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.”