Work on 25-story apartment tower at Goll House site paused, in part because of new sales tax

Willow Partners Inc. said it paused development of its planned 25-story Milwaukee apartment tower in response to rising interest rates and the city’s recently approved sales tax increase.

That apartment tower at 1550 N. Prospect Ave. was to break ground by late summer for a May 2025 opening. Chris Houden Jr. of project developer Willow Partners said the firm will “evaluate the opportunity to move forward as conditions change,” but must restructure the deal because of the sales tax increase that was finalized this month.

“We fully support the sales tax increase, but it is a scenario we have to address,” Houden said in a written statement Monday. “We plan to wait until the end of 2023 and monitor all contributors to cost.”

Milwaukee aldermen on July 11 approved that 2% city sales tax increase that is to take effect Jan. 1. That increase is to plug future city budget deficits and prevent otherwise significant cuts to public safety and other city services in order to pay the city’s pension obligations and other costs.

The higher sales tax increase would apply to construction materials and likely other aspects of the new development on Prospect Avenue. Those new costs appear as developers are already contending with higher interest rates and overall construction pricing. Those pressures are making it harder to build at all and, if projects are possible, demand higher rents for either housing or building space in the completed buildings.

The development with 192 luxury apartments was budgeted at about $69 million. Willow Partners was working with lead contractor C.D. Smith Construction Inc. While gaining approvals at the start of this year, Willow did not seek city tax incremental financing incentives.

The project is on the site of the historic Goll House mansion, which Willow Partners plans to lift from its foundations and relocate in order to clear the footprint of the proposed tower. That work will also follow what Houden called a more “lenient” schedule.

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