City Creates TIF for Villard Ave. Project
Deal on 43-unit apartment project is a shift in policy by Barrett administration.
In an effort to create more affordable housing, the city again finds itself creating a small tax-incremental financing (TIF) district to subsidize a new apartment building.
The city will create a $500,000 developer-financed TIF district to support the development of the 43-unit 3600@Villard apartment building in the Old North Milwaukee neighborhood. The project would be developed by a partnership of Brinshore Development and Index Development Group.
The move, used to plug a financing gap in the project caused by high construction costs and devalued low-income housing tax credits because of the federal tax overhaul, was unanimously endorsed by the Common Council’s Zoning, Neighborhoods & Development Committee Tuesday morning. The city created similar districts in 2017 for the SEVEN04 Place development ($575,000) and the Legacy Lofts apartments ($635,000). All of the districts have used a “developer-financed” setup that reduces the risk to the city by paying the grant amount to the developer over time only if the property value on the site exceeds the base value.
The 3600@Villard project would be developed on five lots near the intersection of W. Villard Ave. and N. 37th St. The city, which owns three of the lots, approved selling its portion of the property to the development group in early 2017 for $20,000. That price was reduced to $4,350 in early 2018. The price reduction qualified this as a gift by the standards of the Federal Home Loan Bank’s Affordable Housing Program. The development team was able to leverage that “gift” to improve its application to the bank and ultimately secured a $645,000 grant.
According to city documents the $7.3 million, 3600@Villard project would be financed with an $850,000 mortgage from BMO Harris Bank, $4.95 million in low-income housing tax credits, the $500,000 TIF district and $645,000 bank grant. The project will also benefit from the city allocation of $368,500 in federal HOME funds designed to create or preserve affordable housing.
The project has the support of area Alderman Ashanti Hamilton. The council president told the committee: “I’m excited about this project and the catalytic impact it can have on the area.”
Index Development’s Que El-Amin said the project team is still making final refinements after meeting with Hamilton and area stakeholders. El-Amin said the project would include 26 parking spaces, but the developers are looking at nearby lots to lease additional spaces following neighborhood feedback. Approximately 1,700 square feet of commercial space is also intended for the building’s first floor.
Index Development Group is led by El-Amin, Rafael Garcia, Heidi Henley and Jackie Carter. The partners met in 2015 while they were enrolled in the Associates of Commercial Real Estate (ACRE) program. The ACRE program, housed at Marquette University, is intended to teach real estate development skills to women and minorities.
Brinshore, one of the largest affordable housing developers in the Midwest, has developed over 5,000 units of housing in 10 states said firm vice president Michael Roane. He said this would be the firm’s sixth project in Milwaukee.
The project team said Brinshore would own 65 percent of the project, with the Index team owning the remaining 35 percent.
The building is being designed by Korb + Associates Architects.
Change in City TIF Policy
The city has traditionally only created TIF districts with costs in excess of $1 million because of the administrative costs associated with their creation. Ald. Robert Bauman asked if the Villard Avenue TIF represents a policy change by the administration.
“Is this a new policy change? If it is, great. Now I know I can submit all kinds of projects,” said the alderman, an affordable housing advocate.
The $500,000 Villard district is budgeted to incur administrative costs of $54,000 over 18 years. The funds, which Prioletta said would be used to audit and remit the increased tax revenue to the developers, represent a cost in excess of 10 percent of the amount granted to the development. She agreed with Bauman’s assessment that the Redevelopment Authority of the City of Milwaukee relies on the administrative fees to fund its operations.
In response to a question from Ald. Milele A. Coggs, Prioletta also confirmed that the 43 units would be counted in Mayor Tom Barrett‘s pledge to develop or preserve 10,000 affordable units over 10 years. The city will need to drastically ramp up activity to meet the goal.
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