King Park Housing Project Loses Out On Affordable Tax Credits

New houses rise along W. Harmon St. in Josey Heights. Photo by Jeramey Jannene.

One piece of a major homeownership project in King Park has been slowed after the development team lost out on affordable housing tax credits.

In 2022, the county allocated $6.5 million in funding from the American Rescue Plan Act (ARPA) toward the development of 120 single-family homes on scattered vacant lots throughout the neighborhood. At the helm of the project is the Community Development Alliance (CDA).

The plan calls for three-bedroom homes that can be sold for $110,000 or less. The public funds will help close the gap between building costs and the affordable purchase price. James Mathy, Housing Division director, previously told Urban Milwaukee, “Without ARPA funds, you wouldn’t be able to make these affordable.”

Habitat for Humanity was selected to build 80 new single-family homes, and Emem Group to build 20 new duplexes. Emem was planning to use low-income housing tax credits (LIHTC) to fund its part of project, but was not awarded any credits in the latest round by the Wisconsin Housing and Economic Development Authority (WHEDA). The state agency distributes both federal and state credits, which are then sold to finance housing in exchange for making specific units aside available at affordable rates to lower-income households.

Teig Whaley-Smith, CDA chief executive, told Urban Milwaukee the 80 Habitat homes are fully funded with the permitting process underway. Losing the LIHTC for the 20 Emem duplexes, though, will affect the timeline for that portion of the project.

“It’ll adjust the timeline, but ultimately, we believe we have a path forward,” he said.

It’s unlikely that construction will begin on the Emem homes until they close the financing gap, which amounts to approximately 20% of the project cost, he said.

Whaley-Smith noted that developers can only apply for competitively-awarded larger tax credits once a year. But applications for smaller 4% federal tax credits can be entered at any time. And the federal credits, he said, are non-competitive. “So you’re kind of guaranteed that as long as you structure the project accordingly,” he said.

The tax-credit-financed homes would be rented for 15 years at below-market rates before they ar

The King Park project is the first “project of scale” directly targeting homeownership sponsored by the county, Mathy previously said. The homeownership gap between white and Black Milwaukeeans is among the worst in the nation when compared to peer cities, according to a report by the Wisconsin Policy Forum. In order to close the gap, Milwaukee needs 32,000 new Black and Latino homeowners over the next 30 years, according to a 2021 CDA report.

In 2022, the county allocated more than $20 million, much of it federal ARPA funds, toward affordable housing. Along with the funding for King Park, it included funds for suburban affordable housing projects and rehabilitation of tax-foreclosed properties.

County Executive David Crowley has repeatedly said that housing is a critical piece of his administration’s goal to eliminate racial health inequity in Milwaukee County. “The foundation of housing is one of the main social determinants of health, and there still remains a large gap as relates to homeownership for African-Americans throughout Milwaukee.”

Whaley-Smith said that the city’s Fond du Lac and North Area Plan, developed with community input, specifically called for increased homeownership.

“And there will be bumps up and down the road,” Whaley-Smith said. “But we are committed to executing that resident vision of homeownership in these neighborhoods, and the [CDA] is here to be an accomplice to help get that done.