on the art museum, symphony or ballet.
Actually, Mike, it’s quite different. For one thing, these arts organizations are all nonprofit organizations: No deep-pockets owner will see his business increase in value if we subsidize an arts group. For another thing, the players in these organizations are anything but millionaires. Many have to work part time (teaching music or waiting tables) to supplement their pay. And finally, the city doesn’t directly subsidize these organizations. Any tax funding (and it is relatively modest) comes from county and state government.
Hunt goes on to contradict himself, deciding it is “absolutely valid” that private dollars be used to build a replacement for the Bradley Center because taxpayers have had enough, after bailing out the Brewers and Packers. But doesn’t that sentiment help explain why politicians have been cautious (“the Jurassic Period could have melted into the Cretaceous,” Hunt snorts) on deals like Miller Park?
And if Hunt’s big-mindedness has now let politicians off the hook for a new basketball arena, just which “city leaders” does this leave to merit his column’s scorn? Is he now attacking local business leaders, like Journal Communications Chief Executive Steve Smith (who’s been very involved in civic issues, to his credit), for not immediately proffering private dollars?
I don’t think Hunt actually knows which leaders he’s blaming, which is probably why none are named. Like other JS sports writers who pontificate on this issue, he mostly knows he enjoys covering the games and could lose his job if there are no pro sports teams here. Why can’t the rest of the community understand how incredibly important that issue is?
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