Committee Okays City Funds for Convent Project
School Sisters of St. Francis transforming south-side home into 63 apartments.
A Common Council committee unanimously endorsed a $720,000 city-financing plan Tuesday to advance an affordable, senior housing development on Milwaukee’s South Side.
The city would effectively provide a property tax rebate via a developer-financed tax incremental financing (TIF) district to support the redevelopment of the St. Joseph Center, formerly a convent, into 63 units of affordable housing known as Chapel Gardens.
The first project is known as the Maria Linden apartments and includes 72 units for those ages 62 and older. It uses the address of 2735 W. Greenfield Ave. and includes a mix of new construction and the adaptive reuse of the north portion of the convent building. It opened in 2013.
The new $16.1 million phase targets the middle of the convent building, the oldest portion of which dates back to 1890. A total of 59 units in the main building, all one and two bedrooms, will be set aside for seniors and four three-bedroom units will be developed in an existing, smaller building to the west known as the St. Jude building.
“Their intent is that this would be an asset to the community, not just for sisters,” said General Capital’s Sig Strautmanis to members of the Zoning, Neighborhoods & Development Committee. The low-income housing tax credits used to finance require the apartments be made available to qualifying members of the public.
The project supports the mission of the organization while providing financial stability. The organization has long been engaged with the surrounding neighborhood, including helping to create the the neighborhood-focused VIA CDC (formerly Layton Boulevard West Neighbors).
“The sisters take their role in this neighborhood very seriously,” said Strautmanis. He said a series of neighborhood meetings were held to answer questions and address concerns.
Included in the project are a community gathering space, library, business center and fitness center for residents. Direct access will also be maintained to the St. Joseph Chapel.
The TIF district will direct incremental property tax revenue of up to $720,000 plus 4.75% interest generated by the property back to the partners through 2041. The city is increasingly using the financing structure, which places the risk on the developer, to plug affordable housing financing gaps.
How does a tax-exempt religious building generate any property tax revenue? A taxable condominium unit would be created consisting of a portion of the Herman Schnetzky-designed convent building and the adjacent St. Jude building. It would be the only property in the TIF district. If project costs are less than the estimated $16,156,000, the amount of the grant would be reduced by 50% of the cost savings.
A city comptroller’s report estimates that, based on the expected assessed value of the development, the project may take the entire 20-year window to recover the costs and could fall short of collecting the full amount by the time the window closes. Comptroller Aycha Sawa noted there is no financial risk to the city should it fall short. Apartment buildings are assessed based on the income they produce, with affordable housing developments with below-market rates yielding lower assessed values than their construction costs and subsequently generating less property tax revenue.
The financing plan is sponsored by area Alderwoman JoCasta Zamarripa and zoning committee chair, Alderman Jose G. Perez. The committee didn’t debate the file after hearing a presentation from Department of City Development affordable housing specialist Maria Prioletta and Strautmanis.
The low-income housing tax credits, $6.5 million, are the largest equity source for the project. The project is receiving state and federal credits over a period of 10 years. The credits are often sold to institutional investors for a slight discount. Projects using the credits must be maintained at below-market rates for a period of at least 30 years. The development team secured the competitively awarded credits in April 2020. The project is also slated to receive $4.5 million via historic preservation tax credits from the state and federal government.
The TIF agreement requires the project to be completed by December 2022.
The sisters, also with General Capital’s assistance, redeveloped the former Sacred Heart Sanitarium at the southwest corner of the block into housing for the order, including the six-story Alexia Tower with 46 units and one-floor Clara Court with 31 units. That project was completed in 2015.
The full council is expected to vote on the district’s creation, the city’s 107th TIF deal, on February 9th. The board of the Redevelopment Authority of the City of Milwaukee previously endorsed the plan.