Jeramey Jannene
Eyes on Milwaukee

Affordable Apartment Project Near Downtown Gets Three-Month Extension

Haywood Group needs to finalize project financing by end of the year.

By - Sep 16th, 2022 12:28 pm
City Place Two. Rendering by Engberg Anderson Architects.

City Place Two. Rendering by Engberg Anderson Architects.

Haywood Group is being given an additional three months to assemble financing for the second phase of its City Place development located just north of Deer District and Westown. It’s just the latest extension for one of several affordable housing developments in the city that have struggled to close financing gaps.

Haywood and Thirty Six Blocks are pursuing a four-story, 38-unit apartment building at the intersection of N. 6th St. and W. Walnut St. City Place Two would include 32 two-bedroom units set aside at below-market rates for individuals making less than 60% of the area median income and six three-bedroom townhomes available at market rates.

The 18,152-square-foot parcel, 1728 N. 6th St., is owned by the Redevelopment Authority of the City of Milwaukee (RACM). On Thursday, the authority’s board granted the development team a three-month extension to close on the $20,000 purchase, extending the deadline to the end of the year.

“As you may have heard with many other projects across the city with tax credits and other sources there have been delays in getting the whole funding stream organized,” said Department of City Development real estate specialist Yves LaPierre in briefing the board.

Thirty Six Blocks secured $5.7 million in low-income housing tax credits from the Wisconsin Housing and Economic Development Authority in April 2020 to finance the new building. The federal credits are sold to institutional investors to raise equity for the project in exchange for renting the units at below-market rates.

In February 2021, the development team was optimistic it could get the second phase off the ground shortly. “The plan is that construction would start in May or June of this year and be completed in June of 2022,” said Robin Reese, executive director of nonprofit Thirty Six Blocks to the RACM board on Feb. 18, 2021. But construction costs spiked and Reese has since relocated to North Carolina.

Given the inaction following the February 2021 RACM approval, the Common Council extended the closing deadline. At DCD’s request in April 2022, it extended the closing deadline to June 30 with one three-month extension available at a $2,500 cost. That option was exercised, but another extension is still necessary.

LaPierre said the City Place issues are similar to those other developers are experiencing. The primary issue is that construction costs have risen, but the credits are for a fixed amount.

Governor Tony Evers awarded the project $2 million in July from the state’s American Rescue Plan Act grant to address the gap. It was one of 10 Milwaukee and 22 statewide affordable housing projects to receive a funding boost.

Developer Kalan Haywood, with his firm then known as Vangaurd Group, completed the first phase, the 51-unit City Place Apartments, in 2018 with partner Cardinal Capital Management and Thirty Six Blocks.

A third phase of the development would be located on the northeast corner of the block. Haywood intended the second and third phases to be market-rate buildings when they were approved in 2017, but the market reportedly does not currently support that. The sequencing of the later phases was also reversed.

Prior to City Place, almost the entire block had been vacant since the 1990s following a failed urban renewal effort that started several decades earlier.

Photos and Rendering

If you think stories like this are important, become a member of Urban Milwaukee and help support real, independent journalism. Plus you get some cool added benefits.

Leave a Reply

You must be an Urban Milwaukee member to leave a comment. Membership, which includes a host of perks, including an ad-free website, tickets to marquee events like Summerfest, the Wisconsin State Fair and the Florentine Opera, a better photo browser and access to members-only, behind-the-scenes tours, starts at $9/month. Learn more.

Join now and cancel anytime.

If you are an existing member, sign-in to leave a comment.

Have questions? Need to report an error? Contact Us