A potential refinancing of some Wisconsin Center District debt could have benefits that extend beyond saving the district money.
It could also open WCD, which owns and operates the downtown Milwaukee convention center and other event venues, to new business opportunities.
WCD officials and consultants outlined their plan to refinance some existing debt during a Board of Directors committee meeting this morning.
Proposed new bonding would replace tax-exempt bonds WCD issued in 2013, said John Meehan, a managing director at Baird, the district’s financial advisor. The bonds are related to a $41.9 million renovation of the
Miller High Life Theatre, then known as the Milwaukee Theatre.
Interest rates are now half of what they were back then, Meehan said. This would save the district an estimated $200,000 to $250,000 annually on debt payments.
The refinancing could also open the theatre to certain uses that at present aren't allowed, according to Marty Brooks, president and chief executive officer of WCD.
The easing of use restrictions would come from WCD refunding its tax-exempt bonds with taxable bonding, Brooks said.
"Moving from tax-exempt bonds to taxable bonds, it does open up a number of business opportunities we are currently restricted from pursuing as far as private usage of the facility by dealing with a third party," he said. "There could be positive impact on our business in other areas aside from the interest savings over the next 11 years."
For example, the theatre would be able to lease space for a Starbucks coffee shop if not bound by such restrictions. Moving to taxable bonds gives WCD the freedom to think more creatively about what the future holds for district-owned facilities, spokeswoman Sarah Maio said in an email.
Brooks made clear this is an added benefit, but not the driving force, behind the district's desire to refinance its debt.
The new bonding would not exceed $29 million in value, Meehan said. The bonds would be paid off in 2032, the same maturity date as the bonding they would replace.
Board members will be presented with a detailed refinancing plan and vote on whether to authorize the financing next week. WCD aims to issue the new bonding in November.
"After further discussions with our finance team, management has concluded that executing such a refinancing transaction is in the best interest of the district," Steve Marsh, WCD senior vice president and chief financial officer, said.
Meehan said the state of Wisconsin has also in recent weeks issued taxable debt to refund tax-exempt debt. The state's intention is the same as WCD's, to save money on debt payments.
