City Providing Cleanup Loan To Redevelop Edison School

The Redevelopment Authority of the City of Milwaukee will use its brownfield cleanup loan fund to support the redevelopment of a former school into 75 affordable apartments. It’s the fourth piece of city funding going into the $27.6 million project.

The board unanimously voted Thursday to provide Gorman & Co. with an up-to-$1.13 million loan for cleanup work associated with the Edison School project, 5372 N. 37th St., in the Old North Milwaukee neighborhood. The funds will be paired with a $965,000 grant from the city’s Housing Trust Fund, a grant of $750,000 from the city’s allocation of HOME affordable housing funds and $875,000 from a tax incremental financing (TIF) district that will effectively rebate increased property tax revenue from the development.

Gorman, with partner Malik Cupid, would redevelop the school building into 63 apartments set aside at below-market rates for individuals at least 55 years old. Twelve three-bedroom townhouses would be constructed on the 3.5-acre property. Fifteen of the units would be reserved for individuals experiencing homelessness, with financing provided by the Milwaukee Continuum of Care.

Developer Ted Matkom, Gorman’s Wisconsin market president, told a council committee last week that his firm hopes to begin construction work by the end of January. The brownfield loan will be used to close a financing gap.

“The vast majority of our loan would be issued on a reimbursement basis,” said RACM senior environmental project engineer Tory Kress in briefing the board on the proposal. It would go towards lead paint and asbestos cleanup as well as cleanup costs associated with an above-ground storage tank.

The loan has a 17-year term at a 3.05% interest rate. Gorman’s annual repayments must match the deferred developer fee the development team is paid, with a balloon payment due at the end of the loan.

“It’s a little bit longer term than we would normally do, but we think this is an important project,” said RACM assistant director Dave Misky. The length of the loan is designed to run alongside the life of the low-income housing tax credits.

Misky said even after the TIF district was approved, the project still had a financing gap due to rising costs and interest rate increases.

The building was constructed in 1924 as the Village of North Milwaukee’s high school. After annexation, it was reconfigured to house Milwaukee Public Schools‘ original Custer High School and finally Edison Middle School. It’s been vacant since 2008.

According to the TIF district proposal, the project’s financing package relies on $10.6 million in housing tax credits, $6.3 million in historic preservation tax credits, $3 million in state ARPA funding, $2.5 million in mortgage financing, $965,000 in applied-for funding from the city’s ARPA-backed Housing Trust Fund, a $900,000 grant from the Federal Home Loan Bank, $875,000 in TIF support, $884,000 in developer financing, $750,000 in city-managed federal HOME funds and $707,000 from a deferred developer fee.

Lutheran Social Services of Wisconsin and Upper Michigan will use an office in the building to connect residents, both from the building and neighborhood, to service providers. Matkom said such a proposal helps improve the project’s scoring to receive the competitively awarded housing tax credits.

“What we really love about this community is that there are a lot of homeowners around us,” said Matkom in November.

Cupid is an assistant principal with Milwaukee Public Schools, but graduated from the Associates in Commercial Real Estate (ACRE) program designed to train women and minorities for careers in real estate. “I have learned so much and I am looking forward to doing my part to serve my community at all levels,” he told the RACM board in November.

Gorman has led the redevelopment of a number of former schools in Milwaukee.

For more on the proposal, see our March 2022 coverage.

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