AB438: Bill Text

LRB-4398/1

EVM/MPG/KP:all

2023 - 2024 LEGISLATURE

2023 Assembly BILL 438

September 28, 2023 - Introduced by Representatives Brooks, Duchow, Binsfeld, Rozar, O'Connor, Plumer, Melotik, Schmidt, Michalski and Swearingen, cosponsored by Senator Feyen. Referred to Committee on State Affairs.

AB438,2,2 An Act to repeal 77.705, 77.707 (1), 77.76 (6), 229.64 (2), 229.65 (7), 229.66 (2) (b), 229.66 (2) (c), 229.66 (2) (g), 229.68 (11), 229.68 (15) and 229.682 (3); to renumber 77.707 (2); to renumber and amend 229.64 (1); to amend 16.58 (3), 77.54 (41), 77.707 (1), 77.71 (intro.), (1), (2), (3), (4) and (5), 77.76 (4), 79.037 (2) (intro.), 79.037 (3), 229.65 (1), 229.66 (2) (a), 229.66 (4), 229.67, 229.68 (intro.), 229.68 (4) (b), 229.68 (4) (d), 229.68 (7), 229.68 (9), 229.68 (12), 229.68 (13), 229.68 (16) (intro.), 229.68 (16) (a), 229.682 (1), 229.682 (4), 229.682 (7), 229.685 (1), 229.69 (4), 229.71, 229.75 (3), 229.76 and 341.14 (6r) (b) 13. b.; to repeal and recreate 229.66 (3); and to create 16.09, 25.17 (1) (es), 77.54 (9a) (gm), 79.037 (4), 229.65 (6m), 229.66 (2) (bm), 229.66 (2) (cm), 229.66 (2) (gm), 229.68 (8) (d), 229.68 (8m), 229.6802, 229.6805, 229.682 (9), 229.682 (10), 229.682 (11), 229.685 (3), 229.687, 229.695 and 229.80 of the statutes; relating to: baseball park district administration and funding for improvement of professional baseball park facilities.

Analysis by the Legislative Reference Bureau

This bill directs state grants to and requires local funding of a local professional baseball park district (district), directs the district's use of those funds, and modifies the powers and administration of the district.

Current law

Under current law, a district is created in each county with a population of at least 600,000 (presently, only Milwaukee County) and all counties that are contiguous to that county (in relation to Milwaukee County, these counties are Ozaukee County, Racine County, Washington County, and Waukesha County). A district has a variety of powers. Among these, a district may acquire, construct, equip, maintain, improve, operate, and manage baseball park facilities and may set standards governing the use of, and the conduct within, baseball park facilities.

The district is governed by a district board, which currently consists of the following members:

1. A number of persons equal to the number of counties within the jurisdiction of the district plus one, which totals six members, appointed by the governor subject to senate confirmation; three of whom serve two-year terms and three of whom serve four-year terms, and all of whom may be removed only for cause.

2. Two persons appointed by the chief executive officer of the most populous county within the jurisdiction of the district, which is Milwaukee County, who serve at the pleasure of the chief executive officer.

3. One person for each county in the jurisdiction of the district other than Milwaukee County, appointed by the chief executive officer of such county, who serves at the pleasure of the appointing chief executive officer.

4. One person appointed by the mayor of the city of Milwaukee, who serves at the pleasure of the mayor.

Current law authorizes a district to issue bonds for the purpose of constructing, improving, and managing baseball park facilities, in addition to other related functions. Bonds issued by the district are secured by the district's interest in any baseball park facilities, by income from these facilities, and by a sales and use tax current law authorizes the district to impose. Specifically, current law authorizes the district to impose a sales and use tax at a rate of no more than 0.1 percent. However, that sales and use tax ended on March 31, 2020, after the district certified to the Department of Revenue that the district had effectively retired all of its bonds.

District creation and dissolution; district board membership

The bill limits the establishment of a district solely to a county with a population over 750,000, rather than a county of 600,000 and its contiguous counties, and specifies that upon the district's dissolution, the property of the district is transferred to the state, rather than to the five counties making up the district under current law.

The membership of the current members of the district's governing board, described above, end on the bill's effective date, and the bill establishes a new membership of the district's governing board. Under the bill, the board is composed of the following:

1. Four members appointed by the governor subject to senate confirmation, one of whom is appointed as chairperson of the board.

2. Two members appointed by the majority leader of the senate.

3. Two members appointed by the speaker of the assembly.

4. One member appointed by the governor from a list provided by the professional baseball team as defined in the bill (Milwaukee Brewers) subject to senate confirmation. This member may not participate in any nonpublic meeting or vote with respect to the approval or amendment of a lease or nonrelocation agreement between the district and the team, the district obtaining or accepting short-term loans from the state, the district retaining a lease negotiator, or a dispute between the district and the team.

All of the new members appointed to the district board variously serve either two- or four-year terms but may be removed at the pleasure of the appointing authority.

Additionally, the bill requires the new district board, not later than 90 days after the effective date of the bill, to affirmatively determine whether to continue or discontinue the employment of each individual employed by the district.

Changes to the district's general powers and duties

The bill makes the following changes to the district's general powers and duties:

1. Eliminates the district's authority to impose a sales and use tax. The district has not imposed a sales tax since March 31, 2020.

2. Prohibits the district from issuing bonds or incurring other debt, except that the bill authorizes the district to engage in certain short-term borrowing from DOA, as further described below.

3. Requires the district to issue a request for proposals before awarding certain contracts with an estimated cost exceeding $200,000 and to award contracts subject to this requirement based on specified criteria. These criteria are price; time for completion of work; qualifications and past performance of a contractor; contractor responsiveness; contractor eligibility in accordance with the request for proposals; the results of applicable inspections and tests; and performance standards established by the district board. Under current law, the district may enter into contracts subject to any standards established by the district board.

4. Provides that the district may enter into a lease only upon the affirmative vote of a majority of all members appointed to the district board and eligible to vote on the matter. Current law provides that such an action must be approved by 60 percent of the members voting on the matter.

5. During the term of any lease of baseball park facilities entered into by the district and the Milwaukee Brewers, requires the district to, at the district's expense, contract with a facility management company or employ an executive director with expertise in managing and operating professional sports facilities and venues to manage and supervise the development, construction, improvement, repair, and maintenance of the baseball park facilities.

6. With certain exceptions, prohibits the district from initiating any capital project after 2045.

7. Requires the district to contract with the state investment board to invest funds held in the district's segregated fund, as described below.

Segregated fund

The bill requires the district to establish a baseball park facilities improvement fund (segregated fund) into which it must deposit the state grants, payments from or on behalf of Milwaukee County and the city of Milwaukee, certain payments from the Milwaukee Brewers, and certain moneys transferred from other existing funds of the district. Moneys from the segregated fund may be used only for the development, construction, improvement, repair, and maintenance of baseball park facilities, the performance of the district's obligations under a lease agreement with the Milwaukee Brewers, lease negotiation costs, repayment of certain loans, and payment of certain insurance premiums. The bill specifies that, with certain exceptions, segregated fund moneys may not be expended after the Milwaukee Brewers notify the district that the team intends to terminate the lease agreement or the lease is otherwise terminated. In addition, segregated fund moneys may not be expended for the development, construction, improvement, repair, or maintenance of any physical structure that was not owned, operated, or leased by the district on the effective date of the bill.

Lease and nonrelocation agreements

Under the bill, the state grant required under the bill, as described further below, may not be awarded unless the secretary of administration determines that all of the following apply:

1. The district has entered into a customary lease arrangement with the Milwaukee Brewers that (a) has a standard term that expires no earlier than December 31, 2050; (b) requires the Milwaukee Brewers to separately make at least 27 annual deposits in the amounts of $300,000 and $1,851,852 into the segregated fund beginning in 2024; (c) requires the Milwaukee Brewers to additionally make at least 27 annual payments in the amounts of $1,208,401 to the district beginning in 2024; (d) requires the Milwaukee Brewers, or a third party on the team's behalf, to make financial contributions in connection with the development, construction, improvement, repair, and maintenance of the baseball park facilities during the term of the lease in an amount that totals $50,000,000, of which $25,000,000 must be so contributed before January 1, 2037, and requires the team to regularly report to the district all expenditures of those moneys; and (e) requires the Milwaukee Brewers, upon expiration of the lease or termination of the lease as a result of breach by the team, to disclaim any interest in moneys of the segregated fund and, upon request of the district, convey and transfer to the district for consideration not to exceed $1 all of the team's right and title to the baseball park facilities, except for certain ancillary improvements constructed or developed without financial contribution from the state or the district.

2. The district has entered into a nonrelocation agreement with the Milwaukee Brewers that generally requires the team to play all of its home games at the baseball park facilities and prohibits the team from relocating until expiration or termination of the lease according to its terms.

3. The district has contracted with a third party approved by a two-thirds vote of all members appointed to the district board and eligible to vote on the matter to represent the district in connection with negotiation of the lease and nonrelocation agreements described above.

State grant

Provided the district and the Milwaukee Brewers execute the lease and nonrelocation agreements described above, the bill requires DOA to award a grant to the district to assist in the development, construction, improvement, repair, and maintenance of baseball park facilities, consisting of the following:

1. $35,800,000 paid upon execution of the lease and nonrelocation agreements, which is intended to substantially equal the total estimated state income tax imposed in calendar years 2021, 2022, and 2023 on the payroll of the Milwaukee Brewers franchise and of visiting professional baseball franchises using the professional baseball park facilities.

2. The payment of an additional $25,000,000 upon execution of the lease and nonrelocation agreements for the purpose of winterizing the baseball park facilities.

3. Twenty-two consecutive annual payments beginning in 2024 of which the initial payment in 2024 must equal $13,400,000 and the amount of each subsequent annual payment must increase from the initial payment at the rate of 4 percent per year compounded annually, except that no such annual payment may exceed $20,000,000, and beginning on July 1, 2041, no annual payment may exceed $10,000,000. Additionally, no annual payment may be made after expiration or termination of the lease.

Local government payments

The bill also provides that for the next 27 years Milwaukee County must pay $5,000,000 and the city of Milwaukee must pay $2,500,000 annually into the segregated fund to assist in the development, construction, improvement, repair, and maintenance of the district's baseball park facilities. If Milwaukee County or the city of Milwaukee fails to make the full amount of a required payment by July 1 of an applicable year, DOA must reduce the supplemental county and municipal aid payment to Milwaukee County or the city of Milwaukee, as applicable, for that year by the amount that is not paid and deposit that amount into the segregated fund.

Short-term loans

The bill requires DOA to issue short-term loans to the district to assist in the development, construction, improvement, repair, and maintenance of baseball park facilities. Specifically, upon a majority vote of all members appointed to the district board and eligible to vote on the matter, DOA must promptly issue a loan to the district in the amount approved by the board. DOA may not issue more than a total of $50,000,000 in such loans, and interest on each loan accrues monthly at a rate equal to the state investment fund earnings rate during the immediately preceding month, as certified by the secretary of DOA.

Under the bill, the district is required to pay all interest accruing on each loan issued by DOA on a quarterly basis, and the outstanding balance of each loan must be paid no later than 15 years after the date of loan issuance or upon expiration or termination of the lease described above, whichever is earlier. The bill includes a quarterly reporting requirement to the Joint Committee on Finance regarding the loans and prohibits DOA from awarding a loan after December 31, 2045.

Sales and use tax exemption

The bill exempts the following from the sales and use tax: 1) tangible personal property and taxable services sold to a district and 2) building materials, supplies, and equipment sold to owners, contractors, subcontractors, or builders solely for the improvement, repair, or maintenance of a professional sports and entertainment home stadium. Under current law, building materials, supplies, and equipment sold to owners, contractors, subcontractors, or builders solely for the construction, renovation, or development of a professional sports and entertainment home stadium are exempt from the sales and use tax.

Because this bill relates to an exemption from state or local taxes, it may be referred to the Joint Survey Committee on Tax Exemptions for a report to be printed as an appendix to the bill.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB438,1 Section 1. 16.09 of the statutes is created to read:

AB438,7,2 16.09 Grant to a local professional baseball park district. (1) Public purpose. The legislature finds and determines that baseball park facilities encourage economic development and tourism in this state, reduce unemployment in this state, preserve business activities within this state, generate additional tax revenues that would not exist without the baseball park facilities, and bring needed capital into this state for the benefit and welfare of people throughout the state. It is therefore in the public interest and serves a statewide public purpose, and it is the public policy of this state, to assist a local professional baseball park district created under subch. III of ch. 229 in the development, construction, improvement, repair, and maintenance of baseball park facilities.

AB438,7,3 (2) Definitions. In this section:

AB438,7,4 (a) “Baseball park facilities” has the meaning given in s. 229.65 (1).

AB438,7,5 (b) “District” has the meaning given in s. 229.65 (5).

AB438,7,10 (c) “Gap payment” means payment of the amount specified in sub. (3) (a), which is intended to substantially equal the total estimated taxes imposed under ch. 71 in calendar years 2021, 2022, and 2023 on the payroll of the professional baseball team and of visiting professional baseball franchises using the professional baseball park facilities.