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The largest influx ever of jobs to downtown Milwaukee by a suburban firm is coming after Milwaukee Tool financing plan approved

Published Tuesday, May 4, 2021

The largest influx ever of jobs to downtown Milwaukee by a suburban firm is on track after the Common Council on Tuesday approved a $20 million city financing plan for Milwaukee Tool's new office.

The council voted 15-0 to help Brookfield-based Milwaukee Tool redevelop a five-story, 350,000-square-foot office building at 501 W. Michigan St.

The proposal by Mayor Tom Barrett's administration creates a tax incremental financing district for that building, which has been vacant since Assurant Health shut down in 2016.

Milwaukee Tool will receive $12.1 million in city funds in return for having at least 1,210 employees at the downtown office by the end of 2026, according to its development agreement with the city.

After that debt is repaid by the redeveloped building's property taxes, a second grant of up to $7.9 million tied to 790 additional workers will be provided to Milwaukee Tool through annual payments from the building's property taxes. Those payments will occur up to 20 years.

Under the agreement, Milwaukee Tool must make a minimum $30 million investment at the site by the end of 2024.

The initial project budget, not including a possible three- to four-story expansion to house those additional 790 employees, is $46.6 million. That includes the $8 million cost of buying the property.

If the company doesn't meet the annual job benchmarks tied to the first $12.1 million grant, the city would recover $10,000 for each position that falls below those marks.

Milwaukee Tool's project is the largest-ever influx of jobs by a suburban-based firm to downtown Milwaukee.

Starting around the 1960s, companies like Milwaukee Tool began shifting their offices to the suburbs as the growing interstate highway system, new housing for employees and lower property taxes made those locations more attractive.

That wave grew throughout the ’70s, ’80s and ’90s as suburban office parks were developed in Brookfield and other communities.

But a reverse trend, with suburban firms moving or expanding to downtown area locations, started around 15 years ago and began accelerating over the past five to 10 years.

Those employers often cite the need for urban locations to better attract and retain young workers.

One of the largest such companies was ManpowerGroup Inc., which in 2007 moved its headquarters from Glendale to downtown's Schlitz Park area. The company today has more than 700 local employees.

Milwaukee Tool's downtown jobs will be new hires, not positions shuffled from Brookfield and other sites, Milwaukee Tool Chief Financial Officer Ty Staviski said at an April 27 hearing on the financing plan.

The $5 billion company's rapid sales growth, which has been at least 20% annually for 12 consecutive years, is driving the need for a new office, Staviski said.

Milwaukee Tool has 2,600 employees in southeastern Wisconsin and expects to have around 3,200 area employees by the end of this year.

That would include 600 to 700 people at the downtown building by the end of 2021, Staviski said. Those jobs will have an average annual salary of $75,000.

The downtown office will help the company recruit a diverse workforce as well as "the best and brightest out of the best universities as well as other companies," Steve Richman, Milwaukee Tool group president, told the Journal Sentinel.

Meanwhile, Milwaukee Tool has pledged to ensure workers hired by the building's janitorial firm and other vendors earn a minimum of $15 an hour.

Union activists want a broader agreement that also covers health care benefits and working conditions.

The Barrett administration said delaying approval of the financing proposal in order to work on that broader agreement could harm the city's efforts to attract companies to Milwaukee.

The Milwaukee Tool office renovations are to begin by Sept. 1, with substantial completion in January.

The new jobs will come at a time when downtown is losing one major employer: Johnson Controls Inc., which in January said it would move 1,262 office workers over the next two years to its Glendale campus to save costs.

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