A new program that aims to get foreclosed homes back onto the tax rolls and back into being habitable has stirred up some controversy in my city of Milwaukee, WI. The city is offering 100 foreclosed homes in select low-income neighborhoods for the price of $1 each, along with rehabilitation grants of up to $10,000 per home.
But there’s one catch which many residents didn’t realize until they attended a public meeting about the program on January 9: In order to participate in the program, you have to agree to purchase five or more homes. Suddenly an opportunity that seemed almost too good to be true for neighborhood residents turned into something that was only open to a select group of people with the finances to purchase and rehab 5+ homes, plus a background in development.
Applications to the Milwaukee Employment/Renovation Initiative (MERI) through the recently released Request for Qualifications will be judged on:
Experience and capacity – Ability of entity to acquire, hold, develop, and/or own and manage scattered site, tax-foreclosed properties. Experience of the developer in renovating scattered site properties in Milwaukee neighborhoods. Qualifications of key team members responsible for the implementation of the activities.
Financial feasibility of project – Reasonableness of financial assumptions. Ability of developer to leverage additional investment to renovate properties. Evidence of preliminary financing commitments.
In other words, you need to have previous development experience and you need to have the funding to rehab at least five homes on your own dollar (the $10,000 grant is an after-the-fact reimbursement). Participants are also required to hire at least one underemployed or unemployed neighborhood resident for a minimum of 500 hours, as well as “commit to spending at least 25% of construction contract dollars with certified Small Business Enterprises.” Those aspects of the program create (temporary) jobs and support local businesses—both positive things—but the disappointment of neighbors who found out they couldn’t purchase a home for $1 got the most press from local news outlets.
A Missed Opportunity
In contrast, a couple days after the meeting, an op-ed on one local website, Urban Milwaukee, written by Bruce Murphy made the case for why the program was a success that my city should be celebrating: The funding for the MERI comes from the state and was originally going to be used only for the demolition of foreclosed homes. So, the article argues, the fact that it’s being used for home improvement is already a plus. Murphy also states that, given the employment component of the program, it makes more sense for the city to orient the MERI toward developers who have experience hiring and managing employees.
My question is, which is better for Milwaukee neighborhoods and their residents? 100 or so temporary, low-wage jobs and 100 rehabbed, rentable houses; OR 100 low-income families who suddenly have the power to own and renovate their own homes and learn development skills in the process?
Undoubtedly, the developer route is the easy one for the city. As Alderman Michael Murphy, a co-sponsor of the legislation that created the MERI, is quoted as saying in Urban Milwaukee, “’There just isn’t the staff to manage’ a huge number of developers.” I understand that constraint, but it still seems like a missed opportunity.
Instead of creating a program that would allow residents to build wealth and development skills, the city created a program that will put money in the pockets of a handful of landlords and developers, and keep residents stuck in a cycle of renting—in all likelihood—crappy homes. I know I'm being an idealist here, and that a resident-focused renovation program would have required a lot more training and technical assistance. But it's still frustrating to watch that chance disappear.
In an interview at the January 9 meeting by the Milwaukee Neighborhood News Service, Barry Givens, board president of a community organization in the neighborhood of the foreclosed homes said, “History has shown that investors come in, they sweep up property and they don’t really take care of their properties. And, there’s a reluctance from … some of the absentee landlords in trying to address the issues that the community raises.”
In my own experience working with landlords to find housing for homeless Milwaukeeans (my previous job), this was certainly true. I regularly worked with landlords and property managers who oversaw anywhere from 30 to 100+ properties around the city. They showed up, did the minimum work to get their homes up to code and disappeared as soon as the lease was signed. That’s certainly not the case for all of them, but it was quite common.
The Easy Route
Milwaukee’s new housing program seems to see the city’s poor neighborhoods the same way that many government and nonprofit programs see them: As places where some experienced professionals can jump in, offer a couple nice things to the neighborhood residents (a new school building! temporary construction jobs!) and then conclude that their work is done.
Based on the parameters listed in the Request for Qualifications for the MERI, it’s conceivable that just two developers could be selected to buy and renovate all 100 homes and each receive half a million dollars to do it. (At a minimum, the program could have limited developers to purchasing a smaller number of homes, like 10 or 15.) Frankly, I’m sure the city would prefer that: They can work with the big names they’re already familiar with who have a large staff to fill out the necessary paperwork, plus they build some mutually beneficial relationships with wealthy developers (always good to have in your back pocket), and they get press for helping out a poor neighborhood in the process. I can see the ribbon cutting ceremony already.
Of course, 100 habitable, tax-paying homes is definitely better than 100 vacant, non-tax-paying properties, but it could have been so much more: It could have been 100 homes owned, occupied and renovated by residents who were invested in their neighborhood. It could have been a route to a better life for those residents, instead of just another route to a temporary job and a temporary rental house.
Now, as Bruce Murphy points out in his Urban Milwaukee op-ed, it’s important to acknowledge that there are many existing housing programs in Milwaukee that assist residents with purchasing and rehabilitating homes, all with different target audiences and methods of assistance. So maybe we’re just asking too much of the Milwaukee Employment/Renovation Initiative.
Still, it’s frustrating to see a high profile opportunity to empower small-scale developers squandered in favor of “the easy route.”
(Top image of the Sherman Park neighborhood in Milwaukee, from Google Maps)