Affordable Housing Finance

Gorman & Company Begins 7th Phase of Milwaukee Northside Housing Initiative

Tax Credit Advisor, January 2015

In early October Gorman & Company broke ground in Milwaukee on the 7th phase of its nationally-acclaimed scattered site, single family home redevelopment.

Gorman & Company’s Northside Housing Initiative is a partnership with the City of Milwaukee and the Wisconsin Housing and Economic Development Authority (WHEDA). Its goal is to resuscitate challenged neighborhoods that have been devastated by the foreclosure crisis. Foreclosed, boarded-up properties are rehabbed into high-quality rental housing. In addition, newly constructed homes are built on vacant lots that residents consider the “broken teeth” of their neighborhood.

This innovated housing initiative also focuses on training  chronically unemployed people from the affected zip codes. The City of Milwaukee offers critical support for the project by assembling the individual properties and contributing them to the initiative.

From Foreclosures, Affordable Housing

Affordable Housing Finance, 2014 LIHTC Yearbook

A Wisconsin developer’s large-scale initiative in neighborhoods on Milwaukee’s North Side is helping reverse the damage of the Great Recession and foreclosure crisis.  By purchasing vacant lots and foreclosed homes from the city, Gorman & Co. has aided in neighborhood revitalization, homeownership opportunities, and job creation.

Over the course of seven phases, the developer built or rehabbed 282 single-family homes or duplexes affordable to residents earning between 30 percent and 60 percent of the area median income.

“All of those homes that we redeveloped within the neighborhoods are in a high demand because people in this day and age really find it hard to own a home but want the space of a home to raise a family,” says Ted Matkom, Wisconsin market president for Gorman & Co.

Gorman refurbished the homes, many of which date back to the early 1900s, with modern amenities, appliances and security systems.  “You literally get a new home, in a sense, when you move in,” Matkom says.

After the 15-year compliance period, residents living within the single-family homes will have the opportunity to purchase them for the remaining debt, which is projected to be approximately $35,000.

The acquisition and rehabilitation work also has provided a needed jobs boost in the city.  Gorman partnered with nonprofit Northcott Neighborhood House to create a training program for chronically unemployed local residents with challenged backgrounds.  Through the program, men and women were trained to do construction trade work and demolition work.

Low-income housing tax credits (LIHTCs) were vital to the developer’s work.  The $56.6 million initiative was financed with $44.1 million in LIHTC equity.  Additional financing included Neighborhood Stabilization Program funds from the city of Milwaukee.

“The LIHTC program really makes the housing sustainable for years to come,” says Matkom.  “And it really revitalizes the housing stock with minimal subsidy.”

Developer Helps to Transform Milwaukee Neighborhoods

By Christine Serlin, Affordable Housing Finance

A Wisconsin developer’s large-scale initiative in neighborhoods on Milwaukee’s North Side is helping to reverse the damage of the Great Recession and foreclosure crisis.

By purchasing vacant lots and foreclosed homes from the city, Gorman & Co.’s work is resulting in neighborhood revitalization, homeownership opportunities, and job creation.

Over the course of seven phases, the developer built or rehabbed 282 single-family homes or duplexes affordable to residents earning between 30 percent and 60 percent of the area median income.

“All of those homes that we redeveloped within the neighborhoods are in high demand because people in this day and age really find it hard to own a home but want the space of a home to raise a family,” says Ted Matkom, Wisconsin market president for Gorman & Co.

Gorman refurbished the homes, many of which date back to the early 1900s, with modern amenities, appliances, and security systems. “You literally get a new home in a sense when you move in,” Matkom says.

After the 15-year compliance period, residents living within the single-family homes will have the opportunity to purchase those homes for the remaining debt, which is projected to be approximately $35,000.

Residents must sign a contract of care, which promises that they will maintain the home with ordinary upkeep, such as mowing the grass, shoveling snow from the walkways, and doing minor repairs. This helps to instill homeownership responsibilities in the residents and helps to reduce Gorman’s operating costs since it’s a scattered-site project over a three-mile diameter, says Matkom.

The acquisition and rehabilitation work also has provided a needed jobs boost in the city. Gorman partnered with nonprofit Northcott Neighborhood House to create a training program for chronically unemployed local residents with challenged backgrounds. Men and women were trained to do construction trade work and demolition work.

Low-income housing tax credits (LIHTCs) were vital to the developer’s work. The $56.6 million seven-phase initiative was financed with $44.1 million in LIHTC equity provided by Alliant Capital, Boston Capital, and National Equity Fund. Additional financing included Neighborhood Stabilization Program funds from the city of Milwaukee.

“The LIHTC program really makes the housing sustainable for years to come,” says Matkom. “And it really revitalizes the housing stock with minimal subsidy.”

The AHF 50: Top 50 Affordable Housing Developers, #29 Gorman & Company, Inc.

By Christine Serlin, Affordable Housing Finance, April/May 2014

#29, Gorman & Company, Inc.

Gorman and Co., based in Oregon, Wis., isn’t just a housing developer.  The company considers itself a community developer, too, building in revitalizing areas in Arizona, Florida, Illinois, and its home state.  One of Gorman’s major accomplishments for 2013 was finding new sources of financing for that work.

“We have to be prepared if there are real jolts to traditional funding, like low-income housing tax credits (LIHTCs) or historic tax credits,” says COO Tom Capp.  “That’s a bit of the motivation why we’re looking at new sources.”

The firm has had recent success with the government’s EB-5 program, which offers foreign citizens a Green Card if they’ll invest $1 million in an American project that creates or preserves jobs primarily in community development areas.

Gorman is redeveloping the Pabst Brewery site in Milwaukee with three projects.  The first was Blue Ribbon Lofts, 100 affordable units financed with LIHTCs and historic tax credits.  The second was a historic hotel and restaurant, where the company utilized the EB-5 investments.  The third will be market-rate workforce housing with equity from a Chinese developer.

“These financial sources are fueling projects like workforce housing and elements communities want to see us executing in the revitalizing areas,” says Capp.  “These sources are touching housing, but not intermingling with the LIHTC.”

The firm has also received approval from HUD’s Rental Assistance Demonstration program for a 300-unit public housing development in Phoenix.

Readers’ Choice Awards: Urban Finalist A Home for Entrepreneurs awarded to Park East Enterprise Lofts

MILWAUKEE – When workers tore down the elevated freeway between North Dr. Martin Luther King Drive and Milwaukee’s increasingly busy downtown, local officials decided to bring new shops and offices to this area of warehouses and vacant lots.

So Gorman & Co., Inc., filled the entire first floor of its new Park East Enterprise Lofts here with spaces for small businesses, even though the sidewalk outside is usually empty.

“We don’t think this is a retail location,” said Tom Capp, executive vice president for Gorman, an affordable housing developer based in Madison, Wis. “The appetite for mixed-use from planners and developers is sometimes a little more than the market actually has.”

But since Gorman finished the four-story building in December, all of the first-floor spaces have rented except for a 3,000-square-foot retail space on the corner, for which Gorman is in negotiations with a national chain of deli-style sandwich stores.

Live-work spaces are the secret to Gorman’s success. About a third of the 85 mixed-income apartments at the Lofts have two floors and two doors. Residents can use the lower floor as an office, a shop, or even an artist’s studio and use the upper floor as living space. Each of these workspaces opens straight out onto the sidewalk and even has a shingle-style sign that hangs over the door.

“The whole building looks commercial,” Capp said.

The building also includes common spaces for the residents that are designed to help foster a community of entrepreneurs. For example, the building’s business center includes a large-format computer printer for creating posters and blueprints. The building also includes a 16-seat theater for presentations.

Of the 85 apartments, 68 are reserved for families with incomes topping out at between 50 percent and 60 percent of the AMI. The other 22 apartments rent at market rates. All of these apartments rented as quickly as the developer could finish them. The project has 130 names on its waiting list for new residents. “The concept hit the marketplace at the right time,” Capp said.

This fall, Gorman plans to begin building another 92 live-work apartments, this time set in the historic Pabst Brewery “just a tennis ball’s throw away,” Capp said.

The development cost for Park East was $12.5 million. Gorman used a $4.7 million mortgage from the Wisconsin Housing and Economic Development Authority, along with $7.5 million in equity from the sale of 9 percent LIHTCs to Alliant Capital. Under the rules of the tax credit program, the duplex live-work spaces were treated just like large apartments, so all of the cost to build the units generated tax credits.

That’s just another example of how Gorman got the best of both worlds at the Lofts: all the benefits of supplying housing to a market hungry for it, plus the approval of local planning and zoning officials.

Additional project information, as provided in application by the nominator.

Q. Why does the nominated project deserve to be recognized based on the award criteria of this contest?

A. The Park East Enterprise Lofts development represents the first mixed-use development completed in the new Park East corridor of downtown Milwaukee. Since the restructuring of the city’s downtown expressway interchange, a portion of the city that had previously been unavailable for development needed revitalization.

Gorman and Company sought to create a structure to house residents near downtown Milwaukee at affordable rental rates, and at the same time offer a way to keep young entrepreneurs and small businesses within the city. The project combines mixed-income, mixed-use, and live/workspace for entrepreneurs. Its innovative mix of uses is appropriate for a development inspired by an innovative planning district.

These live/work lofts are specifically designed for entrepreneurs to establish residence and businesses in this vita neighborhood. The building consists of four floors, of which the upper thee are residential lofts. The street level features a mix of residential live/work units, each with a street entrance and frontage, and a mix of amenities, common areas, and retail space.

The generous common areas include two conference rooms and public mezzanine gathering spaces, which provide adequate resources for social networking and private business meetings. The project also features 2,600 square feet of retail space; a movie theater for residents’ personal use and business presentations; a community room with a fireplace, kitchen, and rooftop deck overlooking downtown; and a fully equipped business center. All of these features were designed to attract and retain entrepreneurs who will make significant contributions to the city’s economy for years to come.

In total, the development consists of 85 one-, two-, and three-bedroom units, about 75 percent of which are offered below market rate. In addition to its innovative features, it is among the first in the area to address the need for affordable housing and economic development. This vision has been carried through from the building’s footprint—featuring spaces fronting on a major arterial roadway that provides substantial drive-by exposure—to the units themselves.

Q. How does this project represent an innovative solution to a specific development challenge?

A. The development of the Park East Enterprise Lofts hinged on a visionary, urbanist planning process that included the removal of a highly used expressway spur in the heart of the community. The removal of the highway was a deliberate part of Milwaukee’s planning process, and paved the way for a new urban neighborhood that will border the existing downtown.

The redevelopment plan for the area had just been established by the city when Gorman and Company committed to this project in the fall of 2004. Other businesses are now starting construction, including the new world headquarters for Manpower International across the street.

The design of the building respects both automobile and pedestrian relationships, providing appropriately wide sidewalk and storefront spaces without hindering the flow of automobile traffic. In addition, signage and metalwork on the building set an appropriate scale for pedestrians. The broad signage and urban design of the building relate well to the neighborhood at large, bringing a vital new presence to the area, which complements, rather than disrupts, the tone and tenor of the neighborhood.