June 23–Downtown’s Park East strip could draw a lot more bucks if it lands the Milwaukee Bucks, says developer Gary Grunau.
The largely vacant former freeway stub could use a major project to help spark its long-delayed development, Grunau says. And an arena to replace the aging BMO Harris Bradley Center — home to the Milwaukee Bucks, Marquette University Golden Eagles and Milwaukee Admirals — would use a lot of space.
“They need a big site,” Grunau said at last week’s meeting of the new Park East Advisory Group. “If you don’t put it there, where are you going to put it?”
Others on the group, which was formed by County Executive Chris Abele, seemed open to the idea. The Bradley Center board chairman says the Park East would be an outstanding location for a new sports and entertainment arena, which would cost hundreds of millions of dollars to build and likely attract other development.
But a prolonged debate about a new arena could tie up that two-block portion of the Park East strip, which in turn could stop other viable proposals from surfacing, said James T. Barry III, another group member and president of Cassidy Turley Barry commercial real estate brokerage.
Also, Mayor Tom Barrett and other city officials are worried about Milwaukee’s ability to pay off its $34 million debt tied to demolishing the Park East Freeway, building a new bridge over the Milwaukee River, and taking other steps to prepare the area for development.
The debt is being paid through property taxes on newly constructed buildings within the 64-acre Park East tax incremental financing district, which includes the 16-acre strip of former freeway and surrounding properties. A new arena, if run by a nonprofit corporation (such as the Bradley Center) or a government agency (a la Miller Park), wouldn’t pay property taxes on Grunau’s proposed site: about 6 acres between N. 4th and N. 6th streets, north of W. Juneau Ave.
“Obviously, we have concerns about the (debt),” Barrett said.
During the advisory group meeting, Barrett referred to the possible new arena as the “800-pound gorilla” among potential downtown developments.
Talk of a new multipurpose arena to replace the Bradley Center has heated up lately.
In May, Bucks owner Sen. Herb Kohl said he would help pay for a new facility. Kohl’s other large donations include $25 million to help build the University of Wisconsin-Madison’s Kohl Center, home to the Badgers basketball teams and other sports.
Later that month, BMO Harris Bank and other companies announced sponsorship agreements for the Bradley Center totaling $18 million over six years. That cash will help pay for Bradley Center operations until a new arena could be built.
The center opened in 1988. It was built for $90 million with a donation from the late Jane Bradley Pettit, and annually draws around 1.5 million people to sporting events and concerts.
The Bradley Center is one of the oldest facilities in the National Basketball Association. It has about half the number of suites in the average NBA arena, and has no club seats. Arena officials say they need club seats, and more suites, to generate additional revenue — two things difficult to accommodate by renovating or expanding the center.
A new arena also would have more seats in the lower bowl, where fans are willing to pay higher ticket prices.
All of those changes would make the center more lucrative for the Bucks, whose vice president of business operations, John Steinmiller, didn’t return phone calls seeking comment.
There hasn’t yet been a study released of how much a new arena would cost. But, based on other arenas built in recent years for pro basketball and hockey teams, the rough range could be between $350 million and $500 million, said Marc Marotta, Bradley Center board chairman.
Along with money from Kohl and other private sources, a new arena would need public funding, Marotta said. Timothy Sheehy, president of the Metropolitan Milwaukee Association of Commerce, a year ago suggested extending the Miller Park sales tax to cover those costs, which drew opposition from Abele and Gov. Scott Walker.
The 0.1% tax, which applies to sales in Milwaukee County and the four counties that border it, began in 1996 and is set to expire between 2016 and 2020 once the Miller Park debt is retired. Extending the tax to cover a new arena would require a change in state law.
The Park East strip would be “a perfect location” for a new arena, Marotta said.
The site north of Juneau Ave. is accessible, and empty, with no demolition costs, he said. He also said an arena there would attract other developments.
Grunau makes that same point. He said newer basketball arenas, such as the American Airlines Center in Dallas, are much larger than the Bradley Center, and include concourses with restaurants, stores and other developments — much like the renovated Lambeau Field Atrium, in Green Bay.
“It becomes more than a basketball arena,” Grunau said. “It becomes a community center.”
A new arena would make other nearby properties a lot more valuable, said advisory group member Barry Mandel, whose developments include The North End apartments, located in the Park East tax district.
The lack of property tax revenue that a new arena would generate isn’t a deal breaker for locating the facility in the Park East strip, Barrett said.
But a new arena could instead be built on the Bradley Center’s parking lot, he said.
That site, south of Juneau Ave. between 5th and 6th streets, is within the Park East tax district. It’s about half the size of the site north of Juneau Ave.
Paying off the debt
City officials are encouraging discussions among public officials and the private sector about a possible new arena, said Jeff Fleming, spokesman for city Development Commissioner Rocky Marcoux.
“At the same time, we have to balance a variety of factors,” Fleming said, including the future of the tax district.
Once the tax district’s $34 million debt is gone, property taxes from Park East projects flow to the city, Milwaukee Public Schools and other local governments. State limits say the debt must be retired by 2029, but that date could be extended if the tax district becomes financially distressed.
The city’s concerns about the tax district are overblown, Grunau said. He said additional property taxes will be generated by projects such as the new Moderne apartment and condo high-rise, to be completed this fall, and The North End, which completes its second phase in early 2013. Another project, Park East Square Apartments, could start by September if the County Board approves its new development partner.
Grunau said the Bradley Center parking lot is too small for a new arena.
But Barry said that site could be extended by building across what is now one block of 5th St. onto parcels owned by the Bradley Center between 4th and 5th streets.
Most of the discussion over whether a future arena should be built on the Park East strip remains theoretical, as a specific proposal doesn’t yet exist.
And Grunau said the Park East strip also could land a major corporate headquarters similar to the recently failed attempt to draw Kohl’s Corp. His main concern is that local officials don’t settle for a series of low-value projects.
“Whatever goes on that land should be a home run,” Grunau said.
Barry agreed, saying an arena or corporate offices might be the best fit.
“Put (the land) out on the market, and try to find the best possible use,” Barry said.