Milwaukee’s $420 million Wisconsin Middle growth is continuing
The expansion of the Wisconsin Center Convention Center in downtown Milwaukee continues – a taxpayer-funded $ 420 million investment despite the COVID-19 pandemic devastating the travel industry.
The Wisconsin Center District, the state-created agency that operates the convention center and other downtown venues, will borrow this fall by selling bonds to investors.
The sale of the bonds is expected to be completed by mid-December, followed by further planning work and a groundbreaking ceremony at the end of 2021. The expanded convention center, which will double the area of the facility, will open by March 2024.
Although the pandemic has canceled conventions across the country, and airlines, hotels and restaurants face huge losses and layoffs, the time is right for further expansion, said Marty Brooks, district president and chief executive officer.
“We can’t wait,” Brooks said on Thursday in comments to the Board’s Governance Committee, which unanimously gave final approval for the expansion.
The district, which also operates the UW-Milwaukee Panther Arena and Miller High Life Theater, is expected to end in late 2020 with a loss of $ 2.7 million.
It had expected to make around $ 21 million in net income this year before the pandemic canceled the Democratic National Convention and dozen other events at the Wisconsin Center.
The convention business is expected to fully recover by 2023, Brooks told committee members.
An expanded Wisconsin Center, due to open in early 2024, is set to “ride the wave,” he said.
The larger facility will be needed to compete with new and expanding convention centers in St. Louis, Indianapolis and other cities, Brooks said.
Brooks says interest rates on cash lending are at all-time lows.
Finally, there are deadlines that will cause the vote to move forward.
The state of Wisconsin agreed in 2019 to provide taxpayers with up to $ 300 million in county debt related to the expansion project.
This “promise of moral obligation” means that if the district were unable to do so, state taxpayers would pay the debt. This promise will expire in late 2021 if the district has not sold any bonds by then.
Also, bonds sold to investors in 2020 will have their creditworthiness based in part on the district’s 2017-2019 earnings, Brooks said.
In order to postpone the sale of bonds into the future, district income would have to be included from 2020 – when it has fallen sharply.
As a result, bond sales would likely have to be delayed until at least 2024 in order to achieve better income results that are being demanded by investors, Brooks said.
There is great interest among investors in buying the bonds in 2020, said John Mehan, chief executive officer at Baird & Co., the district’s financial advisor.
A bond sale in June that refinanced county debt was also in high demand, Mehan told committee members.
This rescheduling is expected to reduce the district’s debt payments by $ 18.3 million in 2020. This restructuring is expected to save an additional $ 14 million in 2021.
It also went a long way in increasing cash reserves to $ 17 million by early 2021 and to $ 23 million by early 2022, said Steve Marsh, the district’s senior vice president and chief financial officer.
The bonds from the expansion project will be repaid over 40 years through the nationwide hotel, restaurant and rental car taxes levied by the central district. The first debt payments are not due until 2027.
The project was approved by the district board on April 2, with expansion delayed until the governance committee gave final approval.
The $ 419.9 million expansion will add 112,000 square feet to the facility’s main exhibition hall for a total of 300,000 square feet.
The development will also create a second ballroom with an outdoor terrace and add meeting rooms, parking lots and loading docks.
According to a December study by HVS Global Hospitality Services, a consulting firm based in Westbury, New York, the expansion of the Wisconsin Center will attract more conventions, trade shows, and visitor spending to the Wisconsin Center.
Annual direct spending by visitors to the Wisconsin Center, now estimated at $ 105 million, is projected to increase to $ 154 million by the time the expansion is complete.
Full-time positions in hotels, restaurants, and other businesses associated with these expenses, now estimated at 800, will increase to 1,200 in 2024.
Much of the predicted increase in convention bookings is related to the expansion’s second ballroom. This allows the Wisconsin Center to book more than one large meeting at a time.
The Wisconsin Center opened in 1998 and 2000 in two phases. The third phase will take place in the current parking lot of the Convention Center between West Wells Street and West Kilbourn Avenue.
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