Barrett to propose $6.5M for housing
Plan would extend TIF district for one year
When Mayor Tom Barrett presents his 2021 proposed budget Tuesday, it will include about $6.5 million aimed at strengthening housing and making homeownership more accessible in the city.
“Particularly in this time of social unrest and a fight for racial justice and racial equity, we thought that this is the perfect time to really make a bold statement about our commitment to housing in Milwaukee,” Barrett told the Journal Sentinel.
“And we’re doing this in what is without a doubt the most challenging budget that we have faced in years,” Barrett said.
Milwaukee, which was already hardpressed financially, has not escaped the economic fallout of the coronavirus pandemic that has hit government budgets nationwide.
The housing funding was made possible by a tax increment financing district that has reached the end of its life.
That allows the city to use the remaining funds for housing instead of closing the district and adding its increased value to the property tax base.
Milwaukee’s low Black homeownership rate
Homeownership is a key element of how Americans build wealth. But Mil
waukee has a significant homeownership gap between Black and Latinx residents and white residents.
Milwaukee has the second-lowest Black homeownership rate (27.2%) among the nation’s largest metropolitan areas, according to a July report by the University of Wisconsin-Milwaukee’s Center for Economic Development.
That’s tied in part to decades of banks refusing to provide mortgages in predominantly Black neighborhoods that had their boundaries literally drawn on maps in red ink — creating the term “redlining.”
The largest redlining settlement ever initiated by the U.S. Department of Housing and Urban Development involved $200 million provided by Green Bay-based Associated Bank for home loans in Milwaukee and other predominantly minority Midwest markets. That settlement, in which the bank admitted no wrongdoing, was in 2015.
The proposal is meant to lead to more racial fairness and equity in the city, Barrett said.
Barrett will propose using $1.4 million for an income-based down payment grant program with the aim of helping about 200 families purchase homes. The program would focus on the areas of the city where homeownership has lagged.
Though it could change in working with the Common Council, Barrett said the idea now is that people who are at or below 80% of the median family income for the county would be eligible.
That amounts to an income of up to about $67,000 for a family of four for 2020, according to federal guidelines.
He is also looking to allocate $1.5 million to pilot housing cooperative and land trust programs, tools used to tie the benefit of rising property values to the property instead of the individual owners. The goal is to help neighborhoods raise their values, he said.
In a housing cooperative, a nonprofit owns the real estate but people buy shares in it in exchange for the right to live in a unit, whether a house or a multi-family building. When cooperative members sell, the model helps maintain the affordability for the next buyer.
In the land trust model, a cooperatively managed nonprofit owns the underlying land, which is leased to the homeowner who owns the structure on the land. When the homeowner sells, the shared appreciation means the homeowner and the cooperative each get part of the higher value to keep the home affordable.
The mayor’s budget will also propose a $1 million cash infusion into the Housing Trust Fund, which offers grants and loans to build and rehabilitate affordable housing in addition to making it more accessible. Barrett said in past years, about half that sum has been put into the fund each year through borrowing.
He’ll also be proposing to put:
● $700,000 into the Milwaukee Employment/Renovation Initiative that provides workforce development grants to rehabilitate Sherman Park neighborhood homes that are vacant and taxfore closed.
● $1.3 million into the Strong Homes program that provides partially forgivable loans to homeowners to help with repairs.
● About $500,000 into a program that allows the city to dispose of properties.
“We believe that bringing up that homeownership rate is good on several fronts,” Barrett said. “We think it’s good for the individuals themselves, but we also think it leads to stronger neighborhoods as well because of the investment that’s being made, both the financial investment but in many ways the psychological investment.”
The city is using a mechanism in state law that allows it to extend the life of the tax incremental district for one year and put those resources toward housing.
The law requires that at least 75% of the funds be allocated to affordable housing in the city and the remaining 25% to improve the city’s housing stock.
According to the city, those resources can be used anywhere in the city instead of in a specific geographic area.
Since 2014, according to the city, it has used this mechanism to put about $2.3 million toward housing.
The Beerline tax district earmarked to fund the proposed housing efforts was created in 1993 and helped spur development of hundreds of new condominiums and apartment units along the Milwaukee River north of downtown. It is located along North Commerce Street and North Water Street.