Council Members, DCD and Citizens Panel At Odds Over Affordable Housing

The record infusion of money into a 16-year-old affordable housing program is causing unexpected issues at City Hall.

“For the first time in history the Housing Trust Fund is dealing with real money,” said Alderman Robert Bauman on Tuesday to the Zoning, Neighborhoods & Development Committee, referring to federal pandemic funding to the city that can be used for affordable housing. “And as a result there are real issues that have come up that didn’t come up in the past.”

A citizen-led technical review committee for the Housing Trust Fund recommended using a $10 million infusion to partially fund a number of affordable housing proposals. However, the projects they selected left out two that the Department of City Development has plans for: DCD has created tax incremental financing (TIF) subsidies for the two projects with the assumption they would also get a grant from the Housing Trust Fund.

The Common Council now finds itself with a mess, with perhaps too many projects to fund. There are a series of DCD-backed projects that developers say now aren’t ready for construction, a handful of Housing Trust Fund-backed projects that officials with the fund’s administrator, the city’s Community Development Grants Administration (CGDA), warned will lose their largest funding source at the end of the year if the trust fund isn’t used to plug a funding gap and yet another batch of Housing Trust Fund projects that still need to secure an additional funding source even if they get the trust funds.

As a result, the zoning committee put the Housing Trust Fund’s recommendations on hold.

Bauman said the proposed allocation would literally halt multiple projects, including the Concordia 27 development in his district for which construction has already started. It would significantly imperil two other developments, Five Points Lofts and the Edison Middle School redevelopment, for which DCD is recommending tax incremental financing (TIF) subsidies that would operate in tandem with a trust fund grant.

Ted Matkom of Gorman & Co., the developer of the Edison Middle School project, said that construction would start before the end of January if the $965,000 grant from the trust fund was awarded. Instead, Matkom and co-developer Malik Cupid are left to pursue an additional funding source, likely a loan, and have an unknown start date. The zoning committee voted to grant the school redevelopment a $875,000 subsidy via a single-purpose TIF district, but the development team can’t close on that loan until they fill the trust-fund-related funding gap.

Bauman said the lack of coordination between the citizen-led technical review committee, CDGA and DCD was a big issue. “We need coordination,” said Bauman. “There is perhaps overarching priorities that the technical committee isn’t aware of.”

“We agree. We have got to do a better job of communicating,” said DCD’s affordable housing specialist Maria Prioletta later in the meeting when the committee considered the TIF proposals. She said DCD wasn’t advocating taking money from one project and giving it to another, but there are now issues and, if things move forward as is, additional resources will need to be found. The proposed TIF districts are already at the maximum subsidy DCD thinks they can provide.

Bauman questioned the technical review committee’s actions.

“Did they adequately consider the reality of shovel-ready projects?” asked Bauman. He also raised concern that committee members had to recuse themselves from voting on portions of the recommendation because they had connections to the projects. “They may have recused themselves from the voting, but they did not recuse themselves from the evaluation of grants.”

“I think there was consideration of all the items you brought up,” said Mario Higgins, CDGA associate director. He said all of the projects slated to receive funding were shovel-ready. “Certainly, there were projects that were ready to go that did not receive funding.”

Bauman wasn’t the only one with concerns.

Alderwomen Marina Dimitrijevic and JoCasta Zamarripa said they didn’t see projects on the city’s South Side. “There is very little work or investment being proposed here for the near South Side and I find that very problematic,” said Zamarripa. The lone southside project is a $100,000 allocation to the United Community Center for homebuying counseling. “You shortchanged the south side.”

“That’s ridiculous. We didn’t shortchange anybody,” said Ald. Michael Murphy, the trust fund’s creator and its chair, though not a member of the technical review committee. He noted the lack of southside applications. The only large development on the southside was Bear Development‘s Bay View proposal. “I can’t force people to apply for money.” But Zamarripa and others took issue with the application window, which ran from late July to early August.

Murphy also defended the perceived conflicts of interest. He said only Dorothy York of Acts Housing, which would receive $1.25 million for its acquisition fund, could be plausibly considered an issue.

“There is a real issue here and I see both sides of it,” said Ald. Scott Spiker.

“We need coordination,” said Bauman. “Once the money is out the door, it’s out the door.”

He moved to hold the measure approving the Housing Trust Fund’s recommendations, drawing the support of Dimitrijevic and Ald. Russell W. Stamper, II. Spiker and Murphy voted against the hold. Zamarripa isn’t on the committee.

“We had one opportunity to get this right, and I don’t think we’re getting this right,” said Bauman. The city allocated $10 million to the fund in 2021 from its $394.2 million American Rescue Plan Act (ARPA) grant, and no extra money remains as virtually all of the remaining money is expected to go to plug budget holes. Bauman and Zamarripa led the allocation to the trust fund through the council’s omnibus allocation.

“If the intent was using ARPA dollars to pick and choose projects of council members, then that’s what we should have done,” said Murphy. He cited the program’s past successes, including providing part of the funding to restore Old Main at Soldiers’ Home for homeless veterans. Only a single applicant applied for housing for the homeless in the latest funding round.

Bauman said he would support going back to the drawing board. “If we set up a Housing Trust Fund to primarily deal with homelessness and no one applies for homeless I would say ‘ope, stop the presses.'” He cited the lack of an application from the Veterans Community Project for its long-planned tiny homes community for homeless veterans.

Higgins and CDGA director Steve Mahan warned the committee that failure to act by the end of 2022 could jeopardize some of the projects that were to get funding, as it could cause their other funding sources to expire.

“I don’t see where this process, that has been in place for 16 years, is compromised because it has additional dollars,” said Mahan.

The council must now decide what to do. It could take a wide variety of actions, but council members didn’t indicate they had a clear sense of exactly what option would be pursued.

And while the council’s concerns are in large part about what proposals are not included for funding, a number of those that are would fill final gaps in long-planned projects. That includes Martin Luther King Library redevelopment ($1.5 million), the Riverwest Workforce Apartments and Food Accelerator ($1 million) and EIGHTEEN87 on Water ($783,765). The library project is a rare case of things going according to plan: both DCD and the technical review committee moved to provide funding to the project.

A detailed list of the proposed allocations and applicants is available on Urban Milwaukee. Coverage of the recommendations is available in our Nov. 30 article “City To Fund 12 Affordable Housing Projects.”