Fight for MillerCoors HQ

Denver offers investments; Milwaukee touts subsidies

Ryan Horton

Saturday, November 10, 2007

Denver or Milwaukee for MillerCoors?

Milwaukee and its fledgling regional economic development group, M7, have gotten themselves into one heck of a fight. The battle over attracting the newly merged MillerCoors headquarters will pit the upstart M7 against a colossus in the world of regional economic development - the Metro Denver Economic Development Corp. Led by the highly regarded Tom Clark, the MDEDC was the first group of its kind in the nation and can trace its roots back a full 20 years.

This is a true David vs. Goliath story. Based on what we know about both organizations, how will each group play their cards to capture the MillerCoors prize?

Quality of life and work force. Right out of the gate, both sides will predictably advertise their superior quality of life and educated work force. To be sure, there is plenty to support both Milwaukee and Denver's claim of "most educated" and "most livable." Denver has mountains and modern transit. Milwaukee has beautiful lakes and little traffic. Denver is in a state that has 35.5 percent of its residents with a bachelor's degree or higher - third highest in the nation. Milwaukee is in a state that hosts one of the world's best research universities and a superior K-12 system.

At this stage, both regions will have similar approaches - bombard the subject with favorable data on educated workers and livability. However, from this point forward, the strategies of Milwaukee's M7 and Denver's MDEDC could diverge in rather dramatic fashion.

Taxes. The M7, along with others in the community, will stoically downplay Milwaukee's "reputation for high taxes" while highlighting Milwaukee's lower cost of living.

Conversely, the MDEDC may actually downplay Colorado's low taxes. Such a contrarian strategy would instead highlight the Denver region's recent history of large public investments. Such a move by the MDEDC would draw from an experience the organization had in November 2005 when their phone rang off the hook after a $3.7 billion "tax increase" passed in Colorado by referendum vote, 52 percent to 48 percent. Who was calling? It was prospective businesses, and, no, they were not mad at the tax increase. They were interested in moving to Colorado because of the anticipated greater dollars that would flow to higher education and infrastructure.

In short, Milwaukee talks costs, Denver talks investment.

Incentives. The M7, along with Gov. Jim Doyle's office, will follow through with a substantial incentives package aimed at "sealing the deal" with MillerCoors. Wisconsin plays the incentives game with gusto.

Conversely, the MDEDC will offer only a modest incentives package for MillerCoors because Colorado has little in the way of incentives to offer. Instead, recruiters will play up the Denver region's recent history of public infrastructure investments:

• FasTracks - $4.7 billion commuter and light-rail build-out.

• T-Rex - $1.7 billion freeway-replacement and light-rail project.

• DIA - $5 billion international airport.

• New baseball, football and basketball/hockey stadiums in downtown Denver.

Again, Milwaukee talks subsidies, Denver talks investment.

End game. All else being equal, what would you take? Milwaukee, which downplays its high taxes but offers an attractive incentives package, or Denver, which plays up its recent investments but offers only a small incentives package?

On D-Day, the MDEDC will presumably lay it on thick to MillerCoors by saying exactly what an MDEDC representative told the crowd at a recent conference in Denver: "Incentives don't make a bad deal good." Denver will claim that despite Milwaukee's large incentives package, Milwaukee is actually the quintessential "bad deal" because of its inability (whether true or not) to make strategic investments that are important to the business community. Metro Denver will predictably hit on the same theme over and over and over: Investment, not incentives.

If Milwaukee loses MillerCoors, many will blame Wisconsin's high taxes.

However, defeat could just as easily be blamed on an approach that views economic development as simply cutting checks (incentives) and cutting costs (taxes). Economic development is also about investment. Just ask Denver.

Ryan Horton is senior researcher at the nonpartisan Public Policy Forum, which researches and promotes sound public policy throughout southeastern Wisconsin.