Interview with Better City Leader
By Doug Dalager
I posted an article a couple weeks back about the presentation made by Bruce Thompson to the Superior City Council regarding the Better City Superior initiative (see that post HERE). Later that same week, Mr. Thompson made a similar presentation to the Douglas County Board of Supervisors. In both instances, he received the support of these two elected bodies.
His reason for visiting the City Council was to ask that they add an advisory referendum to the ballot in November that would query the public as to their support of the creation of an “Exposition District” in the downtown Superior area. The project would host a 150 room hotel/convention center, as well as an indoor water project and sports facility that would have the ability to host soccer and lacrosse games and large tournaments. The vision is to bring people from out of town to our downtown, and to make it into a destination.
The City Council supported Thompson’s request, and the County Board is also supportive of the proposal, although the referendum will only be placed before City residents at this time.
Local Interest is High
I began posting this story around the many Facebook group pages in town last week and the reaction was immediate. For the most part, people are initially supportive of the proposal, but there is a tremendous desire for more detail. With that in mind, I visited Bruce Thompson in his office at National Bank of Commerce in downtown Superior yesterday afternoon for a two hour fact-finding expedition.
Admittedly, this is a big project with many details…much more than can be examined in one article. Consequently, today’s article will serve as an introduction the Better City Superior initiative and I will fill in the gaps in subsequent stories.
What is Better City Superior?
Better City Superior, Inc. (BCS) was created in March 2014 with funding from 40 local businesses, public entities, grants and foundations. Their initial funding was $166,500, sparked by a two year commitment of $60,000 from the National Bank of Commerce and the time commitment of its president, Bruce Thompson, to lead the initiative.
Thompson assembled a Board of Directors, including representation from downtown retailers, construction and transportation businesses, and city representation. This board meets quarterly with the goals in mind of creating a clear vision forward for Superior that incorporate a project of high expectations that will bring jobs to town and elevate the quality of life for our residents. Their belief is that successful communities invest in themselves, and that now is the time for Superior to make the choice to of committing to improvement.
According to Thompson, the BCS group has been working with Better City, a national economic development firm that helps small communities with limited resources identify and implement strategic plans that revitalize downtowns, create jobs and help existing businesses thrive. The group has developed successful strategies for communities throughout the U.S., including East Liverpool, Ohio, and Brigham City, Utah. You can view their website HERE.
Business members of the BCS board are Thompson; Mark Hubbard (formerly with Lakehead Constructors; Al Kurtz, Jr. (Erbert and Gerberts); Dave Miller (Northwest Outlet); Ryan Fraley (Halvor Lines); and Jim Ronding (ReMax One). Thompson reports that the organization has also received signed resolutions of support from the following groups/organizations:
• Douglas County Board of Supervisors
• Superior City Council
• Superior-Douglas County Area Chamber of Commerce
• Superior Business Improvement District
• Development Association of Superior and Douglas County
• School District of Superior
• Wisconsin Indianhead Technical College
• University of Wisconsin-Superior
• Superior Amateur Hockey Association
• Superior Area Association of Realtors
• Northern Wisconsin Building & Construction Trades Council
• Iron Workers Local 512
• Superior Federation of Labor
• Douglas County Tavern League
• Superior Young Professionals
• Kiwanis Club of Superior
• Douglas County Unit of the Wisconsin Towns Association
How Did BCS Settle On This Proposal?
This has been a thoroughly researched process, and BCS has conducted extensive interviews of elected officials, business owners, citizens and potential developers along the way. In late December of 2015, they also conducted three focus groups with concerned citizens, and then offered an online survey that attracted input from over 1100 citizens. Overwhelmingly, respondents agreed with the direction being taken and said they support partially funding development through a hospitality tax, such as the Exposition District would allow.
Part of this process was to find an appropriate funding vehicle that would allow the goals of BCS the opportunity to happen and succeed. What they discovered was the Exposition District that was created in Milwaukee twenty years ago in an effort to revitalize that downtown (known as the Wisconsin Center Tax District). It has since by expanded to help construct a new sports complex that current houses the Milwaukee Bucks.
What is an Exposition District?
The concept of an Exposition District is that it allows revenue to be generated through a targeted a tax base, i.e., users of hospitality and hotel/motels in the district. In essence, this is then a user tax…funded by the people who use the facilities, with much of the revenue being generated by visitors rather than residents. With this in mind, according to Thompson,
“Better City Superior has identified an Exposition District to be the best public funding mechanism to support needed large-scale development in Superior.”
In order for this to happen however, existing Exposition District legislation must be modified at the State level in order for Superior to take advantage of such a funding mechanism. The referendum that Thompson has successfully asked the Superior City Council to authorize will signal to the State of Wisconsin that our residents are in favor of this proposal.
What Happens If Residents Favor BCS?
Assuming resident approval is obtained via referendum, City and BCS officials will work with our representatives in the State Assembly to obtain approval for Superior to create our own Exposition District. After approval at the state level, the City Council and Administration would be tasked with creating an Exposition District for Superior.
As Thompson see it, his group is providing City leadership a “proof of concept” proposal, that can only become a reality if the City Administration and elected officials get behind it. Assuming voters approve the proposal by referendum, and the State Assembly allows Superior to create a local exposition district, nothing will happen unless our City leaders make it happen.
This is an entirely democratic process, and the future of Superior hangs in the balance. It will take forward thinking and proactive action by those in elective office to take this important step towards improving Superior.
Why Doesn’t the Private Sector Develop This Project On Its Own?
According to Thompson, studies have shown that “low rents and current poor market conditions do not justify the capital investment in these projects if the private sector has to bear all of the cost.” As a result, there is no development currently underway in downtown Superior, or anywhere else in our community.
He maintains that a public-private partnership (PPP) will lessen the financial burden on developers, improving their chances of earning a market rate return on their investments. Additionally, multiple large projects will make the projects less risky because they are expected to positively change the existing market.
In layman’s terms what that means is no one would take such a risk on a large scale project of this nature unless the numbers make sense.
Let’s examine this thinking on a micro-level.
There has long been money available for downtown business owners to improve their store fronts…the goal being to make downtown Superior more attractive and inviting.
For a business owner however, it may be a stretch to link improving the face of their business with better income potential. Installing a new awning, adding fresh paint, or a renovated facade may look nice, but does it bring money to the bottom line?
By financially assisting in that process/goal, the City has gradually improved the appearance of downtown Superior by sharing the cost with the business/property owners. As the entire area becomes upgraded, the business climate will change for the better. However, left to their own devices, business and property owners would be less likely to do this on their own.
Why Build This Project In Downtown Superior?
Some would suggest taking over the Mariner Mall, or perhaps the former Target and K-Mart stores for this project. Putting location issues aside, these options fundamentally do not make sense. It is cost prohibitive to retrofit such buildings for a project like this…building new is more cost effective.
Additionally, Thompson made the point that “communities are defined by their downtowns.” With the recent complete reconstruction of Tower Avenue from Belknap to N. 3rd Street, this stretch of roadway is prime for economic redevelopment. While Thompson admits that economic development is “heavy lifting”, he also believes that big picture thinking is crucial to creating a successful future for Superior.
Now, let’s go back to the BCS proposal. One can envision that a large hotel/convention center attached to attractions such as an indoor water park and sports facilities would most certainly create traffic and bring money to the downtown area. Look no further than Heritage Center in the old Clyde Iron building in West Duluth to see the impact of bringing scores of hockey teams to Duluth from all over the states of Minnesota and Wisconsin.
The juxtaposition of the Superior Amateur Hockey Association (SAHA) complex to the BCS proposed complex only adds more synergy to the project. A 150 room hotel/convention center in the middle of multiple sports opportunities in our downtown would no doubt benefit from tournament play attracting players and families from the Twin Cities area.
Also, were a corporate campus housing a one or more large employers in downtown Superior to be built, that would bring new life to our downtown. Those employees would no doubt patronize downtown restaurants and bars, and this would likely create incentive for new businesses to open, both in the realm of hospitality and retail.
This would then encourage the owners of other buildings in downtown Superior to improve their properties to attract new retail tenants, and maybe even new condo development above those stores. That would bring more traffic to the area, more residents, and on and on…
So…Where Does the Money Come From?
I think you get the idea. But here’s the thing, unless you create the initial incentive for a developer to take the first risk…the idea probably never gets off the ground. That is where the Exposition District comes into play. By levying a ½% sales tax on restaurant food and beverage (F&B) sales within Superior, and an additional 2¾% sales tax on hotel rooms and rental cars, sufficient moneys can be raised to pay off a $10-$12 million bond over the course of 20 years.
To put this proposed F&B sales tax into perspective, ½% on a $10 sandwich is 5¢. Can you see how this might be a fair and small price to pay in order to see our downtown redeveloped? Unless you make a point of staying hotels or renting cars in your hometown, you would have no further liability.
Then through tax increment financing, where the district could bond for an additional $20 million, that would passed along to the developer and paid off over the lifetime of the bond (20 years for example), the City could raise upwards of $30 million.
Due to the nature of the Exposition District, the City of Superior would have no liability for these bonds, and hence…no risk. Thompson is hopeful that should this proposal make it into the state budget that perhaps the State Assembly might even agree to back up a portion of the bond to make this an even more attractive project to potential developers.
According to Thompson, all of the above provides sufficient incentive for a developer to risk an additional $65-$70 million to build the project. BCS has already been in detailed conversations about this proposed project with several developers, and he asserts that there is definitely an interest in this initiative on their part should the Exposition District be formed.
First however, the citizens of Superior must approve the concept of this proposal in an advisory referendum come November 8th.
More to Come
I know that the moment this article hits the web, debate will rage hot and heavy about its feasibility and whether or not it will work, along with concerns that ultimately the cost of this development will fall back on residents. The emergence of what some describe as CAVE people (citizens against virtually everything) is inevitable.
Hopefully by providing the public any and all information about this project that can be found, we can get the CAVE people out there to reconsider rejecting this BIG IDEA out of hand. I was fortunate to attend a motivational speech by speaker Ted Schick earlier today at Superior High School, where he made a very salient point that I think applies wonderfully to this issue. He said,
“If you don’t keep people informed, they make things up.”
I urge you, don’t be a CAVE man…don’t make things up!
Explore Superior intends to keep you informed and educated about the Better City Superior initiative. I promise you that we will continue to look into this and make every effort to answer all of your questions along the way.
This process starts tomorrow morning when I plan to attend a committee meeting of the County Board where this will be a topic of conversation.
I will also work my way through the public information I have come across, along with some resources provided me by BCS to better educate the voters about this project. The vote on the BCS referendum will be ten weeks from today, so we have ample time to become well educated about the proposal and its economic ramifications.
Upcoming articles will examine the results of the community survey taken in December, along with specific comments culled from the online interviews. We will also dig into the financial calculations generated by the BCS group, look at their timeline for development, explain what a Public Private Partnership is, learn about tax increment financing (TIF), and solicit input from the City Councilors, County Board members, and the City Administration.