Is Racine ready to become something different from just a manufacturing town?
With the wheels starting to churn on a potential $40 to $45 million arena/convention center and a hotel project, Racine will likely need to answer that question over the coming months. But with so many unknowns — including how to pay for the arena — the Common Council will soon be faced with whether they want to explore the idea.
City staff outlined where they stood with the project on Monday. They explained to the Common Council and the Redevelopment Authority the scope of the project: a 100 to 150 room hotel and a 3,500 to 5,000 seat arena on the southeast corner of Gas Light Drive and Lake Avenue.
The upside of the project: 600 to 800 jobs, 50,000 new visitors to the city, and $322 million in new spending over 30 years. The downside: The city will likely have to front much of the cost. But it could be paid establishing a tax incremental finance district, dollars from the city’s intergovernmental revenue-sharing fund, and a possible bond that could find its way to the property tax bill.
Still, city officials wanted to show the Common Council how well other cities had done with an arena, which is why Racine Mayor John Dickert invited Allentown Mayor Ed Pawlowski to speak. But he declined the visit after the Journal Times wrote a piece about how the FBI is investigating Allentown’s contracting process.
Instead, Geoffrey Dickinson, senior vice president of SB Friedman, rolled out a presentation about Allentown’s success.
“It had a massive exodus from downtown when the manufacturers left in the 1960s, 70s, and 80s and it was a shell of its former self,” Dickinson said. “What’s happened — and it was spurred by this publicly funded arena project — is a massive change in the trajectory of that downtown.”
Where Racine Stands With An Arena
There have been many roadblocks preventing an arena/convention center from moving forward over the past six months.
In the fall the county refused to move forward with pitching in for part of the cost of the project. Some financial partners were not committing to the project over concerns about the site. And the Milwaukee Bucks’ development team wasn’t calling Racine home. So city administrators decided to take another hard look at how to get the project done, said Amy Connolly, the planning director for the city.
“It was clear that what we were doing wasn’t going to work,” Connolly said.
Forming its own development team, the city hired SB Friedman Development Advisors, the legal team of Meissner Tierney Fisher & Nichols S.C., and environmental law experts Mallery & Zimmerman. The team came up with a framework to see if they could make the project viable, which includes seeking out an owner’s representative with the goal of starting the project in the fall of 2018.
But the Common Council and the Redevelopment Authority would need to find a way to pay for the project and give its blessing before any dirt could be moved.
“We’re not quitters,” Dickert said.
Framework Laid Out
Stephen Friedman, president of SB Friedman, explained that most sports facilities are built with others paying for the capital costs, and that they are largely paid for with local government and private partnerships.
In this case, the city would be the developer/owner. But the city doesn’t have the capacity to take on that role. So the development team is seeking an owner’s representative, which would select and supervise the architectural work, and do the planning and design of the project. It would also negotiate with anchor tenants and vendors, and oversee the design and construction of the facility.
Friedman explained that the city would break down the process into three steps:
- Hire an owner representative to create a conceptual level design, which would cost $500,000 to $600,000
- Set the guaranteed maximum price for the project (the go, no go point), which would cost $2.5 to $3.2 million.
- Finalize the detail design to come up with a firm price, which would cost $40 to $45 million.
The Common Council would need to make two major decisions, whether to hire the owner’s representative and whether to seek the guaranteed maximum price for the project.
“We could get to a $3 million plus mark and get a no go, but we should know an awful lot even at the first phase,” he said.
The city’s development team has identified three potential owner’s representatives:
“We’re doing the review process now, but we’re not going to make a recommendation until we’ve finished with the reference checks, legal and litigation research, and the cost qualifications review,” Friedman said.
The development team will make a recommendation to the Common Council and the Redevelopment Authority on Feb. 27 for the owners’ representative. If that moves forward, then the RDA is expected to make a recommendation and request funding from the Common Council sometime in early March.
Project Receives Mixed Reaction
City alderman Sandy Weidner asked if the city had any partners on the project or if it were going alone?
“Not at this time,” Connolly said. “But if we get some of this is pre-development work done… after that we could get other partners to offset the cost of the project.”
However, the city hopes to get a letter of intent from a hotel chain, which would be privately funded.
City alderman Melissa Lemke criticized the city because she felt there wasn’t enough data to support their argument.
Denis Navratil, who owns Dimple’s Imports downtown, agreed with Lemke’s assessment.
“Any responsible pitch to taxpayers should, at a minimum, include a sober and thorough exploration of the costs and risks associated with a given project. Instead, what we all too often see is cherry picked, anecdotal, one-sided hype intended to focus the taxpayer on the benefits while downplaying the cost. Re the cost, the last I heard the estimate was $46 million with no help from the private sector. Among the unanswered questions is why can’t a great project with great profit potential attract private investment?”
But Racine County Board Supervisor Monte Osterman said that Racine was at a watershed moment where even other developers were watching Racine, he said.
“And I spoke with a developer tonight and he asked me this question, which we should be asking ourselves as well: ‘If Racine is not willing to invest in itself, why would anyone else?'” He asked. “This is our moment.”