Wisconsin Center District considers public ownership of planned $455M Milwaukee hotel

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The Wisconsin Center District is continuing to consider a headquarters convention hotel for downtown Milwaukee. A committee on April 1 discussed whether a public entity could be part of project financing and ownership.

The district’s Highest and Best Use Analysis Committee was presented with the financing overview of a proposed $455 million, 650-room hotel to replace the Miller High Life Theatre at North Sixth Street and West Kilbourn Avenue.

Project planners said the hotel is only feasible with public dollars and possible public ownership due to higher construction costs and increased interest rates.

The first option is a public-private partnership in which a private developer is responsible for financing the project with equity and debt, while the public partner provides incentives such as tax credits and tax incremental financing.

The second option is one in which a public entity owns the building and contracts private developers, contractors and operators to deliver and manage the facility.

The public owner would bear the brunt of capital investment in the form of revenue bonds and other tools, planners said. The plan was described as a high-risk, high-reward deal for the municipality involved.

The update was presented by Matthew Avila, a director at Chicago-based Hunden Partners and Hans Detlefsen, president and founder of Hotel Appraisers & Advisors LLC.

The district commissioned a study with Hunden Partners to find development to keep the Baird Center competitive with convention centers in other cities. The committee will report its findings to the WCD Board of Directors in May.

“There’s a big difference between something that’s justified for public policy reasons and something that’s financially feasible in the private market,” Detlefsen said. “That’s where almost all these convention headquarters hotel projects live. They’re not something the private sector is just going to do with the cost of capital and the cost of construction. They don’t pencil out, but there are often reasons to invest and double down on the tourism industry.”

The timeline for hotel development could be four to five years, Detlefsen added.