Tentative Deal Would Salvage Milwaukee’s Deconstruction Program

A crew member from Spencer Renovation & Construction demonstrates deconstruction work in 2019. Photo by Jeramey Jannene.

After a dizzying amount of false starts, the City of Milwaukee’s deconstruction program could finally get moving.

A deal with Northcott Neighborhood House to deconstruct 15 houses in a targeted area and build replacements would be seeded with the remaining $711,000 from a 2019 allocation.

But getting to even a tentative agreement has taken hours of committee meetings, failed contractors and plenty of finger-pointing.

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.

But the Department of Neighborhood Services (DNS) for years has cited obstacles in hiring contractors to do the work even after the council allocated $1.2 million for the idea. 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.

DHS has cited city contracting requirements, including bonding, Small Business Enterprise (SBE) certification and Residents Preference Program hiring of unemployed or underemployed city residents, as stumbling blocks.

Alderman Robert Bauman, the concept’s chief proponent at City Hall, introduced legislation to reduce or modify many of the requirements in recent weeks.

“The goal here is not to save every vacant building in the city. The goal here is to determine what is the most practical and beneficial way of removing those buildings,” said the alderman on Tuesday when the Zoning, Neighborhoods & Development Committee discussed his proposal.

His proposal would allow Northcott, a nonprofit that works with individuals leaving incarceration, to meet city contracting requirements without becoming a for-profit company. It would also allow Recyclean, a Kenosha-based firm that has performed many private deconstruction jobs in Milwaukee, and other firms to receive a waiver on various city contracting requirements.

“We have willing contractors capable of doing the work, capable of linking up with [Northcott] Neighborhood House to employ Black and Brown individuals, often who lack training, who need jobs, often ex-offenders. What better process could we embark on? What greater public good could we be achieving? Environmental, employment, equity in the community, job training. Would it cost a little more? Perhaps, but it’s an investment well made,” said Bauman.

The alderman continued to insist that DNS doesn’t want the program. “I know there is huge resistance to this. No one wants to pursue this goal.”

Officials with DNS, including Commissioner Erica Roberts, said that wasn’t the case and that Bauman’s proposal would help.

But then, the proposal appeared to fall apart at the committee room table.

Department of Public Works (DPW) Commissioner Jerrel Kruschke said Mayor Cavalier Johnson‘s proposal to add an in-house demolition to DPW as part of a $3 million blight elimination plan couldn’t reasonably be pivoted to serving as a deconstruction arm of the city. “It’s not that it’s un-doable from the Department of Public Works. We just have never done it,” he said, noting the per-house time would shift from 2.5 days to three weeks. He suspected only 15 homes could be deconstructed in 2024.

Chief Equity Officer Bernadette Karanja said she “100%” supported the goals of deconstruction, but was concerned that waving the contracting requirements was “unprecedented” nationwide and could open a “Pandora’s box” that unravels the equity-focused programs. She suggested Northcott form a for-profit joint venture.

“Okay, that’s it. I lost,” said Bauman after council members, including chair Michael Murphy, began expressing pessimism.

But then Ald. Russell W. Stamper, II requested the conversation continue and suggested there was a solution.

“We would like to deconstruct 15 units and build 15 units in their place. We don’t want to create more vacant lots,” said Northcott Executive Director Tony Kearney, Sr. Northcott would also like the target houses to be in a cluster to maximize the impact. “We have been doing this stuff for 22 years… I believe this is doable and creates value.”

“I love the component of putting a house back on that space,” said Alderwoman Milele A. Coggs, who with Stamper has one of the greatest impacted districts.

“I think this is a great idea,” said Roberts, the DNS commissioner.

“We all supported deconstruction. We are just dealing with neighborhoods that are so inundated with these properties that are taking forever to come down. And we don’t want to abandon deconstruction, but we are recognizing the challenges that DNS has faced,” said Coggs.

But there is a new legal challenge the Northcott agreement could run into it. The $711,000 DNS reports remaining from the $1.2 million is scheduled to lapse to the city’s tax stabilization fund because it has been unspent for three years.

The return of unspent capital funds to the stabilization fund is a matter of state law said budget director Nik Kovac. But he said he wasn’t immediately aware of the funding and it wasn’t included into the 2024 budget plan. Coggs suggested the council would need to move to encumber the funding by the end of the current year.

The committee held off any formal action on Bauman’s proposed legislation to allow an agreement with Northcott to be worked out.

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Related Legislation: File 230906