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UW-Milwaukee - Center for Economic Development

Policy Research Report Abstract

The PabstCity Redevelopment Project: Inflated Projections and Dubious Economic Assumptions, by Marc. V. Levine

Introduction

PabstCity represents, according to its promoters, "one of the most significant economic development initiatives ever undertaken in our region," generating economic benefits to "respond to many of the area's priorities." Even after downscaling their original request for $74.8 million in public money, the developers' request for $39 million in city taxpayer subsidy is "the biggest city funding ever for a Milwaukee commercial development," a TID [tax increment district] "twice as large as any previous City of Milwaukee sponsored TID and greater than the previous seven City TIDs combined." The anchor attractions in PabstCity will be a "House of Blues" live-music venue, Sega's Gameworks, and a "state-of-the-art 16 screen cinema complex."

Notwithstanding the enormous public expenditure involved, the city's Department of City Development (DCD) has aggressively promoted the project -and recommended approval by the Redevelopment Authority and Common Council - without providing a rigorous, independent analysis of the economic impact projections and market assumptions contained in the developers' proposal. DCD did commission a "TIF Feasibility Report" from a consultant, S.B. Friedman & Company of Chicago, but the Friedman report explicitly relies on "market study information...produced on behalf of the developer...[and] supplemental retail market information provided by the developer subsequent to the initial TIF application" - in other words, no independent market analysis.

Such an independent economic impact and market analysis is, of course, crucial for the Common Council to adequately assess the risks of the proposed PabstCity TID, and to evaluate whether the promised economic development benefits are likely to materialize and be worth the public expenditure. Unfortunately, even a cursory review of the entertainment market in metropolitan Milwaukee and in comparable cities across the country, suggests that the market assumptions underpinning PabstCity are highly questionable, the projected economic impact vastly overstated, and the potential damage to local, non-subsidized entertainment businesses very real.

Indeed, in addition to our own analysis, the City Comptroller's report and consultant's study - finally released on June 2, 2005, only five days before the next scheduled meeting of the Zoning, Neighborhoods and Development Committee, after the first presentation of the PabstCity TID to the committee in mid-May, and after the approval of the plan by RACM on May 26-confirms serious weaknesses in the economic development analysis underpinning PabstCity. Our recommendation would be that the Common Council delay action on the PabstCity TID until the Department of City Development conducts (or the Common Council separately commissions) an extensive independent analysis of the economic development policy issues surrounding PabstCity.

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