Affordable Housing in Every Major Project?
Proposal would require it for any project with 20 or more units. Will developers oppose it?
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.”
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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