Wisconsin Center board OKs expansion financing once market recovers from COVID-19

The long-planned $420 million expansion of Milwaukee’s downtown convention center is moving ahead again after officials approved a plan Thursday allowing money to be borrowed for the project once markets recover following the COVID-19 outbreak.

The Wisconsin Center District‘s board of directors granted its governance committee authority give its OK to a bond sale once the economy recovers. Financial markets are now in disarray amid the coronavirus outbreak, which has led government officials to shut down much of the economy in an attempt to combat the pandemic.

“The financing was ready to go but is now put on a shelf until things settle down in the market,” said John Mehan, of R.W. Baird and Co., who is on the finance team for the project.

Just three weeks ago, plans for the downtown Milwaukee convention center looked very different. The district’s board was then prepared to vote on a final financing proposal before releasing bonds later this month.

But the COVID-19 outbreak has hit the Wisconsin Center’s events business particularly hard. Marty Brooks, center district CEO, told his board on Thursday that 61 scheduled events at the Wisconsin Center and its affiliated properties have been cancelled or postponed.

The Center District has long discussed building an addition on a north-side parking lot that was left unoccupied when the convention venue went up 20 years ago. Plans call for 112,000 square feet of additional space — an expansion that would nearly double the center’s current size and make it the equal of similar venues elsewhere.

Officials say the project could generate about $100 million in wages for construction crews and create about 1,100 construction jobs. Before the outbreak, project leaders had planned to start building the addition early next year. Now, Brooks’s hope is that ground can be broken some time in 2021.

Gilbane and C.D. Smith are the two main contractors on the project, and the board has already hired a number of subcontractors. Among them are: GRAEF, as a structural engineer; Kapur & Associates, of Glendale, as a civil engineer; and Henderson Engineers, of Kansas City, for mechanical, electrical and plumbing work.

Under a resolution the center district board approved on Thursday in a 12-5 vote, the project financing team will bring a bond sale of $525 million to the board’s governance committee once financial markets recover. The bond sale will cover not only the $420 million cost of the expansion but also related expenses, as well as provide reserves.

The plan didn’t come without opposition. Various board members questioned Thursday whether it will be wise to borrow more than half a billion dollars amid the uncertainty of the COIVD-19 outbreak. Milwaukee Alderman Bob Bauman, Milwaukee County Comptroller Scott Manske, Republican Senate Majority Leader Scott Fitzgerald and state Rep. Joe Sanfelippo each voted against authorizing the financing plan.

“We seem to be going into this thing blind as a board,” Sanfelippo said. “This is going to be our last opportunity to weigh in on this unless it’s in the governance committee.”

Meanwhile on Thursday, the board approved a plan that would raise Milwaukee County’s room tax from 2.5% to 3% and extended the expiration of the local food and beverage tax beyond its scheduled end date in 2023.  The board also signed off on a $150 million plan to refinance debt and cover $15 million in capital projects that, in normal circumstances, would be paid for with events revenue. The action will allow the Center District to avoid defaulting on its existing debt in December. Follow @natebeck9