Bruce Murphy
Murphy’s Law

City’s $1 Home Program a Great Idea

But you’d never know it, given how some of the media covered it.

By - Jan 12th, 2017 11:41 am
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City owned home at 2817-19 North 22nd Street. Photo from the City of Milwaukee.

City owned home at 2817-19 North 22nd Street. This home is available for purchase from the city (under a different program) for $2,500. The estimated renovation cost is $81,455. Photo from the City of Milwaukee.

There was no mystery about the fact that the city’s program to rehabilitate foreclosed homes in the Sherman Park neighborhood was aimed at developers who could fix up multiple properties and not for individuals looking for a free home.

The program was quite accurately described in stories by WISN TV, the Business Journal,  CBS 58 and the Journal Sentinel. It offered homes for $1 and up to $10,000 in expenses per home for developers willing to rehabilitate five or more single family homes or duplexes.

But somehow some citizens got the wrong idea. “In hindsight, we should not have referred to the ‘one dollar’ aspect of the program,” says Jeff Fleming, who handles PR for Milwaukee’s Department of City Development. “I think some people heard those two words and paid less attention to the rest.”

That might be because fly-by-night websites that steal stories and capsulize them — like this one  — spread the idea anyone could score a house for one cool dollar.

“There seemed to be some miscommunication,” says Ald. Michael Murphy, who co-sponsored the legislation creating the program. “A lot of people came down here with the understanding you could buy a home for a dollar.”

And Fox TV pounced all over the resulting complaints, with a story about angry citizens, including one who declared the city should “stop disrespecting us.”  No, Fox didn’t explain that the program had always been for developers only and that numerous stories had carefully explained this to the community.

In a follow-up story by Neighborhood News Service and published by Urban Milwaukee, some questioned the logic behind a program targeting only developers.

So why is it structured that way?

In the wake of the violent disturbances in Sherman Park this past summer, Gov. Scott Walker announced the state would provide $4.5 million in help to the area for housing and jobs. It was nowhere near the $25.6 million in funding from a 2012 settlement of a suit that was supposed to solve the foreclosure crisis but was grabbed by the Walker administration to fill a hole in the state’s general fund.

Still, the money was welcome and eventually led to the state granting $2 million from the Wisconsin Department of Financial Institutions to address foreclosed homes in the Sherman Park neighborhood. The grant guidelines stipulated that no more than $10,000 could be spent per home, and all the money had to be expended by June 1, 2018. Thus the program would demolish 200 homes.

Mayor Tom Barrett and the Department of City Development created a program in line with this, and then it was reviewed by the Common Council. Murphy and aldermen Russell Stamper and Khalif Rainey, the three council members whose districts include all of the targeted area (bounded by Lloyd Street, Capitol Drive, 60th Street and 20th Street), then worked with DCD on an amended plan.

Rather than spend the money only on demolishing homes, the plan called for using half of it to rehabilitate 100 salvageable homes. It also added an employment plank, whereby any developers bidding for funding would have to hire at least one unemployed or underemployed city resident for each home that’s rehabilitated. The plan had the potential to provide jobs in the neighborhood (though residents from any low-income neighborhood in the city would be eligible).

Given the employment requirement, the program made more sense for developers, and given the state’s tight timeline for expending the money and the logistics of processing grant applications and overseeing the program, DCD preferred working with perhaps one developer. “They were thinking of Gorman,” Murphy notes referring to Gorman and Co., which does a lot of residential development in Milwaukee.

Instead a compromise was reached: it would be open to for profit and non-profit developers and each must rehabilitate at least five (one or two-family) homes, so no more than 20 developers would need to be overseen by the department. “There just isn’t the staff to manage” a huge number of developers, Murphy notes.

The Request for Qualifications process allows the city to pick the highest scoring proposals from developers, who must spend at least $10,000 to fix up homes, renovate them to be code compliant and can then rent, offer a rent-to-own program or sell the homes to owner-occupants.

The plan passed the Common Council unanimously.

Stamper called it “a huge opportunity” to create “a workforce jobs skills program” for “individuals from the inner city.”

Rainey, too, sang its praises: “For me, the potential impact of the program is to have homes that are currently nuisance properties… sitting unoccupied in our neighborhoods, to be housed with families,” he told the Journal Sentinel on Monday. “To be back on the tax rolls, to make our neighborhoods safer.”

But by Tuesday, facing criticism from some, Rainey seemed to be running away from the program. In an interview with NNS reporter Jabril Faraj, Rainey described the plan as “the mayor’s proposal” while “adding the Common Council did not have the discretion to structure the program as they liked,” Faraj reported.

Neither Rainey nor Stamper responded to interview requests. But it’s clear the mayor’s original proposal was overhauled by the two alderman and Murphy. It’s really their plan, not Barrett’s. And the resulting program seems a practical one that will likely to have a very positive impact.

As for those folks who came down to City Hall expecting to get a house for free, they were directed to other programs offering once-foreclosed homes taken over by the city that can be purchased on very generous terms. “So it wasn’t a waste of their time,” Murphy notes.

But in the process, an obvious good news story for the city somehow became bad news.

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7 thoughts on “Murphy’s Law: City’s $1 Home Program a Great Idea”

  1. tomw says:

    Bruce, thank you for clarifying this. It now makes sense and seems well intentioned. The fact that the state glommed onto the settlement money for foreclosed homes should be remembered as at least indirectly that money went to fund those wonderful tax cuts the Governor likes to tout.

  2. Patty says:

    Many of those other programs offered b the City can be found here – http://city.milwaukee.gov/NIDC#.WHfq1v2Qxok

  3. John Casper says:

    Bruce, many thanks.

    Agree with tomw.

    “Gov. Scott Walker Pockets Money Intended For Wisconsin Foreclosure Victims To Make Up State Budget Shortfall.”

    http://www.forbes.com/sites/rickungar/2012/02/11/gov-scott-walker-pockets-money-intended-for-wisconsin-foreclosure-victims-to-make-up-state-budget-shortfall/#7488b5cb1212

  4. Mike Drew says:

    Too bad that this doesn’t mention ACTS, a long-running and highly successful Milwaukee program using very low mortgage payments and high sweat equity to turn run-down houses into cozy and confortable homes for hundreds of inner city residents. Managing ACTS is Michael Gosman, a former silk stocking corporate lawyer who decided he’d feel better living on a non-profit’s paycheck while doing good..

  5. The communication released about the dollar homes was definitely misunderstood and poorly
    Delivered😀 THE idea for qualified developers to upgrade the community is excellent 👌

  6. Lucy Cooper says:

    Good job of giving actual background and facts.

    The sight of aldermen (Rainey and Stamper)running for cover is disheartening.

    The actual taxpayers (I’m one) are tired ofseeingourmoney going to mow lawns, shovel snow and do board ups on the city foreclosures. We’d prefer parks, libraries and job training…

    Yes, Walker screwed us (what ‘s new) but it seems to me DCD was playing a weak hand the best it could.

    Lucy

  7. Southside Resident says:

    Bruce, you got the facts right on the details of the program, but if you look closer, I’m not sure this is as beneficial as it could be. First, the workforce development piece. At a $15 living wage, for the 500 hours the worker is required to be hired by the program, that adds up to $7,500. For this $7,500 worth of work to an unemployed/underemployed resident, the City shells out $10,000 in develpoment grants. Now, the home is owned by an investor-owner who has multiple properties and little incentive to maintain the property at a high level or adequately screen tenants once the check cashes.

    Why not spend the full $10,000 on the workforce development piece and offer the finished homes to the workers themeselves?

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