Where’s the money for convention center expansion?

Commentary

In January, I predicted a consulting firm hired by the Wisconsin Center District would recommend the downtown Milwaukee convention center be expanded.

Turns out I’m better at predicting the outcome of consultants’ reports than the winner of the presidential election.

To no one’s surprise, a report from Crossroads Consulting Services LLC says the Wisconsin Center should be expanded to increase its exhibit space, currently 189,000 square feet, to 300,000 square feet.

That would bring Milwaukee’s convention center in line with facilities in similar-sized cities and, according to the consultants, help Milwaukee attract more conventions.

Cost estimates for the potential expansion project vary, but a safe bet is between $150 million and $200 million. The convention center is an important attraction for downtown Milwaukee and needs to be expanded, but how are we going to pay for it?

The Wisconsin Center District is funded by three Milwaukee County taxes – a 2.5 percent tax on hotel rooms, a 3 percent tax on rental cars, and a 0.5 percent tax on food and beverage – plus an additional 7 percent tax on hotel rooms in the city of Milwaukee. The only tax the district board has the authority to raise is the Milwaukee County hotel room tax, which it could bump up to 3 percent, but that would only generate an additional $1 million per year.

The district is also obligated to provide $93 million for the Bucks arena and still owes about $24 million on the project that transformed the Milwaukee Auditorium to the Milwaukee Theatre. That project won’t be paid off until 2032. With those obligations and its lack of options to increase revenue, the district has no way to finance a convention center expansion.

In order to expand the convention center, the district will need a new funding source. That will take the approval of the Republican-controlled state Legislature and Gov. Scott Walker. Republicans have shown no support for any tax increase. The key to finding a funding solution likely falls on the shoulders of Scott Neitzel, the secretary of Walker’s Department of Administration and chairman of the Wisconsin Center District board. He might see the need to expand the convention center and come up with a funding idea he can sell to his fellow Republicans.

Officials will have to ask a critical question: is it worth it to spend millions to expand the convention center in Milwaukee, a cold weather city that is not a major visitor destination? However, Milwaukee does have key advantages to attract conventions, including low costs relative to major convention cities and its central location.

But what if we build it and they don’t come? Wisconsin Center District and VISIT Milwaukee officials will need to demonstrate that if the convention center is expanded, they really will be able to attract more business. Otherwise, the building becomes an even more expensive white elephant.

Get our email updates

Andrew Weiland
Andrew Weiland is the editor of BizTimes Milwaukee. He joined BizTimes in 2003, serving as managing editor and real estate reporter for 11 years. A University of Wisconsin-Madison graduate, Weiland is a lifelong resident of the state. He lives in Muskego with his wife, Seng, and son, Zachary. He is an avid sports fan and enjoys coaching his son’s youth baseball and basketball teams.