John Norquist, where are you?
By the time Norquist left office, the city was undergoing a renaissance, with redevelopment spreading from the Third Ward to Downtown, Brewers Hill, the lower East Side, Menomonee Valley and near South Side. Norquist used city subsidies, but he was strategic about it, and did his best to make the market function without interference.
His successor, Mayor Tom Barrett, has increased the use of subsidies like tax-incremental financing. Now everybody wants them and Barrett is increasingly under fire to give more, more, more. Last week, the Common Council voted unanimously to force the Department of City Development to study whether it should give a $9.5 million handout to developer Richard Curto for his Park East Square project. Barrett had turned Curto down. If the Common Council is going to micromanage every new project in Milwaukee, development will slow to a crawl. And more than anything, developers need a fast, smooth process in dealing with government.
Where did it all go wrong? Barrett’s willingness to spend $41 million in TIF money on PabstCity suggested he would be easy prey for developers. The Common Council defeated this plan (the beginning of Barrett losing power to the council on such issues), but when developer Joe Zilber stepped up with a different plan for the old Pabst brewery area, he was rewarded with a $29 million funding package. Worse, as he sells portions of the land to other developers, they may approach the city for help, as Deputy Comptroller Michael Daun has noted. With a possible double subsidy, who knows what the taxpayers’ final price tag for this area will be?
Barrett also agreed to spend $25 million in city money to encourage Manpower to move a few miles south, from Glendale to Downtown Milwaukee. So much for the Milwaukee 7 idea that we are all one economic region working together.
Developer Barry Mandel’s North End project along the Milwaukee River was originally going to get a small, $2.4 million package of city help. But Mandel wanted more. And considering what others are getting, why shouldn’t he? Eventually, Barrett bumped it up to $8.8 million.
In Norquist’s last two years in office, 2002 and 2003, the city spent $96 million on TIF subsidies. That increased to $159 million in 2005 and 2006.
But this isn’t enough for the Public Policy Forum, which devoted an entire study to arguing Milwaukee needs to spend more on TIFs, without proving its case for more spending. It simply asserted this would be good because other cities use more TIF money than Milwaukee.
The Business Journal did an April 20 editorial warning the city that it had better hand out more TIFs or national developers would walk away from Milwaukee. Apparently the newspaper forgot about the news story it did just a month earlier hailing a “Billion dollar building boom” in the Downtown area, with 10 different projects worth nearly $1.2 billion planned by developers. That doesn’t sound like a city that’s hurting for development.
And if Milwaukee does need to jump-start any development, it’s not along the river or in the adjoining Park East area. This is prime real estate in the middle of the city’s redevelopment boom.
Handing out TIFs to new hotel developments could undercut current hotel owners, who must compete without a subsidy. It’s unfair to developers who never ask for subsidies, such as Boris Gokhman. Two of the biggest developments in the city’s history, Kilbourn Tower and the University Club Tower, both on Prospect Avenue, were done without subsidies. Milwaukee has become a very hot place for development. If one developer won’t break ground without a big subsidy, odds are another one will.
Back Scratching In Corporate Boardrooms
Few part-time jobs pay as much as a stint on a corporate board. In Sunday’s Milwaukee Journal Sentinel, reporter Avi Lank did a solid story on the high pay for corporate board directors, noting they may make as much as $229,000 per year just to sit on a board. In defense of directors, Ulice Payne Jr. argued they must work harder since the Sarbanes-Oxley Act went into effect (in 2003), because they are now held more responsible and must double-check what management tells them.
Perhaps. But the pay for directors has been rising for years, since long before Sarbanes-Oxley. It has risen right along with chief executive pay, which these directors have been unable or unwilling to rein in. In 2005, The Corporate Library found, the pay for top CEOs rose 11.29 percent, while the pay for directors rose 16.5 percent. The CEOs are ever more generous in what they pay directors, and those directors return the favor by setting ever higher compensation levels for CEOs.
The rationale for these double-digit increases is that the companies seek to pay CEOs and directors at the median level for their peers. Of course, if everyone gets raised to the median compensation level each year, the median will jump ever higher and you will continue to get double-digit annual increases in compensation, with no end in sight.
The Buzz
– Scott Walker ran for county executive after promising voters he would not serve more than one term. Now we learn he will run for re-election in 2008 and break his promise to voters. No need to tell the truth, Walker apparently decided. Mere truthiness is good enough.
– Newly elected Supreme Court Justice Annette Ziegler, who faces investigations of her ethics by both the state Ethics Board and state Judicial Commission, is guilty of yet another ethical violation, allowing herself to be listed as a featured guest for a Republican fundraiser. Here’s the story.
– Mr. Hot Air: Sheriff David Clarke continues to make noises about running against Tom Barrett even as he fails to work on raising any campaign dollars. Translation: He wants media attention but doesn’t really want to do the work needed to run for mayor.
-My last column mistakenly suggested the Judicial Commission was dominated by lawyers and unlikely to be aggressive in investigating Ziegler. My error. The commission is not dominated by lawyers, and in letters (above), you’ll find a strong defense of the commission’s work.
– Finally, as perhaps the chief critic of the silly subsidy offered to Cabela’s outfitting store by Washington County, my congratulations to the current board for its decision to override the past board’s decision. Cabela’s is raking in the money in one of the most active hunting states in America. Taxpayers shouldn’t have to add more to the store’s profit margin.
I’ll be back in two weeks.
And don’t miss critic Ann Christenson’s Dish on Dining.
