MPS on the hook for $40 million to support streetcar project

By Robert Miranda

Editor, Wisconsin Spanish Journal

February 2, 2015

Alderman Jose G. Perez is quietly giving away his vote in support of Mayor Barrett’s streetcar, knowing that the Milwaukee Public Schools (MPS) will be on the hook for $40 million dollars, part of the $124 million dollars it will cost the City of Milwaukee to build the streetcar.

When attempts by the Spanish Journal to reach Perez were made last week to inquire about this latest revelation, no return phone calls were made by the Alderman.

At issue is a January 5, 2015 Legislative Reference Bureau (LRB) memo written to Alderman Joe Davis Sr., who is also a candidate for mayor, that breaks down the various taxing entities the city will be siphoning money from to pay for the streetcar.

The LRB clearly illustrates that MPS commitment to build the downtown streetcar will be $40 million dollars. That’s the largest share. The city’s portion is $33 million behind MPS. The memo also points out that Milwaukee Area Technical College (MATC) will be paying $7 million dollars in future tax revenues towards the streetcar.

The January 5 LRB memo has come under fire however by Aldermen in support of the streetcar.

Alderman Nik Kovac, a staunch supporter of the streetcar project, stated during an exchange on social media that the LRB memo was wrong and that the LRB reissued another memo on January 7 “retracting” the initial memo.

However, when Kovac sent a copy of the January 7 memo, the footnote #2 of the January 7 memo stated: “The estimates assume that the Couture project is built as proposed—with the streetcar component. If the project is not built as proposed, no incremental tax revenues would be generated or deferred for the City and the other property taxing entities.”

This statement clearly means that MPS dollars will not be impacted if the streetcar is not built with the Couture downtown project. However, if the Couture project is built with the streetcar component, future MPS dollars will be needed to build Couture and the streetcar.

The LRB January 7 memo was not a retraction as Kovac stated, but an affirmation of what the LRB stated initially on January 5.

Chris Johnson, editor of kingfishmke.com, familiar in the area of taxes, accounting and auditing stated that, “The way TIDs work is through incremental property taxes, or increases in the property taxes. As the property taxes increase in the streetcar area those funds will not go to MPS ($40M) or MATC ($7M), they will go to the TID to make payments on the financing for the streetcar. So in essence the streetcar, through the TID, is taking the increased property taxes away from MPS and MATC.”

Kovac responded to that by saying, “Yes, the future taxes on the incremental value will go to the streetcar and not to anything else (and technically anything else includes MPS or MATC), but that is a highly misleading way to phrase it. Those incremental values will only be there if we build the streetcar, so to imply there could be another way to spend that found money is highly deceptive.”

Johnson responded by saying “Since when is using plain English misleading or a deceptive way of saying things”.

Jose Perez supports the streetcar, but with this new revelation that MPS is on the hook for $40 million dollars to build it, efforts to get Perez to comment met with negative results.

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Last edited by Tyler Schuster.   Page last modified on February 02, 2015

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