Finding Funds for Expanding Milwaukee’s Convention Center and Bradley Center

If you build it, they will come.

That has long been the rallying cry of proponents of expanding Milwaukee’s convention center, who have been pushing for such a project since the $184 million facility opened in 1998.

But the stark reality is that little progress has been made in the last decade towards Milwaukee getting a bigger convention center. Anytime the project is pushed, it is stalled by a lack support, funding, and political will.

There has also been a significant slowdown in the convention business since the September 11, 2001, terrorist attacks, failed merger talks between the Wisconsin Center District, which oversees the Midwest Airlines Center and the nearby Bradley Center, and the unwillingness of politicians in Madison to push for the additional taxes necessary to make the project a financial reality.

“This is one of those projects where it has been all talk, but no action,” said a Milwaukee public relations executive.

But it is also the case where I don’t think there has been a public case made for whether it is needed or not. It is not like the convention center is busy all the time or that conventions are beating down our door to come to Milwaukee. We have to scrap for anyone that we can get.

But local tourism officials, led by Milwaukee attorney Franklyn Gimbel and Visit Milwaukee President Doug Neilson, contend that Milwaukee is losing convention business to other Midwestern cities, such as Indianapolis, Minneapolis, and Kansas City, which have expanded their facilities in recent years.

In addition, due to the tourism downturn since 9/11, Milwaukee’s competition for national conventions is expanding to include even major cities such as Chicago, which now fights with Milwaukee for the smaller pool of national conventions held each year throughout the United States.

“If we want to be in the big leagues, we have to have a facility that meets those standards,” said Gimbel, chairman of the Wisconsin Center District, which includes the convention center, the Milwaukee Theatre and the U.S. Cellular Arena.

Added Neilson,

The Midwest Airlines Center is now the smallest convention facility among all the major Midwest cities we compete against. Working with the Wisconsin Center District, we plan to commission a feasibility study this year that will determine if a larger convention center will create greater demand for conventions and in turn, create more jobs and economic impact by bringing more visitors to Milwaukee.

Long-Running Push

The convention center, with 189,000 square feet of exhibit floor space, opened in two phases, in 1998 and 2000 along West Wisconsin Avenue in downtown Milwaukee. It replaced the 132,000-square-foot MECCA convention hall that opened in 1974.

It was financed with three taxes levied in Milwaukee County—a 3 percent tax on car rentals, 2 percent tax on hotel rooms and a 0.25 percent tax on restaurant food and beverage sales. There is also a 7 percent hotel room tax in the city of Milwaukee that goes to the Wisconsin Center.

The expansion project that has been floated would add 100,000 square feet of exhibition space, as well as 30,000 square feet of meeting rooms and a 20,000-square-foot dining area. Gimbel has said the project could include underground parking and a tunnel under Kilbourn Avenue to connect the convention center with the U.S. Cellular Arena and the Milwaukee Theatre.

The addition would be built on what is now a surface parking lot north of the existing convention center and bordered by Kilbourn and North Sixth, West Wells and North Fourth streets.

But how it would be paid for is the million dollar question that has been lacking an answer for the past decade.

Convention center leaders know they have to go to Madison to get the state Legislature to approve additional tax authority, something most politicians won’t touch with a 10-foot-pole in today’s anti-tax environment.

Gimbel had some hope in 2006 when the Democrats took control of the state Senate, added seats in the state Assembly, and Democrat Jim Doyle won reelection. But even with that slate, there has been little interest in proposing a bill that would give additional taxing authority to the convention center board.

When you consider that any new tax, whether it be the hospital tax or gas tax, proposed by Doyle or other Democrats has been opposed by Assembly Republicans, there is little chance that it would be included in a state budget bill or even be considered as separate legislation.

“It would be a very difficult sell to say the least,” said Patrick Curley, Milwaukee Mayor Tom Barrett’s chief of staff. “Any new tax nowadays would be hard to get much support in Milwaukee or Madison.”

Added a political source,

There is no appetite in Madison for pushing this tax. They are not getting any pressure from their constituents for this project and why should they go out on a limb for a couple of people that want a larger convention center. They would have to prove there is a need and so far that has not happened.

One of the funding methods floated is a regional hotel tax that would include at least Waukesha County and possibly Ozaukee, Washington, and Racine counties—a move that would be very controversial.

The plan would have the potential to restart the debate over funding a Milwaukee project with taxes on surrounding areas, as was the case with the enactment of the sales tax to fund the construction of Miller Park in the mid-1990s. An early morning vote in 1995 by the state Legislature led to the 0.1 percent sales tax on Milwaukee and the four surrounding counties for the $400 million Miller Park construction.

But it also led Racine County voters to recall State Senator George Petak for his vote for the stadium tax.

Gimbel believes it would be fair for Waukesha County to support the Midwest Airlines Center because conventions in Milwaukee generate business for Waukesha and Brookfield hotels.

"My view has always been that Waukesha should be part of the convention center tax," Gimbel told The Business Journal in 2007.

Steve Marcus, chairman and chief executive officer of the Marcus Corporation and a Wisconsin Center board member, goes further than Gimbel on spreading the tax burden. Marcus suggests including all four counties surrounding Milwaukee.

"The convention center helps everybody," said Marcus, whose company owns three luxury hotels in downtown Milwaukee.

Marcus said he wouldn't support the convention center expansion unless hotel room taxes increase throughout the region. He's concerned about Milwaukee becoming a "tax island" with higher rates than surrounding areas.

But county officials in the surrounding counties would be quick to oppose any such move. Racine County Executive Bill McReynolds said Racine County voters would strongly oppose another regional tax.

“It’s just not going to happen,” said a Waukesha County elected official. “Any time Milwaukee wants a project, they look to the suburbs and our county for financial support. You can’t tell me that Oconomowoc and Hartford benefit from having conventions in downtown Milwaukee.”

The Wisconsin Center is also dealing with the financial impact of the slowdown in conventions in recent years.

In fact, in April the board delayed adding approximately $500,000 to its payment to Visit Milwaukee. The board cited concerns about reduced convention activity and the need for maintenance on the convention center. The Wisconsin Center contracts with quasi-public Visit Milwaukee for its marketing.

Wisconsin Center District board members said they want more information on Visit Milwaukee's marketing of the Midwest Airlines Center, which logged flat bookings this year and expects softer bookings in 2009. The district has committed to paying Visit Milwaukee about $4.2 million but is holding off on an additional $500,000.

The Wisconsin Center board is invoking a "financial hardship" clause in its contract with Visit Milwaukee. Gimbel told The Business Journal that the district has postponed capital projects over the past three years and needs some of the higher tax collections for deferred maintenance on the downtown convention center. He said one priority is replacing the carpeting.

Room tax collections in the city of Milwaukee were about $8.8 million in 2007, up 4.3 percent from 2006. By contract, 55 percent of those monies would go to Visit Milwaukee. The $500,000 would pay for hiring a sales representative, travel expenses for recruiting conventions, and cash incentives for prospective conventions and events, said Neilson.

He said bookings at the Midwest Airlines Center are soft for 2009 because fewer big conventions are coming to town. Visit Milwaukee still hopes to attract some smaller meetings and groups for this year and 2009, he said.

Bradley Center Debate

There are some in the community who believe that the only way for the Midwest Airlines Center to expand would be to merge with the Bradley Center. The two state-chartered entities held merger talks several years ago, but could not come to an agreement because of concerns about who would be in control and whether there were enough cost savings to make the merger practical.

The Bradley Center is run by a private board, headed by well-known attorney Ulice Payne, while the Wisconsin Center is overseen by a board with mostly public officials, headed by Gimbel.

“The egos were just too big to get anything done,” said the political source. “It makes sense for there to be one entity overseeing both of the buildings because you could do more joint marketing and programming with half of the staff. It would be more efficient, but the boards are too different to try and make them one.”

Instead, the Bradley Center is embarking on its own plan to find additional revenue for its main tenant, the Milwaukee Bucks.

The board recently hired a developer to undertake a project that could include a mix of retail, housing, office space, parking and possibly a hotel for a four- to six-acre site that surrounds the Bradley Center. The Bradley Center controls about 90 percent of the land between North Fourth Street on the east, West State Street on the south, North Sixth Street on the west and North Juneau Avenue on the north.

The Bradley Center board also retained a national consultant to consider the possibility of selling naming rights to the building, despite the fact that it was paid for by a $90 million donation by Jane Lloyd Pettit. The consultant hopes to get at least $30 million, or $3 million, a year over 10 years for the naming rights.

The two plans, if successful, would also likely put off for now the need for a new basketball arena, something that Payne said in November 2005 the community needed to start talking about undertaking.

But Payne’s comments found no support in Milwaukee, as many community and business leaders know there is no current appetite for public funding of a sports facility. The last one that got approval was for the $290 million renovation of Lambeau Field in Green Bay and that barely won support even with the huge following for the Packers in the state.

“There is no support for any public money for a new sports arena period,” Curley said.

However, many see the board’s naming rights decision as controversial, given Pettit’s donation and the belief that the building would also have her family’s name on it.

In fact, in a recent poll on The Business Journal's Web site, nearly 65 percent of respondents did not support the decision to seek a naming rights sponsor. Some respondents also posted pointed comments.

“I thought it was already named,” wrote John Stollenwerk, chairman of Allen-Edmonds Shoe Corporation, Port Washington.

Who would be foolish enough to spend money to put their name on it for, perhaps, a short period of time until they can resell it once again. This is a first for Milwaukee. Normally, the way to do it is to knock it down first.

Many comments also warned that such a move might hurt future philanthropic efforts.

“I would be absolutely livid if I donated $90 million for its creation and then it gets renamed willy-nilly,” wrote one respondent. “This would be a big indicator to any future philanthropists that their money (and intent/wishes) are not top priorities.”

In fact, the Bradley Center board ended up quickly dropping the naming rights efforts after an April letter from the children of Jane Bradley Pettit to the Milwaukee Journal Sentinel revealed the family's opposition.

Jane's daughter and son, Lynde Bradley Uihlein and David V. Uihlein, Jr., said in the letter that the $90 million given by their mother "could be degraded if those initiatives result in a renamed facility."

Additionally, the letter said that the funding source from naming rights wouldn't provide the necessary money to “impact the financial challenges facing the Bradley Center's future.”

The letter went on to suggest that Bradley Center officials should reconsider the Wisconsin Center merger idea.

The unexpected opposition from the Pettit family left Bradley Center officials scrambling to figure out the next step.

“The Bradley Center needs to do something if they are going to keep the Bucks long term and it seems for now a new building is out of the question,” the political source said. “They need to be creative and it may mean they have to swallow a little bit of their ego and go back to the Wisconsin Center and see if they can work something out.”

 

Mark L. Kass is editor of The Business Journal Serving Greater Milwaukee.