PUBLIC HOUSING; HOUSING (GENERAL);

HOUSING;

You asked how Milwaukee has funded its recent housing redevelopment projects and what its mayor’s role in the process has been.

SUMMARY

Funding for redevelopment of Milwaukee’s public housing has come from the federal Department of Housing and Urban Development (HUD) HOPE VI program, Low-Income Housing Tax Credits (LIHTC), and state and private sources. Milwaukee’s mayor, John Norquist, has been an advocate of private ownership and creating mixed-income projects that blend into surrounding neighborhoods, an approach that can be seen in recently completed and forthcoming projects in Milwaukee.

HOPE VI AND FUNDING FOR MILWAUKEE’S PUBLIC HOUSING REDEVELOPMENT

HOPE VI

HOPE VI was a HUD program that began in 1993 to provide funding to transform distressed public housing projects. HOPE VI’s “mixed-financing” method allowed cities like Milwaukee to use public money and private for-profit and nonprofit funds to replace its public housing developments. The program ended (sunset) in 2002, according to HUD’s website. Attachment 1 includes more information about HOPE VI.

Between 1993 to 2002, Milwaukee received approximately $ 112 million from the HOPE VI program.

Mayor Norquist and Mixed-income housing

John Norquist, who has been Milwaukee’s mayor since 1988, stresses private ownership instead of the federal government’s production of below-market public housing, which he argues has ruined the affordable housing market (publishing a book addressing the topic, The Wealth of Cities: Revitalizing the Centers of American Life, in 1998). His approach emphasizing the use of mixed-financing to produce mixed-income developments is reflected in the Milwaukee’s recent housing redevelopment efforts. For example, on August 1, 2002 Milwaukee opened its Townhomes at Carver Park development, part of a $ 24 million project that replaced 170 distressed units with various affordable housing options, including 51 public housing units, 51 tax credit rentals, and 20 market rate units, according to an article at Milwaukee’s Department of City Development website.

Funding sources for that project included HOPE VI and Federal Home Loan Bank grants, financing from US Bank, and investments made from the sale of federal LIHTCs program credits (Fannie Mae invested $ 10 million in the project in exchange for tax credits). These different sources allowed Milwaukee to place properties that were formerly tax-exempt on the tax rolls, according to the article.

The article also notes that the 122 new townhouses are similar to the architecture in the surrounding neighborhood, another Norquist strategy to better incorporate formerly distressed areas back into their communities. Attachment 2 is a copy of the article.

Milwaukee will use a $ 19 million HOPE VI grant for a forthcoming project to tear down and redevelop a 36-year-old development called Highland Park, a 220 unit, high-rise apartment building. It will be replaced with (1) a smaller, 114 unit building for elderly people and those with disabilities, (2) 16 low-income rental townhouses, (3) 30 market-rate single-family homes, and (4) 40 offsite (outside of the current development’s area) single-family rental homes. Attachment 3 is a copy of the article or see the June 30, 2003 article at The Business Journal.

LIHTC Program

LIHTCs are a financing tool that allows developers to provide affordable rental housing for people of limited income. Developers receive tax credits for a project and typically sell them to private investors who benefit from a reduction in federal tax liability. The proceeds from the sale generate equity for the development, thus reducing the need for debt financing and enabling the owner to charge affordable rents. Tax credits are often needed to finance multifamily proposals because the rental income generated by an affordable housing complex is usually insufficient to cover the costs of developing and maintaining the property, according to the Connecticut Housing Finance Authority’s (CHFA). In Connecticut, CHFA administers the federal LIHTC program.

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