Using a complex tax incremental financing district (TIF), the City of Milwaukee will support a $19 million effort to build affordable homes in the city's Midtown neighborhood.
The project is being led by Milwaukee
Habitat for Humanity, which will build 34 single family homes, and Milwaukee-based developer
Emem Group, which will build 20 duplexes.
The city's $2.3 million developer-financed TIF weaves throughout the neighborhood to support development on vacant lots scattered throughout the neighborhood.
"The boundaries of this TIF district are more convoluted than any district the city has ever approved in the past," Milwaukee Mayor
Cavalier Johnson said.
The primary funding source for the $10.7 million duplex component is low-income housing tax credits. Additional funding will come from Milwaukee County’s American Rescue Plan Act grant, tax-exempt bonds, and federal HOME funds allocated by the city.
Each unit in the duplexes will have three bedrooms. As a requirement of the tax credits, the houses will be leased for 15 years and then sold. The duplexes are to be completed by the end of 2025.
[caption id="attachment_595386" align="aligncenter" width="686"]
The Midtown TIF district. Map from City of Milwaukee[/caption]
The $8.5 million Habitat for Humanity project is a continuation of the organization's effort to develop more than 100 homes in the area. Other funding sources including American Rescue Plan Act funding from the city and county, philanthropic support, material donations, volunteer labor and sales proceeds. Future owner occupants must complete financial counseling and work on the home’s construction. The Habitat homes are to be completed in phases by 2027.
Within the last six months, 2,500 families in the Midtown area — most of whom are spending more than 50% of their income on housing — have applied for homeownership, according to
Brian Sonderman, CEO of Milwaukee Habitat for Humanity. Families moving into the Habitat homes will be paying less than 30% of their income with most spending less than $800/month on their mortgage, he said.
The nonprofit
Community Development Alliance will initially front the capital to the development and be repaid the funding only if property tax revenue increases beyond the current base value, according to city documents.
Some of the private partners involved in the project are the Northwestern Mutual Foundation, Zilber Family Foundation, Wells Fargo, Greater Milwaukee Foundation, Milwaukee Development Corp.
"Everybody uniting together will provide affordable home opportunities to make sure the homes are attainable for Black and Latino residents in Milwaukee," said
Teig Whaley-Smith, chief alliance executive at the Community Development Alliance.
"This is also about how do we support small businesses in Milwaukee," said
Michael Emem, CEO of Emem Group. "Emem Group being a small business and a beneficiary of this project, I just want to underscore the importance of how this TIF district helps us as a small, emerging developer and all the contractors downstream."
Growth in tax revenue from these sites will be used to fund improvements around the neighborhood.
"As we invest in the improvements here we are very aware of the current residents, and we want the new homes to fit in and we want to make sure that we're not displacing the existing homeowners and renters," Johnson said.
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