Hotel plans depend on Wisconsin Center growth
The new hotel proposal pitched for a key downtown Milwaukee location carries some big numbers: over 500 rooms in two connected towers, with 103,000 square feet of meeting room and exhibit space, at a cost of nearly $280 million.
But that plan — one of two submitted for the site so far — depends on expanding the neighboring Wisconsin Center convention facility. And there are unanswered questions as to whether such big-ticket public spending would win the necessary support from state officials.
Jackson Street Holdings LLC recently submitted its proposal for a 2-acre, city-owned parking lot south of W. Wisconsin Ave., between N. 4th and N. 5th streets.
That parcel, just south of the Wisconsin Center and west of the Grand Avenue mall, is the site of three failed hotel proposals dating to the late 1990s.
The city listed it for sale in June, seeking development proposals tied to the downtown streetcar's possible expansion on N. 4th St., between the Milwaukee Intermodal Station, 433 W. St. Paul Ave., and the future Milwaukee Bucks arena, at N. 4th St. and W. Highland Ave.
City officials hoped to receive a range of mixed-use development proposals, with investors attracted by the proposed streetcar expansion, the Bucks arena, plans to redevelop the Grand Avenue into new offices and retail space, and other nearby projects on downtown's west side.
Jackson Street Holdings and Marcus Hotels and Resorts Inc. have so far provided the only responses, and a city-led review panel will evaluate them before deciding whether to recommend a proposal.
The city isn't releasing information on the competing proposals, citing an exception allowed under the state open records law for negotiating the sale of public land. Any development proposal would need Common Council approval.
Meanwhile, the proposals will also be the subject of discussions by officials at the Wisconsin Center District, the state-created agency that operates the Wisconsin Center and other nearby venues.
"We’re probably going to have to look at this and bring it back to a future board meeting," said Scott Neitzel, state Department of Administration secretary and chair of the Wisconsin Center District board.
Marcus said its proposal would help Milwaukee attract larger meetings and events. But company executives have declined to provide details.
Marcus' properties include the Hilton Milwaukee City Center, just west of the proposed development site, at 509 W. Wisconsin Ave.
Jackson Street Holdings contacted news media outlets to discuss its proposal, known as Nexus. Jackson Street's properties include the new SpringHill Suites Milwaukee Downtown, about one block north of the site, at 744 N. 4th St.
The Nexus development would feature three hotels totaling 506 rooms. One hotel would be in a 15-story tower near W. Wisconsin Ave. and N. 5th St., with two others in a 20-story tower at W. Wisconsin Ave. and N. 4th St.
A four-story building would connect the two hotel towers and would feature several meeting rooms plus exhibit space.
Nexus also would include street-level restaurants, cafes and bars. A skywalk across Wisconsin Ave. would connect the development to the Wisconsin Center.
A major shift
The Nexus meeting rooms and exhibit space would be financed, owned and operated by the Wisconsin Center District. That would mark a big shift in the district's long-term expansion plans.
The Wisconsin Center opened in two phases, in 1998 and 2000. Since then, a third phase has been planned for its parking lot, which runs north of the facility to W. Kilbourn Ave.
A 2014 report commissioned by the Wisconsin Center District said that expansion would cost roughly $200 million and would help the Wisconsin Center draw more conventions, building a demand for more hotel rooms and other services. But it generated no formal action, mainly because the proposal lacked a financing plan.
The Wisconsin Center District is largely financed through a 2.5% tax on hotel rooms, a 3% tax on car rentals, and a 0.5% tax on restaurant food and beverage sales within Milwaukee County. The district also receives a 7% hotel room tax collected by the city, and earns revenue by renting out its facilities, collecting a commission on food and beverage concessions and providing other services.
The district board can vote to raise the county room tax to 3%. But it can't raise the other county tax rates without approval from Gov. Scott Walker and the Republican-led state Senate and Assembly, which seems unlikely.
Meanwhile, the Bucks arena financing plan approved last year indicated an extended delay for any possible Wisconsin Center expansion.
That's because the Wisconsin Center District, through its countywide taxes, is providing $93 million of the $250 million public share of the arena's $524 million development costs.
Most of the debt from building the Wisconsin Center will be paid off by 2027. Much of the center district's tax revenue will then shift to paying down Bucks arena construction debt until 2046.
Given those facts, state legislation to allow the district to raise its tax rates would be needed to pay for a convention center expansion, center district officials said at a 2015 public hearing.
Neitzel, in an interview after the Nexus proposal surfaced, said it was premature to discuss possible expansion financing plans.
However, he cautioned against assuming that financing a convention center expansion would require obtaining legislative approval to increase the center district's tax rates.
Neitzel, who became center district chair a year ago, said the district's annual tax revenue has been increasing. The district's net tax revenue was $31.8 million in 2015, compared to $29.8 million in 2014 and $28 million in 2013, according to its most recent annual financial report.
"There’s been growth in those revenues," Neitzel said. "One of those questions will be whether that growth continues, and at what pace."
He also acknowledged that previous expansion plans have all focused on building the Wisconsin Center north, to Kilbourn Ave.
'Very doable'
Neitzel said district officials would review the Nexus proposal.
Meanwhile, the district also is conducting a strategic review of its facilities, which include the UW-Milwaukee Panther Arena and Milwaukee Theatre. The review should be completed by early 2017, he said.
"That will give us some basis to look at where we go from there," Neitzel said.
The Nexus proposal to expand the convention center calls for less exhibit space and more meeting room space than what the center district's consultant recommended in the 2014 report. That's based on comments from event planners, who want more flexible meeting space options, said Doug Nysse, of Arrival Partners LLC, a consulting and design firm working with Jackson Street Holdings on Nexus.
Nysse believes the Nexus convention center expansion plan would cost less than the $200 million estimate for expanding the Wisconsin Center north to Kilbourn Ave. He said he's still working on refining that cost estimate.
Nexus would generate an estimated $75 million over 25 years in hotel room taxes for the city and center district, Nysse said. That creates one possible source of financing for the convention center expansion that's tied to the Nexus proposal, he said.
Also, Nysse said the Wisconsin Center meeting room and exhibit space expansion at the Nexus site would generate enough new demand for the Hyatt Regency Milwaukee, 333 W. Kilbourn Ave., and Marcus Hotels' Hilton to add a combined 250 to 500 hotel rooms at their properties. Both the Hyatt and Hilton are connected by skywalks to the Wisconsin Center.
Hotel industry consultant Greg Hanis said the Nexus proposal is "very doable."
Hanis, who operates Hospitality Marketers Inc., said creating around 500 rooms at one site by breaking them into three separate hotel brands, and then connecting the development to the Wisconsin Center, is a smart approach.
"Milwaukee needs more hotels that serve the convention market," he said.
Reported by: jsonline.com
But that plan — one of two submitted for the site so far — depends on expanding the neighboring Wisconsin Center convention facility. And there are unanswered questions as to whether such big-ticket public spending would win the necessary support from state officials.
Jackson Street Holdings LLC recently submitted its proposal for a 2-acre, city-owned parking lot south of W. Wisconsin Ave., between N. 4th and N. 5th streets.
That parcel, just south of the Wisconsin Center and west of the Grand Avenue mall, is the site of three failed hotel proposals dating to the late 1990s.
The city listed it for sale in June, seeking development proposals tied to the downtown streetcar's possible expansion on N. 4th St., between the Milwaukee Intermodal Station, 433 W. St. Paul Ave., and the future Milwaukee Bucks arena, at N. 4th St. and W. Highland Ave.
City officials hoped to receive a range of mixed-use development proposals, with investors attracted by the proposed streetcar expansion, the Bucks arena, plans to redevelop the Grand Avenue into new offices and retail space, and other nearby projects on downtown's west side.
Jackson Street Holdings and Marcus Hotels and Resorts Inc. have so far provided the only responses, and a city-led review panel will evaluate them before deciding whether to recommend a proposal.
The city isn't releasing information on the competing proposals, citing an exception allowed under the state open records law for negotiating the sale of public land. Any development proposal would need Common Council approval.
Meanwhile, the proposals will also be the subject of discussions by officials at the Wisconsin Center District, the state-created agency that operates the Wisconsin Center and other nearby venues.
"We’re probably going to have to look at this and bring it back to a future board meeting," said Scott Neitzel, state Department of Administration secretary and chair of the Wisconsin Center District board.
Marcus said its proposal would help Milwaukee attract larger meetings and events. But company executives have declined to provide details.
Marcus' properties include the Hilton Milwaukee City Center, just west of the proposed development site, at 509 W. Wisconsin Ave.
Jackson Street Holdings contacted news media outlets to discuss its proposal, known as Nexus. Jackson Street's properties include the new SpringHill Suites Milwaukee Downtown, about one block north of the site, at 744 N. 4th St.
The Nexus development would feature three hotels totaling 506 rooms. One hotel would be in a 15-story tower near W. Wisconsin Ave. and N. 5th St., with two others in a 20-story tower at W. Wisconsin Ave. and N. 4th St.
A four-story building would connect the two hotel towers and would feature several meeting rooms plus exhibit space.
Nexus also would include street-level restaurants, cafes and bars. A skywalk across Wisconsin Ave. would connect the development to the Wisconsin Center.
A major shift
The Nexus meeting rooms and exhibit space would be financed, owned and operated by the Wisconsin Center District. That would mark a big shift in the district's long-term expansion plans.
The Wisconsin Center opened in two phases, in 1998 and 2000. Since then, a third phase has been planned for its parking lot, which runs north of the facility to W. Kilbourn Ave.
A 2014 report commissioned by the Wisconsin Center District said that expansion would cost roughly $200 million and would help the Wisconsin Center draw more conventions, building a demand for more hotel rooms and other services. But it generated no formal action, mainly because the proposal lacked a financing plan.
The Wisconsin Center District is largely financed through a 2.5% tax on hotel rooms, a 3% tax on car rentals, and a 0.5% tax on restaurant food and beverage sales within Milwaukee County. The district also receives a 7% hotel room tax collected by the city, and earns revenue by renting out its facilities, collecting a commission on food and beverage concessions and providing other services.
The district board can vote to raise the county room tax to 3%. But it can't raise the other county tax rates without approval from Gov. Scott Walker and the Republican-led state Senate and Assembly, which seems unlikely.
Meanwhile, the Bucks arena financing plan approved last year indicated an extended delay for any possible Wisconsin Center expansion.
That's because the Wisconsin Center District, through its countywide taxes, is providing $93 million of the $250 million public share of the arena's $524 million development costs.
Most of the debt from building the Wisconsin Center will be paid off by 2027. Much of the center district's tax revenue will then shift to paying down Bucks arena construction debt until 2046.
Given those facts, state legislation to allow the district to raise its tax rates would be needed to pay for a convention center expansion, center district officials said at a 2015 public hearing.
Neitzel, in an interview after the Nexus proposal surfaced, said it was premature to discuss possible expansion financing plans.
However, he cautioned against assuming that financing a convention center expansion would require obtaining legislative approval to increase the center district's tax rates.
Neitzel, who became center district chair a year ago, said the district's annual tax revenue has been increasing. The district's net tax revenue was $31.8 million in 2015, compared to $29.8 million in 2014 and $28 million in 2013, according to its most recent annual financial report.
"There’s been growth in those revenues," Neitzel said. "One of those questions will be whether that growth continues, and at what pace."
He also acknowledged that previous expansion plans have all focused on building the Wisconsin Center north, to Kilbourn Ave.
'Very doable'
Neitzel said district officials would review the Nexus proposal.
Meanwhile, the district also is conducting a strategic review of its facilities, which include the UW-Milwaukee Panther Arena and Milwaukee Theatre. The review should be completed by early 2017, he said.
"That will give us some basis to look at where we go from there," Neitzel said.
The Nexus proposal to expand the convention center calls for less exhibit space and more meeting room space than what the center district's consultant recommended in the 2014 report. That's based on comments from event planners, who want more flexible meeting space options, said Doug Nysse, of Arrival Partners LLC, a consulting and design firm working with Jackson Street Holdings on Nexus.
Nysse believes the Nexus convention center expansion plan would cost less than the $200 million estimate for expanding the Wisconsin Center north to Kilbourn Ave. He said he's still working on refining that cost estimate.
Nexus would generate an estimated $75 million over 25 years in hotel room taxes for the city and center district, Nysse said. That creates one possible source of financing for the convention center expansion that's tied to the Nexus proposal, he said.
Also, Nysse said the Wisconsin Center meeting room and exhibit space expansion at the Nexus site would generate enough new demand for the Hyatt Regency Milwaukee, 333 W. Kilbourn Ave., and Marcus Hotels' Hilton to add a combined 250 to 500 hotel rooms at their properties. Both the Hyatt and Hilton are connected by skywalks to the Wisconsin Center.
Hotel industry consultant Greg Hanis said the Nexus proposal is "very doable."
Hanis, who operates Hospitality Marketers Inc., said creating around 500 rooms at one site by breaking them into three separate hotel brands, and then connecting the development to the Wisconsin Center, is a smart approach.
"Milwaukee needs more hotels that serve the convention market," he said.
Reported by: jsonline.com
