Convention Center Expansion Costs Grow By $36 Million

Milwaukee’s $420 million convention center expansion is now a $456 million expansion project.

There aren’t any new bells or whistles (or waterfalls), but a number of elements are more expensive than originally projected. That includes the cost of concrete work, steel erection, plumbing and electrical services.

The Wisconsin Center District is covering the cost increases with $20 million in new long-term borrowing, $7 million from a short-term bond that will be paid back this year from a restricted reserve account, $5 million from a grant from concessionaire Levy Premium Foodservice and $4 million in excess interest income.

The district board unanimously approved the plan on Friday after a closed-session discussion. It also unanimously approved extending a concession agreement with Levy through 2033.

“All of our bid packs are now in and this funding request will allow us to complete the project as it was originally proposed and deliver the right venue for the city,” said district President and CEO Marty Brooks in a statement.

Brooks revealed during a May board meeting that the project was over budget, having exhausted its 8.5%, built-in contingency fund. He said a “value engineering” effort, a business-driven strategy of delivering something as cheap as possible, was underway with a finalized plan to come as the remaining construction bids were received.

On Friday, WCD officials confirmed the project is still on track for a spring 2024 completion and no cuts from the plan were mentioned.

The project will add 112,000 square feet of exhibition space to the convention center, creating a 300,000-square-foot main hall. Operationally, the facility will be able to host two conventions simultaneously. That will allow one show to load in or out while another operates, eliminating “dark” days.

WCD and VISIT Milwaukee will also have a new array of amenities to pitch in order to book more shows. Multiple outdoor decks, an indoor waterfall and revamped common spaces will wrap the convention hall. A new 2,000-person ballroom and 24 meeting rooms will also be added. The building will be reoriented to the north and given a new entrance.

The new long-term debt is to have a 40-year payback term from the district’s “restricted revenue,” a mix of taxes the district collects. In 2020 the district approved up to $525 million in borrowing for the project, but the district was more than $75 million under the cap before Friday’s vote.

The convention center district’s restricted revenue sources include three Milwaukee County taxes: a 3% rental car tax, a 0.5% sales tax on food and beverage sales and a 3% hotel room tax (which was increased from 2.5% as part of the expansion project). The district also collects a 7% hotel tax on hotel rooms in the City of Milwaukee, but isn’t restricted to using the revenue to pay down debt.

RNC Revenues

State Senator Alberta Darling, a WCD board member, asked Brooks at Friday’s meeting how much the district expected to receive now that the city is officially hosting the Republican National Convention. It will be one of the first major conventions after the expansion.

“I assure you that the business side of the agreement is very favorable to the district,” said Brooks. But he didn’t have any estimated figures to share.

“We haven’t reached an agreement with the host committee for the licensing of our campus for the period of the convention time,” said Brooks. “In that proposal there are some expenses that are covered, others that are not. Until they bring their production people on board we won’t know what those expenses we will be responsible for will be and what the ones that will be incremental that will be charged for.”

Unlike the City of Milwaukee, which has no sales, hotel or income tax, Brooks said the convention center district would also see a boost from hotel and sales tax revenue. This structural issue has reared its head multiple times in recent years, first with the Common Council trying to get a portion of the hotel tax back from WCD in 2020 and then earlier this year publicly considering adding a poison pill to the RNC agreement to directly raise revenue from the convention.

WCD CFO Steve Marsh told the board that annual district revenue, which includes tax revenue as well as income from hosting events, was on pace to eclipse its prior high set in 2019.

Approximately 3,500 convention and meeting planners, part of a group called CONNECT,  will follow the RNC to Milwaukee. The Connect convention will fill the entire 300,000-square-foot hall. “It’s a great booking,” said Brooks, who noted the event would fill more of the convention center, but another event was already booked for part of the building.

Recovering From Piling Issues

One substantial issue that threatened the expansion center’s opening timeline is largely in the past, at least as far as scheduling is concerned.

An unidentified subcontractor that conducted a site survey made an error. As a result, some of the 2,700 steel piles were placed in the wrong location. This was discovered in March.

“The piles, when they’re drilled in the ground during installation, are allowed to have a few inches of tolerance from their location,” said owner’s representative Mike Abrams of CAA ICON in May. He said that ranges from two to four inches. The building must sit on the piles to avoid sinking.

“We are back on track,” said Abrams on Friday. A recovery schedule was used to catch up while mitigation measures, including additional piles, were put in place to correct the issue.

“As a reminder any costs associated within this plan are being tracked and paid for outside the scope of this project,” said Abrams. The general contracting partnership of CD Smith and Gilbane Building Co. is sorting out the issue.

Approximately 185 workers are on site daily now, said Abrams. Two tower cranes are operating and steel associated with the expanded loading dock can be seen on the west side of the building. Structural steel for the actual building itself will begin to rise in September.

This week, work began to lift a new service corridor into the building. Effectively a hidden skywalk, it was assembled in W. Wells St. and is being mounted into the building just below the event hall. It will provide seamless passage for workers between the building’s older southern portion and new northern addition. Its completion will also be good news for those driving Downtown: Wells Street, now closed between N. Vel R. Phillips Ave. and N. 6th St., will reopen in late December or early January said Abrams.

But before Wells Street can reopen Abrams said additional space will be needed on W. Kilbourn Ave. to support the steel erection process.

June Photos

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