The Impact of New Development
Study of 7 new buildings shows big revenue, big return for local government.
There’s no doubt Milwaukee is in the middle of a building boom. There are cranes on the skyline, construction cones at street level and trucks hauling materials every which way.
But what happens when the work is finished? Besides new residents moving in, besides the additional foot traffic, urban density and consumers of local restaurants and retail stores that are generated, all these new projects have a direct impact on the city’s bottom line, increasing the property tax base and spinning off added tax revenue.
To measure the impact of such development on the finances of local government, I conducted a survey of seven recently completed buildings in our growing buildings database. The net result? A collective annual property tax bill of $1,625,808.82. In aggregate that might look like a drop in the bucket compared to the total city property tax levy of $256.77 million, but when you look more closely at each project you start to see the huge impact on the city.
Take Sage on Jackson for example. A small apartment building that replaced an empty lot on the Lower East Side. A handful of neighbors opposed it, and local alderman Nik Kovac confessed that “I am in support of this project, although it is a close call,” during the project’s zoning hearing. It ultimately replaced a lot assessed at $55,300 with a building and lot assessed at $2.55 million, meaning the property value is now 46 times higher. Milwaukee Public Schools alone will receive in excess of $28,000 this year from that decision. That’s a lot of textbooks.
How about The Standard at East Library? The development that replaced the former East Library on E. North Ave. is a mixed-use development that includes a first-floor library. Previous tax revenue from that site? Zero, it was a government-owned lot. Tax revenue this year? $356,216.74. Should the city wish to use their share of the funds to purchase library books to fill the new library branch, they could purchase more than 12,000 copies of Fifty Shades of Grey from Amazon.
True, new development alone won’t restore sagging local government budgets still recovering from the massive impact of the Great Recession and the foreclosure crisis. But the city, county, schools and other local property taxing bodies would be in a world of hurt without new development.
All of which underlines the need to structure sound public policy through zoning and other regulations that makes it as easy as possible to generate more new construction. If not-in-my-backyard (NIMBY) opposition makes proposed buildings shorter, smaller or prevents projects altogether, the end result can easily be thousands of dollars going to other municipalities annually as developers seek the path of least resistance.
Before digging into my building-by-building breakdown, a few quick notes.
- The City Tax here represents the tax collected for Milwaukee Public Schools, Milwaukee Metropolitan Sewerage District, Milwaukee Area Technical College, and the City of Milwaukee. MPS and the city receive the bulk of this, see the full breakdown on the assessor’s website.
- County Tax represents the property tax collected by Milwaukee County and a small amount by the State of Wisconsin.
- I dropped all special assessments and credits, although they’re reflected in the total tax bill. Sidewalk repairs, lottery tax credits, are all visible if you follow the link to the Total Property Tax Bill.
- The previous Assessed Value year (often 2011) represents the year before the new development started, for which there are records available. For a development like Dwell, which included the combination of a number of taxkeys, such records are sometimes not easily available.
What was it before? A largely underutilized lot on Bay View’s main street, S. Kinnickinnic Ave., as well as a couple smaller dwellings.
What is it now? Dwell is a mixed-use apartment building with 70 units, 85 parking spaces and first-floor retail (occupied by Snap Fitness, Community Bark, Rocket Baby Bakery and an insurance agent).
- Assessed Value 2015: $7,876,000 (Land: $210,000, Improvements: $7,666,000)
- Assessed Value 2012: $900,000 (Land: $210,000, Improvements: $690,000)
- Total Property Tax Bill: $232,915.43
- City Tax: $178,150.08
- County Tax: $53,065.66
What was it before? A strip mall.
What is it now? A mixed-use apartment building targeted at Marquette University students with 80 units and first-floor retail space.
- Assessed Value 2015: $13,030,000 (Land: $88,000, Improvements: $12,942,000)
- Assessed Value 2011: $664,000 (Land: $569,700, Improvements: $94,300)
- Total Property Tax Bill: $382,871.08
- City Tax: $294,730.27
- County Tax: $87,791.44
What was it before? A parking lot and home converted into a child care facility.
What is it now? Four buildings containing 31 townhouse-style apartments.
- Assessed Value 2015: $4,730,000 (Land: $186,000, Improvements: $4,544,000)
- Assessed Value 2011: $398,000 (Land: $116,300, Improvements: $281,700)
- Total Property Tax Bill: $138,777.52
- City Tax: $106,989.57
- County Tax: $31,869.04
What was it before? An empty lot.
What is it now? A five-story, LEED-Platinum apartment building containing 20 rental units.
- Assessed Value 2015: $2,552,000 (Land: $192,000, Improvements: $2,360,000)
- Assessed Value 2011: $55,300 (Land: $55,300, Improvements: $0)
- Total Property Tax Bill: $75,510.63
- City Tax: $57,724.61
- County Tax: $17,194.45
What was it before? The one-story East Library branch of the Milwaukee Public Library.
What is it now? A five-story, 99-apartment mixed-use building that includes one commercial space and a 16,000 square-foot condominium containing the new East Library.
- Assessed Value 2015: $12,109,000 (Land: $1,048,900, Improvements: $11,060,100)
- Assessed Value 2011: $0 (Tax Exempt)
- Total Property Tax Bill: $356,216.74
- City Tax: $273,897.83
- County Tax: $81,586.09
What was it before? An empty lot following the demolition of electrical facilities from the former Pabst Brewery.
What is it today? A 71,220 square-foot office building.
- Assessed Value 2015: $4,375,000 (Land: $342,900, Improvements: $4,032,100)
- Assessed Value 2011: $190,500 (Land: $190,500, Improvements: $0)
- Total Property Tax Bill: $137,930.92
- City Tax: $98,959.71
- County Tax: $29,477.18
What was it before? A one-story, commercial building.
What is it now? A 75-unit (310 beds) apartment building targeted at Milwaukee Institute of Art & Design students with first-floor commercial space.
- Assessed Value 2015: $9,693,000 (Land: $553,00, Improvements: $9,140,000)
- Assessed Value 2011: $1,895,000 (Land: $984,800, Improvements: $910,200)
- Total Property Tax Bill: $301,586.50
- City Tax: $219,249.46
- County Tax: $65,307.94