Click on the link below to read the article on Gorman’s Northside Neighborhoods as published on the Wheda Transform Milwaukee website:
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.
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.”
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.”
By Sean Ryan, The Business Journal, January 15, 2014
Gorman & Co. Inc. wants to buy 120 tax-foreclosed homes from the city of Milwaukee and rehab them as affordable housing for new renters, and eventually owners, for $22.5 million.
The projects center on three Milwaukee neighborhoods where city-owned foreclosed houses are concentrated, including areas around the former Tower Automotive plant, said Ted Matkom, Wisconsin market president for Gorman, based in Oregon, Wis.
The developer since 2008 has fixed and leased 200 houses in Milwaukee under this initiative, Matkom said.
The project funding requires state affordable housing tax credits that Gorman will apply for later this month. Gorman will file three applications, Matkom said, one each for houses in the Franklin Heights, Sherman Park and Tower Automotive neighborhoods.
Under the proposal, Gorman would buy foreclosed houses from Milwaukee for between $1 and $5,000, depending on the condition of the building, Matkom said. Gorman would fix them up and rent them to low-income residents for 15 years. After 15 years pass, the current occupant can buy the building for $30,000, paying off the remaining debt on the rehab projects, he said.
“A lot of multi-family buildings kind of get tired as they approach the 15th year,” Matkom said. “This product actually gets more attractive as the 15th year approaches.”
Milwaukee’s Zoning, Neighborhoods and Development Committee on Tuesday unanimously endorsed selling the houses to Gorman.