Damakant Jayshi
City officials and developers disagree on whether a large-scale concert venue is viable for Wausau, as plans continue to create a space beyond city limits.
In a statement released on Aug. 3, project developers Joe Ellis and Anna Herman, of VY Properties, LLC, said their extensive research and business planning has led them to conservatively estimate an economic impact to the local economy” of $53 million annually for their proposed concert venue, The River.
City officials wanted more data to back that claim and said the developers have not provided it.
The 3,500-capacity and 58,000-square foot venue would have been bigger than The Sylvee, a 2,500 capacity theater in Madison that is ranked sixth in the United States in terms of tickets sold in 2021. The ranking was compiled by Pollstar, a concert and live music industry trade publication. Pollstar statistics listed the venue as having sold 45,613 tickets, resulting in $1.9 million in gross revenue in 2021 alone, the Wisconsin State Journal reports.
On Aug. 2 VY Properties officially withdrew their project, one day after the Economic Development Committee stated publicly that the developers would be expected to pay for an independent study to gauge the viability of the project. Prior to the meeting city officials, as directed by the committee, identified and vetted consulting firms they felt would fit the scope of the required study.
ED Committee Chair Sarah Watson defended the committee’s decision. “A market study of the success of a music venue of this size is warranted, as well as a study to see if that portion of the riverfront is the appropriate place to develop it given what is needed from a traffic and parking standpoint.”
Watson said a music venue is very different from housing projects that the city has supported in recent years.
“We know we are short over 500 units of housing, just like the county, state and nation,” she said. “An additional market study to prove that fact is not needed.”
Ellis and Herman say the price was about $50,000 to complete the study, which would have delayed the project’s start by at least four months.
Maryanne Groat, the city’s finance director, was the first to suggest a feasibility study in June. She also said the developers should pay for the study, a position that is at least technically at odds with the past decisions when the city appeared to pay for a review of some sort related to development projects.
Groat said there are differences between the current instance and in the past, saying the study she wanted commissioned was a market assessment on the entertainment venue that would reveal the demand for the facility in a community like Wausau and whether the facility would be successful, along with possible market risks.
Groat acknowledged that the city has funded feasibility studies in the past. “For example, the City received an EPA grant to perform a market study on the riverfront property the city purchased,” she said. “But, I can’t recall one done for a private development to determine the market for the proposed project.”
The city has paid its financial consulting firm, Ehlers Public Finance Advisors, to conduct reviews of multi-million-dollar projects like The Foundry on 3rd and The Riverlife Village. But city officials say there is no comparison with The River concert venue. The Foundry on 3rd, now delayed, is a project to build 154 market-rate apartments. The Riverlife Village was a project to add both commercial and residential buildings on Wausau’s east riverfront.
“The other studies…are financial analysis to affirm or verify the financial gap the developer has represented to the City,” Groat said.
Alder Lisa Rasmussen, a member of the Economic Development Committee, said the Ehlers’ review is a financial analysis to see if the projected gap in financing on a project between banks and private equity is reasonable and whether the city can and should partner to address the gap. “That is part of our development process, chosen after we opted to do increased vetting on large development projects a couple years ago. That is not what this study was to be, we were asking for more detailed data than that.”
Community Development Director Liz Brodek made a similar point.
“Ehlers performs financial analyses for us, not feasibility studies,” Brodek told this newspaper. “They are very different in terms of scope, cost, and duration.”
She also reiterated what Groat and Watson said about the need to find out more about the viability of an entertainment venue.
“The major difference in these projects is that there is an established market need for additional housing of all types throughout the city of Wausau.”
Does Wausau lack infrastructure for a large-scale project?
In a statement released on Aug. 3, Ellis and Herman alleged that Wausau lacks the logistical and financial infrastructure required for the project of the scale they proposed.
Brodek said the developers’ insistence that the city pay for road improvements and create adequate parking for them would have been expensive for the city.
She added the developers were relying on a 5:1 ratio for parking needs, meaning that for a 3,500- person capacity venue, they would need 700 parking spots. However, she said, the city staff’s “due diligence in talking with industry experts showed that the appropriate ratio is closer to 2.5:1 or 3:1.” That difference adds approximately 500 additional parking spaces – a total of approximately 1,200 parking spaces that the developers expected the city to pay for.
Brodek cited the Jefferson Street ramp in downtown Wausau for comparison. The ramp holds approximately 800 vehicles. The estimated cost per space to construct a multi-level parking ramp is $19,000 to $30,000, she said. “If we base the estimate on the low end of that range, we are looking at a cost to the City of $22.8 million to build a 1,200 space parking ramp.”
The community development director also challenged Ellis and Herman’s claim in the statement that they were not allowed to share their “expertise either publicly nor privately to date by city staff or council…” Brodek said they had asked the developers on several occasions for their data and business plan. “No data was provided and the developers declined to share their business plan for proprietary purposes.”
The parking issue, in addition to the viability of the second concert project, appears to have given the city pause.
“I still feel the cost of the parking accommodations were essentially a hidden cost to the city if the projections they offered were accurate, because none of that was in their computation of city contribution,” Rasmussen said.
‘Pipe dream’ or realistic project?
Rasmussen expressed doubts about the ticket sales projected by the developers, saying they “would make their venue larger than the First Avenue and The Rave, both in major metro areas.” She said she examined data from Pollstar as well. First Avenue is in downtown Minneapolis, while The Rave is in Milwaukee.
She also cited public opposition by the executive director of The Grand Theater. In June, Sean Wright from The Grand said The River venue was a “pipe dream” and would be a drag on the city.
“I think anyone who has done the research can see their numbers are just not realistic, as we shared with the City’s Economic Development Committee,” Wright told this newspaper last week, adding “250,000 tickets a year would put a venue amongst the top clubs and or theaters in the world, according to Pollstar.”
Another challenge The River would face would be in attracting top music talent to Wausau, Wright had said in June.
“There’s a vast number of factors that go into booking shows at The Grand or any venue,” Wright told Wausau Pilot & Review when asked about The Grand’s approach in attracting talent. “It’s a complicated process and requires many intense negotiations.”
Ellis and Herman took issue with the “pipe dream” remarks.
“Why are ‘The River’ projections indeed reasonably accurate?” the two write. “1.8 Million people live within 100 miles of Wausau with no other venue of this format or size,” the statement pointed out.
The two said the under-served population in the region mean “The River absolutely would be expected to be a top performing venue in the nation.”
Ellis and Herman say they met with Wright in January and shared the details of The River and offered “a partnership opportunity concept in which (T)he Grand could use The River for several of their own season shows, allowing their ticket holders to indeed see these types of acts through their association with Grand Theater, and allowing the revenue to flow to the Grand from these events.” The developers were referring to acts from top artists. They said Wright declined their offer to collaborate.
Wright, who was provided with the statement from The Rover’s developers did not respond to this part.
“We strongly believe that the regional economy will greatly benefit from the venue, including Wausau, and we will be exploring other potential building site opportunities in the area,” Ellis and Herman said.
