Tag Archives: northside-homeowners-initiative

Gorman teams up with Northcott to rebuild depressed Milwaukee Neighborhood

Click on the link below to read the article on Gorman’s Northside Neighborhoods as published on the Wheda Transform Milwaukee website:

Gorman teams up with Northcott to rebuild depressed Milwaukee neighborhood, Wheda Transform Milwaukee website, 2-2015

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.”

Rebuilding a Dream: America’s new urban crisis, the housing cost explosion, and how we can reinvent the American dream for all

Excerpt from the book by Andre F. Shashaty

In America’s Rust Belt, many communities were hit hard by the foreclosure crises, compounding a long struggle with economic woes. On Milwaukee’s north side, a local real estate developer used the housing tax credit to help address the scars left by foreclosures there.

Gorman & Co., Inc., took a bite out of two prevailing problems in its Milwaukee neighborhood—foreclosures and unemployment. Focusing within a two-mile area, Gorman purchased vacant lots from the city to build 40 single-family homes for rent to lower-income families. This infill development helped restore the vitality and stability of the area.

But the firm did not stop there. It also substantially rehabilitated a series of duplexes that were in dilapidated condition to provide another 40 affordable units and preserve the neighborhood’s character.

“It has stabilized the neighborhood,” said Ted Matkom, Wisconsin market president for the firm. “It has eliminated blight. When you drive down the street it looks like a new subdivision.”

Known as the Northside Housing Initiative, the project also helped address unemployment, which stood at 50 percent for African-Americans. Gorman partnered with the Northcott Neighborhood House to train youths and adults with troubled backgrounds to work in construction. More than 50 full-time jobs were created for graduates of the program during construction, giving them valuable experience on top of their training.

Resident of the single-family homes will have an opportunity to buy their houses at the end of the federally mandated 15 –year rental period.

The new homes are part of a forward-looking decision by the city at the height of the foreclosure crises. City leaders recognized that homes could be acquired inexpensively, giving the city the ability to take control of not just individual homes but entire blocks and neighborhoods. This control would be essential to helping stabilize areas with high rates of foreclosure.

The $16.4 million Northside Housing Initiative is made up of two low-income housing tax credit projects that target families earning no more than 50 percent to 60 percent of the area median income.

It is a prime example of how private developers and corporations looking to reduce their tax liability are working with cities to address local housing and community revitalization goals.

Foundation for the Future

By: Affordable Housing News, Summer 2014

Gorman & Company, a well-established development firm with an extensive portfolio in the Milwaukee area, specializes in providing quality affordable housing to communities that need it most. The company is now using its expertise with the Washington Park Homeowners Initiative (WPHI).

The initiative is geared toward a revitalization effort in Milwaukee’s north side neighborhoods, which were particularly affected by the recent economic downturn. WPHI represents the sixth phase of a larger project, and Gorman & Company plans to continue with at least three more development phases to provide more homeownership opportunities in the area.
“The Washington Park Homeowners Initiative is actually the sixth phase of a much larger initiative that we’re doing in the north side of Milwaukee, which has been ravaged by the foreclosure crises,” says Ted Matkom, Wisconsin Market President for Gorman& Company. “it’s really a product that the neighborhoods are looking for right now.”

ADDRESSING A NEED
Milwaukee’s north side neighborhoods rely heavily on the manufacturing sector for jobs, and in recent years have seen a significant number of these jobs disappear. The housing crises in 2008-2009 exacerbated this problem.

“Many jobs fled Milwaukee to go overseas, and combined with the foreclosure crises and the recession, these north side neighborhoods went into a tailspin that resulted in blighted, vacant homes. That’s why the city has so many tax-foreclosed homes,” Matkom says. “We are purchasing tax-foreclosed homes for $1 each and renovating them with tax credits to stabilize the neighborhood and put those properties back on the tax roll.”

With these initiatives, Gorman & Company is providing options to residents on the city’s north side. The firm is focusing on creating safe, stable neighborhoods that, over the course of numerous efforts, will help to make it an overall more desirable place to live.

According to Matkom, demand for these types of residential options is high on the north side.
“It’s a lower-income neighborhood that really needed an update to the housing stock,” Matkom says. “What’s amazing about it, and the reason why we have so many phases, is the demand. We’ve got waiting lists for single-family homes of 50 people. We would have more, but they get stale, so we keep it at 50. We keep trying to make it a better situation with every phase.”

DEVELOPMENT INITIATIVES
The WPHI effort also aims to provide opportunities to help those in need get the skills and experience they need to find jobs. Gorman & Company has partnered with nonprofit organizations to accomplish these goals.

“We’ve done workforce development initiatives with Northcott Neighborhood House, which is using federal, state and local funds to finance the development,” Matkom says. “We assist the chronically homeless and unemployed, in addition to those coming out of the criminal justice system, to cross-train in several trades. Once they graduated from that soft skills and hard skills course, they are put onto a shift that works on siding and demolition for our projects, which are real-time projects to help build a resume. Then they can go off and get hired by the workforce and third-party contractors.”

Engaging in these efforts creates challenges for Gorman & Company, as the firm must work with a significant number of newly trained workers while still completing its developments on time. According to Matkom, however, it’s well worth the effort.

“We create probably 28 family-supporting jobs each phase through that program, and they get hired off to third-party contractors at a regular pace,’ he says. “It’s a challenge for us to keep the quality of the workmanship up, but it’s a good challenge because it’s actually placing people in jobs as a result of the training.”

FOUNDATION FOR THE FUTURE
Part of Gorman & Company’s motivation for pursuing these extensive revitalization efforts is their overall alignment with the company’s goals. It specializes in working through tax credit initiatives to improve areas that may need additional help. Before beginning efforts in any neighborhood, the firm surveys the community to gain insights about the needs and challenges present.

“Typically, the most challenging projects these communities foresee are the ones that are in our wheelhouse, which are eliminating blight or revitalizing an area that’s blighted,” Matkom says. “This was kind of the prefect project for us because it did have all of those components, which was workforce development and meeting a need in a community to stabilize these north side neighborhoods.”

Moving ahead, Matkom hopes Gorman & Company’s methods for WPHI and beyond will be recognized and replicated elsewhere. Because the firm operates on a housing and economic development model, the company’s leadership is eager to see its long-term effects not only in Milwaukee but also in other adversely affected cities throughout the Midwest.

“I think this model we’ve created in Milwaukee is a true model that can be replicated in other Midwest communities that have lost a lot of manufacturing jobs and were hit by the foreclosure crisis,” Matkom says. “Many Midwest cities suffering from a post-manufacturing letdown from the recession could use this model to rebuild some challenging neighborhoods and make them great workforce housing neighborhoods like they were in the 1950’s and ‘60’s.”

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.

Gorman & Company, Inc. Named in the Top 50 Affordable Housing Developers of 2013

April 10, 2014

Affordable Housing Finance named Gorman & Company, Inc. in the top 50 affordable housing developers for 2013.

Former real estate lawyer Gary Gorman overcomes early challenges to build successful business

By Tom Daykin, Journal Sentinel, September 30, 2013

Gary Gorman was a real estate attorney when he decided he’d rather be a developer, instead of the guy who gives developers legal advice.

Gorman & Co. was launched in 1984. Within a few years the firm was focusing on apartment buildings, aimed at lower income renters, partly financed with federal affordable housing tax credits, along with projects that use historic preservation tax credits. Today, located in the Dane County community of Oregon, the firm has 230 employees, operates dozens of properties in Wisconsin, Illinois, Florida and Arizona, and annually develops apartment buildings and other projects costing around $75 million.

The firm’s Milwaukee-area developments include the new Brew House Inn & Suites, a hotel created at the former Pabst brew house, along with Blue Ribbon Lofts, apartments developed within the brewery’s former keg house. The company also plans for another apartment development at the Pabst complex, now known as The Brewery.

Gorman recently met at the Brew House Inn to talk about his early challenges as a developer — including a partner who was a cocaine addict — how the firm grew, and its new foray into the hotel sector. Here’s an edited transcript of that interview.

Q.How did you become a developer?

A. When I got out of law school (in 1980) I was hired by a firm and promoted by that law firm as somebody who knew something about real estate syndication, which is just a fancy term for putting together a group of investors to do deals. I represented developers and syndicators for four years.

Then they offered me a partnership. And I thought, if I become a partner, then I’m going to stay. And it really wasn’t what I wanted to do. I was more intrigued by the business side. So, June of ’84, I left the law firm. I teamed up with two other guys (including a marketing expert). One guy that was older, more experienced and allegedly had more money.

Q.Did it turn out he didn’t have any money?

A. Well, you’re guessing the rest of the story. Our basic strategy was that we were going to put existing properties under contract, we were going to raise the equity capital by selling limited partnership shares, buy the properties, have somebody else manage them, and then we sell them after five years and take a piece of the profits. That was the idea.

So, within about six months of leaving the law firm, the marketing guy and I started seeing these letters coming in from collection agencies, and dunning letters from banks and other creditors to this older guy. The bottom line is he had this white powder problem that I didn’t know about. Should have done better due diligence. His frequent trips to Jamaica were not just to lay in the sun.

Q.What happened?

A. The marketing guy and I left him and formed our own little shop. And we did one deal in 1985 called Seminary Park Apartments, in Evansville, Wis. It was a small deal, 24 units. It was a historic rehab of abandoned school buildings that had previously been a private school for boys. So it had been empty for a long time.

It was immensely complicated for a small deal, and we probably made about $1.50 an hour. But that created a track record. At the end of that deal, the marketing guy said, “I can’t live like this any more. I never know if we’re going to have the deal, not have the deal. I don’t know if I’m going to have a paycheck.” (So the partner left the firm.)

Q.How did it feel to be on your own?

A. It felt a little lonely. Then tax reform started heating up and it eventually passed in 1986. That changed the tax code completely, and it eliminated a lot of the benefits of investing in real estate. But it created a new tax credit, the affordable housing tax credit. So I thought maybe I could work with that.

Q.Did you just immediately think there’s just unlimited opportunity there?

A. No, God no. I thought: Would this ever work? And who would ever invest seeking this credit? And should I go back and beg my senior partner at the law firm to take me back? All those thoughts were going through my head. And there were times when I literally ran out of money.

I worked with a law firm and an accounting firm to put together four private placements in 1987 that were raising capital for (tax credit) deals that another builder built because I didn’t have the capacity to build anything. It was a lot of work.

I got a call one day (in 1987 from Boston Financial). They had a fund that had raised money to invest in these tax credits, and would I be interested in having that fund invest as the equity investor?

Q.And you said, “Would I?”

A. I kind of held the phone away like, is this really happening? Absolutely, I wanted to.

Q.With the advent of the fund, I assume your life got a lot easier in terms of financing.

A. It did. Trying to find investors that put in $5,000 apiece a year was tough. The first institutional deal was a big break-through.

Q.At what point were you starting to do multiple projects a year?

A. I think we did two a year in ’88 and ’89. (As the firm grew, it added in-house property management and construction divisions. In 1995, it hired Tom Capp, a former Fitchburg mayor who is now Gorman & Co.’s chief operating officer.)

Q.Was adding Tom a turning point?

A. It really was. It added a level of political sophistication that, frankly, I didn’t have. He really knows how to work with city planners, mayors, elected officials, plan commissions. He knew that mentality. He had a greater level of patience with the political process.

Then we started to grow, did more projects. All of the equity was from institutional investors. Then we thought we would internalize the architectural function. We did that in ’99. At that point we sort of had the bones of an integrated development firm. That’s where we are today.

Q.What percentage of your business comes from affordable housing developments?

A. Probably 85%.

Q.How did you first get involved in doing the Brew House Inn & Suites?

A. (During a presentation to some Chinese government officials who were visiting Madison, Gorman was impressed with the interpreter, University of Wisconsin-Madison law student Ying Chan. Gorman hired him as an intern.) I was paying him, but I really didn’t know what he was doing. He was going to seminars here and there, and then he left when he graduated from law school.

He called me about six months later and said that he had been successful raising money through this EB-5 program (in which foreign citizens receive green cards in return for job-creating investments in the United States) for an immigration attorney out of the state of Washington who had never done a development deal before. I said, Ying, if you can raise money for someone who has never done anything before in the development area, it ought to be easy for you to raise money for us.

We had done Blue Ribbon Lofts, and we thought, where can we find another historic (preservation) deal that was of some size? Talking to the Zilber folks (owners of the Pabst complex), they pointed us to this building. The reason it’s a hotel rather than an apartment building is that to attract EB-5 capital you have to create jobs. A hotel and (restaurant) produce a lot more jobs than an apartment building.

Q.You’ve never done a hotel before, right?

A. No, but we have a regional manager, Laura Narduzzi, who’s got 25 years experience (in the hotel industry). I completely defer to her judgment on designing the hotel, running the hotel. I’ve stayed in a thousand of them but I don’t know anything about running them. I’m learning a little bit now, though.

Q.What have you learned?

A. The staffing level is much higher than an apartment building. The service level is huge. You have to have skilled, well-paid people on site, all the time.

Q.Are you making money?

A. We’re doing OK. Is it belching cash? No, not in the early phases. But we’re doing a lot better than our projections showed.

Q.Are you going to do other hotel investments?

A. We have a deal in Kenosha, called Heritage House. It’s a historic building. We’re about to convert that into a boutique historic hotel. I just made a presentation to the mayor of Rockford, Ill., and his staff on a project there that would be a historic hotel combined with a conference center. I made a presentation in Butte, Mont., with a concept of a similar combination of a historic hotel and a conference center. It’s opened up another area for us.

Q.But you’re going to continue to primarily be an apartment developer, right?

A. Yeah, that’s our core competency.