The planned expansion of the Wisconsin Center convention center in downtown Milwaukee received a key financing approval Thursday allowing the $420 million project to move into the planning phase and the Wisconsin Center District to issue bonds to support it this fall.
A groundbreaking for the project, which would double the square footage of the convention center, is anticipated in late 2021 with the new addition opening in early 2024. Had the district waited to move forward, the bonds for the project may not have been issued until 2024, with construction not starting until the following year and the opening delayed until 2027 or 2028.
Instead, the project can move forward after the Wisconsin Center District governance committee unanimously approved a resolution allowing for the financing of the $420 million expansion project. The committee approval was a requirement included in the full board’s approval of the expansion in April.
The bonds will likely be priced later this month or in November with a closing in mid-December. John Mehan, a managing director at Baird, the district’s financial advisor, said a June refinancing of district debt saw good interest.
“We think that there is going to be strong interest (in the bonds) and frankly what we’re seeing is interest coming back to the tourism-related type industry,” Mehan said.
Marty Brooks, chief executive officer of the Wisconsin Center District, acknowledged that if he were on the committee his question would be “why now?”
“Why in the midst of a global pandemic that is taking a heavy toll on the hospitality industry is the Wisconsin Center District management team recommending to move forward with an expansion that will require significant bonding,” Brooks said.
The reasons to move forward, he said, include the fact that the evaluation of the district’s revenues for bonds currently considers results from 2017 to 2019. Waiting until next year would bring 2020 into that evaluation, a year where the district’s revenues have plummeted because of the COVID-19 pandemic.
A $300 million portion of the bonding for the expansion project also has the backing of a moral obligation pledge from the state of Wisconsin if the bonds are issued before the end of 2021.
Brooks also noted the availability of historically low interest rates and the potential for rates, material and labor costs to rise if the project is delayed.
“The package which was approved today meets strategic financial goals including building the right facility to accommodate the WCD’s needs, and supporting the debt structure within the district’s restricted taxes. It also allows the WCD to construct a facility that will be an aesthetically compelling addition to the development and renaissance of Westown,” Brooks said.
He also noted the meeting and convention industry is projected to fully return in 2023, allowing the Wisconsin Center to “ride the wave” with the opening of its expansion in 2024.
Brooks also highlighted planned or recently completed convention center expansions in St. Louis, Indianapolis, Columbus, Louisville and Nashville as reasons the Wisconsin Center needs to improve to remain competitive.
