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District considers limited options to pay for theatre
By Don Walker The Wisconsin Center District board cannot unilaterally raise the county's car-rental tax to deal with cost overruns on the Auditorium project, but it will consider raising the food-and-beverage or hotel tax instead, district officials said Thursday. Officials, including Franklyn Gimbel, chairman of the district board, had said Tuesday that the board might bump the car-rental tax from 3% to 4% to raise revenue needed to pay for the cost overruns on the Milwaukee Theatre, the new name for the old Auditorium. The project was expected to cost $32 million but was revised upward by $2 million. New, even costlier estimates are expected next week, apparently because of problems with the pilings underneath the building. District officials were advised Wednesday that the board had no right to bump up the car-rental tax. The Legislature has the first option on raising the tax. "We've got our hands full," admitted Richard Geyer, president of the Wisconsin Center District, which operates the Midwest Airlines Center, the U.S. Cellular Arena and the Milwaukee Theatre project. Besides the car-rental tax, the district collects a countywide 0.25% tax on food and beverage sales, a 2% tax on rooms in Milwaukee County and a 7% hotel tax formerly collected by the City of Milwaukee. The car-rental tax is generally viewed as a tax that would hit area taxpayers the least because out-of-towners are most likely to rent cars. The food-and-beverage tax, on the other hand, is seen as a tax that hits locals as well as out-of-towners. Since increasing the car-rental tax is not an option, Gimbel said he was looking at seeking board approval of an increase in either the food-and-beverage tax or the hotel tax. In Gimbel's view, the hotel tax would have a greater impact on out-of-towners and would be more likely to be accepted locally. "If I were leaning toward a tax, I would lean to the hotel tax because it's a tax that affects visitors primarily," he said. But an increase in a hotel tax could affect the area's ability to compete for convention business. Gimbel said he believed the board had the authority to raise those taxes. Gimbel said no decisions had been made pending discussion at the district's regular board meetings Tuesday. He said one additional possibility would be to approve a tax increase but place a sunset date on it once the cost overruns are addressed. "We have to look at other revenue streams," said Milwaukee Ald. Tom Nardelli, who heads the district's project development committee. Asked if the district could borrow money, Nardelli said: "We may be maxed out on borrowing." District officials have calculated that an increase from 2% to 3% in the countywide hotel tax and an increase of 7% to 8% in the city portion of the hotel tax would raise an additional $1.3 million a year. An increase from 0.25% to 0.50% in the food-and-beverage tax could generate an additional $3 million in new revenue. This week, the district also had to throw in the towel on a $100 million to $120 million expansion plan for the Midwest Airlines Center. Gimbel and his board had planned to lobby the Legislature for an additional tax increase to fund an expansion of the convention center, but they have put that off for at least a year. With the convention center plan in mothballs, more attention is being paid to the final price tag at the Milwaukee Theatre. Nardelli said he had no idea how much more the theater project will cost. He said the problems with the pilings, which are driven underground to keep the building sturdy, were unforeseen. "Some of these problems could not have been known ahead of time," he said. Still, Nardelli and Gimbel said the project would go on, despite the overruns. "It still will cost less than what it would have cost to build a new building," Nardelli said. It is anticipated that the 4,200-seat theater will generate new revenue for the district, attracting more convention, corporate and civic assemblies. The district board views the Milwaukee Theatre as a venue that will fill a niche for a midsize assembly hall. Gimbel also declined to second-guess the decision to remake the Auditorium, which was built in 1909. "We'll finish the theater this fall,"
Gimbel said. "It's a no-brainer. There's no option. You can't stop it." |
