State could investigate bonds for the new Downtown hotel.
State Sen. Lena Taylor is asking the Joint Legislative Audit Committee to look into the approval of $43.5 million in public bonds for the Downtown Marriott project.
An audit, if ordered by the committee, could investigate why WHEDA (the Wisconsin Housing and Economic Development Authority) approved public financing for the $54 million project once it was already underway.
The tax-free bonds are expected to save the developers, Jackson Street Management LLC, several million dollars in interest payments, the Business Journal reported in August. For administering the sale, WHEDA will receive a $212,500 commission from Jackson Street.
The weekly also reports that Marcus Corp. president Greg Marcus tried to stop WHEDA from approving the bonds this summer, arguing they would give the Marriott an unfair advantage. "I just keep going back to why did we stimulate a building that exists," he said. Construction was already underway when the public financing was approved. Marcus Corp. owns the Downtown Pfister, InterContinental and Hilton hotels.
"Why did WHEDA approve a multi-million dollar taxpayer financed subsidy designed to stimulate development to a project that was already under construction and already had private financing?" says Taylor's letter, which was delivered to the Audit Committee today.
Local PR man Evan Zeppos, speaking for the developers, told the Business Journal the team had been working with WHEDA on the bonds since last fall.
According to a newsletter produced by the Quarles & Brady law firm, Midwestern Disaster Area Bonds -- the type approved by WHEDA -- are funded by the Heartland Disaster Tax Relief Act, a package of tax incentives approved by Congress in 2008, after tornadoes and floods damaged several Midwestern states, along with Arkansas and Nebraska.
Eligible areas of these states, including Milwaukee County, may issue tax-exempt public financing to private businesses that suffered a loss during the storms -- or to businesses replacing "a trade or business with respect to which another person suffered such a loss," according to the newsletter.
It also says the deadline to apply for the bonds is Jan. 1, 2013.