An additional $20 million in public debt is needed to finance inflation-fueled cost overruns on downtown Milwaukee's convention center expansion.
The expansion project, initially budgeted at $420 million, is doubling the Wisconsin Center's size. It is to be done by March 2024 — around five months before helping host the Republican National Convention.
The project's debt is being paid off over 40 years by countywide hotel, restaurant and car rental taxes levied by the Wisconsin Center District, the state-created agency which operates the convention center.
The project is facing a $36 million shortfall due to inflation and supply chain issues, according to the district.
So, district board voted Friday to borrow another $20 million to cover the higher costs of steel, concrete and other construction materials.
The remaining gap is being filled with $4 million in excess interest income, $5 million in grants from Levy Premium Foodservice LP, which operates food and beverage concessions at the Wisconsin Center and other district buildings, and $7 million from a reserve account.
The board also voted to extend Levy's food and beverage contract. That contract, which was to expire June 30, could now extend as late a June 30, 2033 under district options.
Bids on various portions of the project, which started a year ago, have been 10% to 15% higher than budgeted.
However, the district's tax revenue has been higher than expected so far in 2022 compared to the year-earlier period.
"All of our bid packs are now in and this funding request will allow us to complete the project as it was originally proposed and deliver the right venue for the city," said Wisconsin Center President and Chief Executive Officer Marty Brooks, in a statement.
Annual direct spending of visitors to Wisconsin Center, estimated at $105 million in 2019, is expected to increase to $154 million during the expansion's first year, according to a study by HVS Global Hospitality Services, a consulting firm based in Westbury, New York.
Full-time jobs at hotels, restaurants and other businesses tied to that spending, now estimated at 800, are expected to increase to 1,200 in 2024, according to the study.
Tom Daykin can be emailed at tdaykin@jrn.com and followed on Instagram, Twitter and Facebook.