$7.5 Million Grant Will Help Create 5,000 New Minority Homeowners

A coalition of groups working to reduce racial disparities in homeownership in Milwaukee received a major boost Wednesday when Wells Fargo awarded a $7.5 million grant to back the generational effort.

The Community Development Alliance, a newly-formed organization focused on addressing Milwaukee’s housing issues, is allocating $2 million of the grant to Acts Housing‘s new acquisition fund. The fund is intended to preserve or create affordable housing by purchasing batches of properties and reselling homes to targeted owner-occupants instead of watching out-of-state investors build local portfolios.

The fund was one of several strategies identified in CDA’s initial planning and analysis effort, which was also backed in part by Wells Fargo. The study found the need to create 32,000 new Black and Latino homeowners over 30 years to address racial disparities.

”That plan has over 20 strategies in it but we’ve all know that you can’t do 20 things at once,” said CDA head Teig Whaley-Smith at an event announcing the grant.

The alliance is focusing on three strategies: the acquisition fund, building new, affordable starter homes on the 3,000 vacant, city-owned lots that dot Milwaukee and expanding homebuying counseling programs.

Based on U.S. Census data, Milwaukee has the second-lowest Black homeownership rate of major cities. A reported 56% of white households own their homes, but Latino homeownership is 38% and Black homeownership is only 27%.

The CDA, Acts and its partners will use $3 million of the grant to expand homebuyer counseling and downpayment assistance programs. The programs are intended to eventually serve 1,000 families per year through a strategy of expanding capacity by 10% annually. That includes programs run by the Social Development Commission, United Community Center and Housing Resources, Inc.

“It’s now that we change that system,” said Whaley-Smith. “That’s not going to happen overnight. These problems are centuries in the making.”

“Helping more people have an equitable pathway to homeownership is a priority for Wells Fargo,” said Otis Rolley, head of Social Impact for Wells Fargo and president of the Wells Fargo Foundation, in a statement. “Deliberate action and attention are needed to improve homeownership opportunities for people of color, and our grant is intended to mobilize collaboration across the city. The Milwaukee organizations funded by this grant have deep expertise that will benefit thousands of families.”

“This is momentous,” said Mayor Cavalier Johnson. “Growing up in Milwaukee I experienced the impacts of housing insecurity like many families currently are.” He said moving caused him to go to six different elementary schools in the city.

“This is what partnership and collaboration look like,” said County Executive David Crowley, who detailed his own challenges with housing growing up.

The remainder of the funding will go to addressing other housing needs as they arise, including developing new houses.

Milwaukee is one of eight cities to receive a grant from the bank’s $60 million Wealth Opportunity Through Homeownership (WORTH) program.

The announcement was made Wednesday afternoon at the start of Acts’ annual Neighborhood Table fundraiser. The event was held at The MECCA Sports Bar and Grill and in the adjacent plaza at Deer District.

Acquisition Fund

The Acts Homeownership Acquisition Fund is a first-of-its-kind effort for Milwaukee to address an influx of private-equity-backed real estate investors.

“Annually, there are hundreds of families with [low-to-moderate incomes] 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 president and CEO Michael Gosman in a June press release announcing the effort. “That because predatory, out-of-state investors have purchased massive quantities of single-family homes to use as long-term and often poorly maintained rentals.”

The fund has a goal of purchasing 100 units per year, with $10 million for acquisitions and $1 million for administration. It was announced in August as having $3 million in hand, $1 million from the Zilber Family Foundation and $2 million in “other contributions.” Those other contributions were revealed Wednesday to be Wells Fargo’s grant.

Whaley-Smith said other efforts are advancing. As Urban Milwaukee reported Tuesday, Milwaukee County is poised to allocate $2.6 million directly to the fund from its American Rescue Plan Act (ARPA) allocation. A request was also submitted to the city’s ARPA-backed Housing Trust Fund for $2.5 million. Initial funding allocations from the trust fund are expected to be announced in the coming weeks.

The organization hopes to create an inventory of homes with prices between $90,000 to $140,000 and resulting monthly housing costs of $900 to $1,200. The intended goal is to create homeownership opportunities for individuals making less than $25 per hour.

Vacant Lot Development

One strategy that the CDA is working to ramp up is the development of entry-level homes on vacant, city-owned lots.

The strategy includes both supporting Milwaukee Habitat for Humanity in maximizing its capacity to develop 40 to 50 homes per year as well as finding creative ways to develop an additional 50 homes per year.

The CDA and LISC Milwaukee secured a $5 million grant from the Wisconsin Department of Workforce Development via the state’s ARPA allocation to focus on homeownership for early childhood educators. It would create 50 homes. A request for proposals is expected to be issued to advance that work said Whaley-Smith. Graduates of the Associates in Commercial Real Estate program would develop the homes.

In partnership with Milwaukee County, the CDA also has an additional $6 million in ARPA funding to build 120 homes in the neighborhood around King Park

“We have 17,000 Black and Latino families aspiring to buy homes for $125,000 or less and there’s only 1,500 on the market each year with 40% bought by investors,” said Whaley-Smith in an interview. “We need the acquisition fund to make sure that 40% aren’t going to investors and we also need to increase the overall inventory.”