The Wisconsin Center District is moving ahead with the proposed expansion of the downtown Milwaukee convention center, though the project timeline is unknown as the nation continues to combat the COVID-19 coronavirus outbreak.
Meeting Thursday morning, the WCD Board of Directors authorized district managers to issue up to $525 million of bonds to finance both the expansion project, which is expected to cost about $420 million, and related costs and reserves. The proposal was approved on a 12-4 vote.
"Today’s board approval was critical for both the short-term and long-term success of the Wisconsin Center District," said Marty Brooks, WCD president and chief executive officer. "The expansion of the Wisconsin Center will result in thousands of direct and indirect jobs, and over $100 million in direct labor wages during construction. We have both an opportunity and a responsibility to serve as the catalyst that will propel Milwaukee into recovery from the crisis we’re all currently enduring."
Brooks said the district won't issue bonding to finance the project until market conditions improve. This means the exact dates of when WCD will issue bonds or begin construction is still undetermined.
Also, bonds can only be issued once the expansion finance team provides the WCD's Governance Committee with updated tax-projection analysis and financial package materials.
The finance team includes representatives of Morgan Stanley, Baird, Quarles & Brady and the Wisconsin Department of Administration.
Board members also authorized the district to issue up to $150 million in bonds to refinance some existing debt and another $15 million to cover expenses the district has already made in preliminary work on the expansion project.
Also, the board approved increasing the Milwaukee County hotel room sales tax from 2.5% to 3% and eliminating the scheduled 2023 expiration of the local food and beverage sales tax.
Some board members were critical of pushing the project forward. They argued doing so would be irresponsible given market uncertainty tied to the COVID-19 pandemic.
"Right now I don’t think there’s anyone capable of predicting what’s going to happen in the next 12-24 months because of these unprecedented times," said board member and Republican state Rep. Joe Sanfelippo.
Fellow board member and downtown Milwaukee Alderman Robert Bauman, who has for weeks been critical of WCD's approach to the expansion, concurred. He said that advancing the project any further "is highly reckless."
Common Council President Ashanti Hamilton said that the expansion project has been discussed throughout his more than 10 years serving as a WCD board member. He said he is worried that if officials didn't move forward now that the project could be pushed off indefinitely.
"The discussion around this expansion has always been at the table, and it never seemed to be the right time to pull the trigger to make these plans happen," Hamilton said. "I do think we have the right leadership in place to continue to move forward."
In a separate action, the board also granted Brooks the ability to strike an agreement with the city of Milwaukee that stipulates WCD would provide a portion of its tax revenues to the city in exchange for city leaders' endorsement of the project.
Last week, Milwaukee Common Council members reversed a previous approval related to the project's financing, citing ongoing talks of revenue sharing and community benefits agreements as well as market uncertainty.
The current draft of the agreement would have WCD in effect pay the city $41.5 million, potentially more, over a period of 40 years.
Starting in May 2025, the WCD would each year give the city $1 million for the district's first $30 million in net income, and another $1 million for each additional $10 million in net income above the initial $30 million. The city would in the meantime receive from WCD payments of $250,000 in May 2022, $500,000 in May 2023 and $750,000 in May 2024.
The board would have to again approve the agreement if the terms were modified in any way. The agreement also need approval of the Common Council.
Sanfelippo was one of three board members who voted against the agreement. He said the city was using their needed endorsement as an opportunity to in effect "shake down" WCD for more than $40 million. He said he would introduce legislation at the state level that would eliminate the need for the city to endorse the project in any way, but that idea gained little to no traction with the board.
Bauman cautioned his fellow board members that outside of the representatives of Common Council who sit on the WCD Board, which includes himself, Hamilton and Alderwoman Milele Coggs, no other council members have taken a look at the agreement.