Task Force Okays $2.5 Million for Homeownership

Milwaukee County could invest more than $2 million in a new program run by a local housing non-profit aimed at helping low-to-moderate income (LMI) residents purchase homes in the city before out-of-state investors can snap them up.

On Thursday, a task force reviewing project proposals for the county’s $183 million allocation of federal COVID-19 stimulus funding unanimously recommended providing $2.6 million to the Acts Housing Homeownership Acquisition Fund, which will attempt to stem the tide of homes being sold to out-of-state investors buying up single-family housing stock and increase homeownership rates for Black and Latino families in Milwaukee.

The initiative was announced in August with a goal of raising $11 million in government and nonprofit funding for a revolving loan fund to purchase homes and then sell them to LMI homebuyers. The plan is to use $10 million for the funds, and $1 million for operational expenses.

“Annually, there are hundreds of families with LMIs that have graduated from the Acts Housing homebuyer education program. They’re financially prepared and approved for homeownership, but they’re missing out on the most affordable homes,” said Acts Housing president and CEO Michael Gosman when the program was announced. “That is because predatory, out-of-state investors have purchased massive quantities of single-family homes to use as long-term and often poorly maintained rentals.”

Acts is seeking approximately $2.5 million each from the county and the City of Milwaukee’s ARPA allocations, as Dorothy York, Acts vice-president for real estate, told the county task force Thursday. The program has already raised $1 million from the Zilber Family Foundation and $2 million in other contributions. If the county and city approve the investments, that leaves $3 million left for the non-profit to fundraise.

“Based on the previous success of our development staff, we believe that this is an achievable goal,” York said.

The plan is to purchase 100 homes that would have otherwise been purchased by investors through off-market deals. “The model or the way we plan to acquire properties is to get between that transaction,” York said.

Acts says predatory acquisition, turning owner-occupied homes into rental units, is the primary cause of a significant decline in Black and Latino homeownership in Milwaukee. The non-profit said in its proposal there are approximately 17,000 Black and Latino families attempting to purchase a home for $125,000 or less in Milwaukee each year, but on average only 1,500 available homes are sold each year and 40% of them are purchased by investors.

The idea for the program is based on the research done by the Community Development Alliance (CDA) for its Collective Affordable Housing Plan, and CDA is also a partner in developing the acquisition fund. Teig Whaley-Smith, CDA chief alliance executive, told the task force that the real estate portfolio sales, or large sales to investors, have been increasing exponentially.

“So if you do nothing, unfortunately, we feel that that number of investor-owned properties eventually moves from 40% to 100%,” he said. “And I don’t say that to be any kind of scare tactic, but that’s the kind of exponential growth that’s happening.”