Milwaukee apartment construction suspended, new sales tax a factor

Milwaukee's new sales tax takes effect in about six months, but one real estate developer said it's already pausing construction on a new apartment building.

Under the development plan, the Goll Mansion on Prospect Avenue would stay on its current property but move a little. Then, a 25-story building would go up. Construction crews were supposed to get started next month, but it's now all on hold.

It means the possibility of lost jobs and lost new housing on the city's east side. The developer, Willow Partners, said in a statement it blamed two things for the hold: increasing interest rates and Milwaukee's upcoming sales tax.

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"It doesn’t surprise me in the least, but to lay this on the sales tax?" said Ald. Robert Bauman. "It has nothing to do with the sales tax. That’s a cheap shot."

Bauman represents the area for the development. He was one of 12 Common Council members to approve a new city sales tax of 2% starting in 2024.

Goll Mansion in Milwaukee

"I think the project was very tenuous from the get-go. And it doesn’t surprise me that the project is not moving forward at this point," he said. "I didn’t think it was going to move forward. It’s a very difficult project to finance."

Blocks away on Van Buren, another apartment is nearing completion. The Nova will feature 251 apartments.

"It will have impact on our construction costs of the building. If construction costs, for the sake of conversation, $60 million, and 30% or 40% of this amount are materials, which tax would be applied?" said New Land Property Management's Boris Gokhman. "You’re talking about $500,000 to $700,000 of additional costs into the building."

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Gokhman said he hopes the extra tax isn't going to step New Land from building more in Milwaukee.

"If the city is not self-sufficient, with the funds and money, police service is going to suffer, fire departments are going to suffer. The road conditions are going to suffer," said Gokhman. "I’m choosing safe streets, repaired streets and on-time service from the city – and willing to contribute. Our buildings should be able to contribute."

Statement from Willow Partners' Christopher Houden

"While sales tax is part of the issue, the primary reason I tabled the deal is due to the acceleration in increasing interest rates.  We remain excited about the opportunities on this site and will continue to evaluate the opportunity to move forward as conditions change. We fully support the sales tax increase, but it is a scenario we have to address. We plan to wait until the end of 2023 and monitor all contributors to cost. As far as moving the mansion is concerned, we plan to move forward on a more lenient schedule."