Amendment Would Shift Money From Demolishing Homes To Fixing Them

Demolition of a city-owned home at 3347 N. 26th St. Photo by Jeramey Jannene.

A budget amendment would strip some of the $3.3 million Mayor Cavalier Johnson proposes to spend on demolishing 180 homes in favor of providing it to individuals to buy and repair city-owned homes.

The proposal, expected to be introduced by Alderman Robert Bauman, was first revealed at Monday’s Capital Improvements Committee.

“There is this rush to demolish and I think it is extremely unwise in most cases,” said Bauman of Johnson’s “Raze and Revive” strategy. “We brag about raze and revive, except there is no reviving that I can see.”

Bauman indicated he would request $150,000 be reallocated to the Housing Infrastructure Preservation Fund. The fund is used to provide forgivable loans to buyers of city-owned homes in need of substantial renovation.

The fund, created in 2009, has been used on approximately 50 homes, at an average cost of approximately $70,000.

“The combined tax base of all of those properties is about $6 million and our investment is about $3 million. When you consider the fact that many of those properties would have had a tax base of zero, I think that’s a program that deserves some budget to deal with particular properties that come up that have needs and present unique circumstances,” said Bauman.

The alderman cited the successful sale and repair of a fire-damaged, city-owned home at 3405 W. St. Paul Ave by now-former Hunger Task Force CEO Sherrie Tussler, who got sick of looking at the house on her block.

“For our $25,000 investment we went from a $0 assessed value to $150,000 assessed value,” said Bauman. The city gave Tussler the house plus $25,000, said Bauman, because $25,000 is the average cost to demolish a house. Tussler sold it for $155,000, but it’s now assessed for $175,800.

Budget director Nik Kovac said by razing 180 houses per year, the city is on track to eliminate its backlog of raze candidates by 2037. “Right now there is a 360-unit backlog,” he said. Approximately 150 properties are issued condemnation orders annually.

But Bauman noted that the city grades each of the publicly and privately owned candidates, and many that are rated “medium” and below are candidates for rehabilitation.

“What’s the revive side of this equation?” asked Bauman of the city’s budget staff. He said the strategy yields vacant lots with “little to no prospect” of a new home being built.

He said groups like Milwaukee Habitat for Humanity were building new homes, but noted they aren’t replacing homes at the rate of demolition. Over several years, the organization is building 80 homes in Harambee and another 80 homes in the area west of King Park. It plans to build 32 homes in 2024. The city is providing some funding for the latter effort.

The Community Development Alliance is using one-time federal funding, allocated by the city, county and state, on several projects, including the construction of 45 homes for early childhood educators.

There is also the city’s signature effort. Bauman led the adoption of the council’s Homes MKE initiative, which allocated $15 million in federal funding to sell and repair 150 city-owned homes, in late 2021. But that program is a one-time, multi-year effort.

There are more homes on the raze list, both publicly and privately owned, being restored than in prior years. Property owners subject to condemnation orders enter into restoration agreements with the Department of Neighborhood Services (DNS).

“We have 39 currently, which is really good, because last year we had 12 at this point,” said DNS supervisor Chris Kraco to the Joint Committee on Redevelopment of Abandoned and Foreclosed Homes on Sept. 23. “There is an increase in what’s getting restored out there.”

Department of City Development deputy commissioner Vanessa Koster said that was happening in part of an increased focus on looking at raze list properties that were on the same block of houses getting fixed up as part of Homes MKE.

A new webpage that maps raze list, publicly-owned properties has resulted in four sales and two more are in the works said Koster. “That’s been very successful coordinating and working amongst city departments,” she said.

Deputy Treasurer Jim Klajbor said part of the driver is likely increasing home prices, making restoration projects feasible.

“Definitely. The numbers haven’t been this high since 2010,” said Kraco.

But even with the different efforts, there are still more new vacant lots being created than there are new homes.

“You are basically liquidating your city’s housing stock if you keep up that rate of demolition versus new construction,” said Bauman on Monday.

If his amendment, to be considered by the Finance & Personnel Committee on Oct. 31, is successful, it would be the only money for the preservation fund.

There is no money currently included in the 2025 budget for the program, said Kovac, because the DCD did not request any.

Deconstruction Inching Forward

Bauman’s advocacy for reducing the demolition of homes also extends to how homes are razed.

Deconstruction, rather than demolition, would involve taking houses apart instead of knocking them down. But DNS has never been able to get the program to work and approximately $700,000 remains unspent in a dedicated fund.

A new request for proposals aims to try again on the program.

First proposed in 2018, the initial deconstruction plan called for the city to prime the marketplace by deconstructing its own homes piece by piece, instead of demolishing them. Private owners razing their properties would also be required to deconstruct homes built before 1930. The vision called for more jobs to be created versus mechanical demolition while also swapping the cost of landfill tipping with a new revenue stream from selling salvaged lumber and other materials.

The first contractor started with great fanfare, then was terminated, and ultimately sued for nonperformance. The second spent months with paperwork delays, then took more than a year to complete a 10-home contract. Additional contracts were opened for bid in two consecutive years, but the winning firms didn’t finalize the contract in either case. In 2023, no bid was opened.

Many of the concerns have related to hiring requirements imposed as part of the contracting process. Many council members have feared removed the requirements, for fear it would extend to other city projects.

A potential late 2023 deal with Northcott Neighborhood House, viewed as a potential savior to the contracting requirement issue, didn’t come to fruition.

A request for proposals to try again on deconstruction is due to close on Nov. 4. Kraco said the revised RFP seeks input from contractors to try to get the effort working.