Wisconsin Center Gives Final Approval for $420 Million Expansion
District will issue bonds this year in order to complete expansion in 2024.
Timing is everything.
And when it comes to the $420 million expansion of the Wisconsin Center, that’s true in more ways than one. “We cannot wait,” said Wisconsin Center District CEO Marty Brooks at a meeting Thursday morning.
The district board approved the convention center expansion in April as the COVID-19 pandemic canceled conferences across the globe and decimated sales tax revenues on which the district relies. A safeguard added to the authorization called upon the board’s governance committee to approve the deal as bond markets stabilized.
Project consultant John Mehan of Robert W. Baird & Co. told the committee that the markets responded positively to refinancing $81.4 million of debt in June, part of a plan to create financial flexibility for the district.
Now the plan is to issue the new debt to fund the expansion by the end of the year to meet two key deadlines.
A moral obligation from the state, which would have the state cover up to $300 million in debt in the event of a default, must be executed by the end of the year. Without the moral obligation, the project’s borrowing costs could increase by up to $50 million, according to a consultant report.
Issuing the debt by the end of the year would also allow the district to present its earnings from 2017 to 2019, instead of having to include the substantial decline in tax revenue in its earnings report. The debt, the first payments of which would be due in 2027, is backed by a 3 percent county-wide hotel room tax, 0.5 percent food and beverage sales tax and 3 percent rental car tax.
Moving forward with the debt issuance and other design and engineering work would also allow the expansion to be completed in 2024. District CEO Marty Brooks said that would afford the district the ability to “ride the wave” of a convention industry recovery that gets back to pre-COVID levels in 2023.
The expansion plans call for adding 112,000 square feet of space to the exhibition hall, creating a 300,000-square-foot hall. A ballroom would be included in the expansion with a minimum of 30,000 square feet of space and a seating capacity of at least 2,000. A total of 24 meeting rooms would be added to the building.
As part of the April approval, the district raised the countywide hotel tax by a half percent (to 3%) to expand its debt reserve fund.
The district once envisioned turning a $21 million profit in 2020, but now estimates it will end the year with a $2.7 million loss. The district operates the Wisconsin Center, the first phase of which opened in 1998 as well as the UW-Milwaukee Panther Arena and Miller High-Life Theatre.
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