Riverwest Affordable Housing Development To Get City Subsidy

Riverwest Workforce Apartments and Food Accelerator. Rendering by Engberg Anderson Architects.

The City of Milwaukee would chip in $1.25 million to get a $30.4 million affordable housing development moving forward.

The Riverwest Workforce Apartments and Food Accelerator is a proposed 91-unit apartment with a first-floor commercial kitchen planned for a vacant lot at the intersection of E. North Avenue and N. Commerce Street.

In addition to enabling the long-planned apartment building to move forward, the city’s selected financing mechanism would trigger a host of contracting requirements requiring the use of small businesses and city residents and enable the neighborhood-preference anti-displacement policy.

The proposal received a unanimous endorsement Thursday from the board of the Redevelopment Authority of the City of Milwaukee (RACM).

The city would create a $1.25 million developer-financed tax incremental financing (TIF) district, effectively a property tax rebate. The development team, made up of KG Development and General Capital Group, would receive the funding from increased property tax revenue generated by the development over a period of no more than 20 years. The structure, now regularly used by the city to support affordable housing, transfers the financial risk to the developer.

The building would have a mix of one, two and three-bedroom apartments. It would use the slope of the site to appear as a four-story building from the street, but rise five stories in the back. Parking would be included in the base of the building.

The core of the project’s financing is competitively-awarded low-income housing tax credits.

Through the tax credit program, units would have rents structured not to exceed 30% of household incomes. Specific units would be set aside for those making less than 30%, 40%, 50% and 60% of the Milwaukee County median income with rental prices ranging from $495 to $1,750 per month. Eight of the units would be rented at market rates.

Nineteen of the affordable units would be set aside for those needing supportive services. Eleven would be set aside for military veterans.

“It’s been a long road to get here, but we’re really excited to be working with Anthony [Kazee] on this project,” said General Capital partner Sig Strautmanis on Thursday.

From a pool of six bidders, the partners won a city-issued request for proposals in 2020 to purchase the vacant lot at 1136-1146 E. North Ave. But after securing the housing tax credits in 2021, it was one of several affordable housing developments placed into financing limbo by rising construction costs.

Kazee, partner at KG Development, said the partners have looked under rocks and knocked on doors to find financing to advance the project.

According to the TIF district, the project’s financing stack includes $14.48 million in low-income housing tax credits, a $7.1 million mortgage from the Wisconsin Housing and Economic Development Authority (WHEDA), $3 million in American Rescue Plan Act funding from the state and WHEDA, the $1.25 million TIF subsidy, $1.1 million as a deferred development fee, $1 million from the city’s Housing Trust Fund, $265,000 from solar energy tax credits and a $185,000 site work grant.

“I’m thrilled about this project,” said area Alderman Jonathan Brostoff. He said it would provide welcome affordable housing along the revitalizing North Avenue corridor.

The Milwaukee Metropolitan Sewerage District is providing a grant intended to retain stormwater on site, avoiding surges into the Deep Tunnel site. “We are hoping to be able to maintain up to 100,000 gallons on site,” said Strautmanis. The solar credits would fund a rooftop solar installation.

The food accelerator component would include a full commercial kitchen, configured for use for cooking classes, startup businesses or residents. Stratumanis said the desire is to have it be “front and center” in the development. The food accelerator, said the developer, is being designed to be “additive” to the neighborhood, not replacing any of the other food groups already operating in the neighborhood.

The project is the fourth to be subject to the 2019 anti-displacement policy which requires that 20% of any affordable units in any development in targeted ZIP codes that receive city financial assistance be set aside for at least 30 days for priority leasing by neighborhood residents.

“I think in this location, it will be particularly meaningful,” said Department of City Development housing specialist Maria Prioletta.

Engberg Anderson Architects is working on the building’s design. General Capital’s Bedrock Construction would serve as the general contractor, with Catalyst Construction serving in a construction management role.

The new building would be across N. Commerce St. from the UW-Milwaukee RiverView Hall residence complex.

Under a previously approved land sale, the development team was to pay $750,000 for the 1.34-acre city-owned parcel at the center of the site. A triangular parcel, 1164 E. North Ave., located to the east and a small lot to the west, 1132 E. North Ave., would be purchased from ReadCo to form the rest of the site.

Strautmanis said the development team is working with DCD on final design revisions to the building.

In 2012 developer Todd Davies proposed a 122-unit, five-story building on the site. Davies secured a zoning change but never moved forward to construction.

The site was used as a Department of Public Works sanitation services yard, but that facility was shuttered in 1991.

The two development partners each have several other projects underway in the city. General Capital is a partner on the Martin Luther King Library redevelopment. Kazee just won a RFP to redevelop a city-owned lot on King Drive and is expected to begin construction shortly on another King Drive development, the Five Points Lofts.

The Common Council must still approve the TIF agreement.

Renderings

Earlier Renderings and Site Plan

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Site Photos and 2012 Project Renderings

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