Affordable Housing in Every Major Project?
Proposal would require it for any project with 20 or more units. Will developers oppose it?
Apartments under construction.
A quietly introduced affordable housing ordinance could drastically impact development Downtown and in surrounding neighborhoods. The proposal would require developers building privately-financed apartment buildings with 20 or more units to set aside 10 percent of all new units for residents making less than 60 percent of the area’s median income.
If developers don’t want to construct the affordable units, which are to be leased at a rate of 30 percent or less of the tenant’s income, they can contribute $125,000 per unit to the city’s Housing Trust Fund.
The proposal is sponsored by downtown alderman Robert Bauman and council president Ashanti Hamilton as well as council members Jose G. Perez, Michael Murphy, Russell W. Stamper, II, Cavalier Johnson and Khalif Rainey.
This proposal would cover part or all of the neighborhoods of East Town, Westown, the Lower East Side, The Brewery and Walker’s Point. The ordinance defines the boundaries of the proposal as “beginning at the intersection of Interstate 43 and West McKinley Avenue, West McKinley Avenue, the Milwaukee River, East North Avenue and East North Avenue extended, Lake Michigan, the Milwaukee River, the Kinnickinnic River, East and West Greenfield Avenue, and Interstate 43 to the point of beginning.”
The feasibility of the legislation is unclear. Multiple developers and industry sources expressed surprise at the proposal, saying they weren’t aware of it. It remains unclear if the proposal would cause significant market distortions or cause developers to stop building apartments within the project boundaries, though some sources did offer this as a potential outcome.
Projects receiving city financial assistance would be required to set aside 20 percent of their units as affordable housing.
In order to avoid the “poor door” problem that has affected similar requirements in New York City, the legislation would require that tenants of affordable units have access to on-site amenities available to residents of market-rate units. Units are required to be comparable to market-rate units in “unit type, number of bedrooms, quality of exterior appearance, energy efficiency and overall quality of construction.” They are required to be dispersed throughout the development.
The legislation’s author, Ald. Bauman, said in an interview with Urban Milwaukee that he was inspired to propose the legislation after observing changes in the marketplace. He went on to say that “the specific cause was the Goll Mansion project.” During that debate around a zoning variance for the project, the developer Chris Houden had promised to leverage city programs to hire underemployed or unemployed city residents, but Bauman, following an opinion from the City Attorney’s office, had found that those promises were unenforceable in the process of granting a zoning change.
Bauman noted that while development Downtown has boomed, it hasn’t made its way much beyond the downtown area. “I know, I have a district that spans both worlds,” he said. The alderman, who is commonly connected with the prosperous Downtown, lives in and represents the near west side stretching as far as N. 35th St.
The alderman says the proposal is based on legislation seen in other cities, particularly Chicago. He described his version as a simplified version of the complex Chicago law.
Bauman tells Urban Milwaukee he has yet to communicate with any developers about the proposal, preferring instead to craft the actual legislation first. As far as the legislation goes, the alderman says “none of this is locked in stone.”
Urban Milwaukee has not received a comment from Mayor Tom Barrett on the proposal, but the Department of City Development forwarded this comment: “The provisions of the proposal are the subject of internal discussions at DCD. The department is likely to have perspective to share with the Common Council following that review.”
Absent as sponsors on the legislation are two council members whose districts would be affected, Milele A. Coggs and Nik Kovac. Neither responded so far to a request for comment.
The proposal is set to go before the Zoning, Neighborhoods & Development Committee at an upcoming meeting.
Expect a vigorous debate around the legislation. Certain to be referenced in that debate is the impact of simply increasing the supply of housing in keeping rents lower. A recent article in City Observatory examines a number of studies and finds that increasing the supply of market rate housing is actually more cost effective at creating affordable housing than subsiding the affordable units directly.
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Political Contributions Tracker
Displaying political contributions between people mentioned in this story. Learn more.
- February 20, 2016 - Cavalier Johnson received $250 from Robert Bauman
- May 7, 2015 - Nik Kovac received $10 from Cavalier Johnson
- May 5, 2015 - José G. Pérez received $10 from Cavalier Johnson
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Has affordability really become an issue? It seems most of these new developments have been on dust lots or brownfields with the legacy residential properties still intact & still affordable. In Walkers Point, the new $1,200+ dollar per month apartments sit across the street from the legacy 350-500 dollar per apartments.
Well, it was a good run of development in the city while it lasted!
Milwaukee is not San Francisco, where there are serious affordability issues. I submit the entire city more than 1-2 miles west of the lake is already affordable housing. If the hope is that this ordinance will prompt developers to build market rate housing outside of the defined boundary, I find it more likely they will build outside the city. Milwaukee’s nascent recovery is too fragile to push for legislation like this.
This is a bad idea that will kill the golden goose that has helped keep Milwaukee afloat over the past ten years. First off, Milwaukee is not Chicago, New York or San Francisco where central business district employment growth is a major driver of housing demand, and where high rents and land prices are driving out affordable housing. Milwaukee needs all the housing development it can get into its downtown area to create a long-lasting, vibrant, downtown housing market that is right now slowly helping to bring employment growth into the downtown area.
Also, there are plenty of affordable housing developments getting built in downtown Milwaukee within the same neighborhoods as higher rent market rate apartment developments. There is no problem to be solved, but there is a problem that can be created by this very bad idea. But I am not surprised that the Milwaukee City Council would come up with such a dumb plan.
I don’t mean to sound melodramatic, but this is truly a moronic idea. The much better idea would be increasing the number of grant programs that provide developers with a financial incentive to provide affordable housing. All this program would do would stifle development and (ironically) lead to increased rents over time. Any person that looks at rents in Milwaukee and believes we have an affordability issue is kidding themselves.
If you want affordable housing to naturally occur, strip all maximum density rules in the city and push heavy on sustainable growth in both population and next generation economic drivers. More density means more housing options and less need for city incentives or rules on such things.
Bauman strikes again. I live in his district but I’m excited to have the opportunity to vote this fool out of office. He lost me when he tried to block the Goll Mansion Tower so that his wealthy little lawyer friends in the condo tower next door would always have their precious views. You know, instead of voting for a tax-producing development that would benefit the entire city. Freaking idiot.
I’m not at all opposed to requiring below-market rate housing for developments of a certain size, just not now, and not in Milwaukee. What sealed the deal for me was when I saw Bauman’s name associated with this. I don’t know him but, Jebus, what a tool.
In Milwaukee, this is a solution waiting for a problem.
Milwaukee compares little to the classic examples of San Francisco and New York City, where consistent historic demand–and near-insatiable demand for housing in the past 6-7 years among the well off-to-exceedingly-wealthy–have created very unique economies. There, rapid gentrification is displacing families, city workers and the creative classes at unheard of rates. And, we’re not talking about needing to move from downtown to Riverwest. We’re talking about moving 20-30-40 miles or more away just to afford living “close” to where you work. Neighborhoods previously untouched by money and development are in play and evictions are way up. the gentrification that used to take a generation to happen is occurring in as few as 5-6 years. This is happening in Chicago to a degree, but not like SF and NYC.
Milwaukee still has plenty of affordable land and many properties that are woefully underdeveloped. I’m all for focusing on high-density and mixed-use developments so that people can easily walk or commute to where they need to go. Some people will have to move at some point, but sometimes that happens.
This is the stupidest idea I’ve heard in a long time, and there’s been a lot of stupid ideas floating around the news lately. Politics getting in the way of the best thing that’s happened to this city in decades. How do we kill this?
I am a real estate developer implementing projects in downtown Milwaukee and in Milwaukee neighborhoods.
I think housing policy debate is healthy, especially in Milwaukee where we are infamous for the impacts of our peak segregation reality. Among the many real estate constraints that are already municipal policy, we currently allow the government too regulate the ratio of spaces we provide for cars in each development. So why is making places for cars considered acceptable restriction, but making places that consider social and racial equity not? Without yet knowing enough about what will be proposed, I take an agnostic position on what may be the right solutions, but to not have discussion turns a blind eye to the whole of Milwaukee. Change is needed- in a way that creates a more equitable and accessible city for all.
Seattle is in an interesting place on these issues and worth noting: http://seattlebusinessmag.com/policy/next-step-seattles-affordable-housing-plan-includes-6000-rent-restricted-homes
I was under the impression that inclusionary zoning ordinances cannot be enacted in Wisconsin due to state law. However, I can’t find anything speaking to this. Can anyone shed light on this?
It isn’t even a NYC-style “elevation sorting” plan:
318-29. Standards for Affordable Units. Affordable units required to be provided pursuant to this chapter shall comply with the following standards, as may be detailed further in the rules and regulations:
1. Affordable units shall be reasonably dispersed throughout the housing development, such that no single building or floor therein has a disproportionate percentage of affordable units.
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Also, what does the City do with funds in the Housing Trust Fund? That’s where all the money this proposal generates goes to. If the plan makes a new tax (and don’t slice it any other way, the affordable units will be subsidized by the market-rate units within the same property; no developer is going to take a loss, even for the “good of the city”), it should explain what it intends to do with the funding.
The idea a to include affordable housing apartments in all new development within the city is one of the best ideas of the century. Thank you to all who presented this opportunity for consideration. Everyone regardless of income deserves to be able to take advantage of the amenities of buildings that others take for granted. For those of you who think there is sufficient low-income housing, you are sadly mistaken. Stop segregating individuals and families from what our city has to offer in its neighborhoods. This is what creating healthy communities is all about. You probably don’t realize how many of your friends and family would qualify who haven’t shared the financial challenges they face. Support this measure along with the Housing Trust Fund.
@Karen:
Building amenities are not a public service provided by a public entity. They are a private benefit to residents of particular residential developments. Those residents pay for those amenities one way or another. If you can’t afford to live in a high amenity building you aren’t missing out on a right or something you are entitled to. To me, that’s like saying everyone, regardless of income, deserves at least 1500 sq/ft of space to live in. I don’t have a door person, a pool, or a full service gym in my building. Would it be nice to have those things? Sure, but that doesn’t mean I deserve to have them, even if others take them for granted.
Milwaukee does not have the housing issues that have developed in several other cities. With the exception of the Third Ward, and perhaps limited parts of downtown, the areas where new construction are happening (i.e., the Eastside and Bay View) have plenty of cheaper housing available. There are also many, many neighborhoods in Milwaukee and the surrounding near suburbs like West Allis that are very affordable.
@ Karen
I’m all for policy to help increase the amount of affordable housing, but this is absolutely NOT the way to do it. All this will do is discourage developers from building in the city due to higher taxes, and instead will channel that development and the property tax revenue that they bring towards the suburbs.
Expecting any developer to lose money on 10% of what they build isn’t feasible for them. Their investment won’t be profitable and they’ll build it in Waukesha or Oak Creek where taxes are lower and they don’t need to build any affordable units. Then rents in the city would actually go up because there wouldn’t be enough rental units to keep up with demand.
I know it seems like a good idea to spread the wealth to rest of the city, but if you really think about it this will actually just make the problem worse. This would be a disaster that could stop the city’s fragile population growth. Do you see why?
Did anyone do the math on this? Milwaukee MSA median income $56,250, 60% is $33,750. Rent must be less than 30% of tenant income, $10,125, divided by 12 months is $843.75. On rent.com, with a filter set at $900, searching in the area code of 53202 there are 261 available units. Granted they are studios/1BR but the same search in Milwaukee County can get you a 2BR. I’m not feeling this.
Take the construction jobs, enjoy a larger tax base and get a plan for the rising pension costs.
Jeremy is on to something here. Before adopting a solution let’s first determine if there’s a problem. i also think @Juli Kaufmann makes a good point but i don’t know that this is even part of the solution to racial disparity in Milwaukee. In fact, if we look at economic disparity between the city and the metro area, Milwaukee doesn’t need more poor people- Milwaukee needs alot more rich people! Her call for a conversation is a good idea.
What percentage of units in that geographic area are affordable? What ratio is ideal? how does the lost revenue effect the typical 32 unit building that now has to pledge 400k to meet the requirement? Does that amount discourage going forward?
If we were to chart the data on development since 2008 (the beginning of the financial meltdown) i would argue there are more buildings built with affordable housing units than not. That’s a sign that the present system works- the low income housing tax credits, and HUD loan guarantee program have done a good job of incorporating affordable housing in a number of projects. In addition, market rate housing in neighborhoods that have mostly affordable units is a good thing, not a bad thing. Market rate pioneers in Walker’s Point, Brewer’s Hill and the Near West Side should be rewarded for adding to the mix of housing options, not punished. Remember, if you have a neighborhood full of low-income people, rich and upper middle income renters ARE the diversity. And that, unfortunately, includes much of the city.
Best quote in the article, something to focus on: “A recent article in City Observatory examines a number of studies and finds that increasing the supply of market rate housing is actually more cost effective at creating affordable housing than subsiding the affordable units directly.”
Question–why are Milwaukee decision makers often suppressing the supply of housing? Why are NIMBY and other objections suppressing housing supply? Why are the interests of current property owners protected by keeping the supply of housing low?
I agree wwith Julie Kaufmann and Leah that a conversation is warranted– of course. Yes, there are many more affordable apartments than we used to have with new developments throughout Milwaukee’s downtown, Third Ward, Fifth Ward and Riverwest. It concerns me when I read the narrow-minded thinking of those who would rather maintain the status quo. I don’t know if this attitude denotes racism or you don’t know what it’s like to live on social security. This is exactly why Milwaukee remains one of the most segregated cities in the country and the one with the greatest economic disparity. We continue to have a building boom in the Greater Milwaukee area. There is no reason why a percentage of new construction cannot accommodate some of these units. The use of tax credits is terrific–but we can do more. There are huge waiting lists of qualified individuals–they may even be your parents or friends. No one is getting rid of market-rate units. They are in abundance throughout the downtown area, and they provide access to transportation and other city resources not available in the suburbs. This effort of inclusion would do wonders for our city–and our reputation.