Business districts face limits on funding

Budget provision criticized by officials

Milwaukee’s business improvement districts, key tools in redeveloping downtown and other neighborhoods, would face new limits on raising cash under a provision tucked into the proposed state budget.

City officials and business property owners are criticizing the proposal, which applies only to Wisconsin’s largest city.

Business improvement districts are formed by commercial property owners, who pay additional special charges on their annual property tax bills to fund them.

The cash pays for such things as marketing campaigns and events for the district’s stores and restaurants; street cleaning, landscaping and other beautification efforts; and security services.

Milwaukee’s largest district, the Milwaukee Downtown Business Improvement District, and other local districts have collected some of those special charges from buildings that have a mix of apartments and street-level commercial space. Buildings that are used only for apartments don’t pay the charges.

The state budget provision focuses on mixed-use properties.

That provision says only the portion of the property that has commercial space can be hit with the special charge.

That charge would be based only on the value of the mixeduse property’s commercial space — and not the entire building’s larger value.

That would reduce the amount of funds paid to the

districts, said Ron San Felippo, board chair of the Historic Third Ward Business Improvement District.

So, while all Third Ward residents and business operators benefit from those services, he said, mixed-use building owners would see their charges drop. That isn’t fair, said San Felippo, a developer.

“Everyone is receiving the benefits,” he said. “If you get the services, you ought to participate” in paying.

The proposal targets only Milwaukee, even though there are business improvement districts in communities throughout Wisconsin.

The “disruptive and harmful” provision “particularly undermines the great work of Milwaukee’s downtown BID,” said Jeff Fleming, Department of City Development spokesman.

“This change means some commercial property owners will receive the full advantage of owning properties in a business improvement district without having to pay their fair share of the cost,” Fleming said in a statement.

It couldn’t be determined which legislator attached the provision to the budget proposal, which was approved Wednesday by the Joint Finance Committee. The committee recommendation sets the stage for votes in the Assembly and Senate — both controlled by Republicans.

The office of Sen. Alberta Darling (R-River Hills), committee cochair, didn’t respond to a request for more information.

Tom Evenson, Gov. Scott Walker’s spokesman, declined to comment on whether Walker would veto the provision.

Milwaukee has 32 business improvement districts and seven neighborhood districts — more per capita than any other U.S. city, according to a July report from the Public Policy Forum.

However, a lack of performance data greatly restricts the ability to measure the effectiveness of Milwaukee’s districts, the report said.

Milwaukee’s downtown district operates the annual Holiday Lights Festival, Downtown Dining Week and other events. It also pays for street cleaning and security services, and works to attract and retain downtown businesses.

Business improvement districts require Common Council approval and are operated by their own boards.