Milwaukee Completes 5 Foreclosed Homes With $15 Million in COVID Money

City of Milwaukee officials told the Joint Committee on Redevelopment of Abandoned and Foreclosed Homes that the city has completed rehabbing five homes, as of now, with $15 million of COVID relief money.

The committee received the money in 2021. The meeting occurred in October 2023. The city is trying to renovate or demolish more homes. Although some are in the pipeline, there are a series of challenges.

“Okay, so we appropriated this $15 million in 2021, almost a year ago, and we have five properties complete,” said Milwaukee Ald. Robert Bauman, chair of the committee.

The city wants to demolish some of these homes instead of rehabbing them, in part because they are beyond repair, but the city can’t find contractors that meet the equity and diversity (SBE) program requirements, city development office officials told the committee.

As a result, they can’t demolish some of the houses even though that’s an approach some prefer, hoping to turn the lots into urban agriculture. Meanwhile, aldermen field complaints from neighbors as some of the blighted homes haven’t seen city action for years. A key aldermen even said some neighborhoods in the city are currently “uninhabitable neighborhoods.”

“Okay, I’m finding that that’s a good point. And you representing the Department of City Development, how do you propose to render these currently uninhabitable neighborhoods, habitable areas that people will want to live in going forward?” Bauman asked a city development official.

Yet, in a catch 22, remodeling them is a problem too because some neighborhoods are “undesirable,” and the homes won’t sell for anywhere near what they cost to rehab, a city official told aldermen. Some of the homes are near busy alleys or across from liquor stores.

“It’s extremely depressing that the Department of City Development is basically announcing there are neighborhoods where no one wants to buy a house,” said Ald. Robert Bauman, the committee chair.

Aldermen were told that construction costs can rise to $400,000 for a new home, asking why the city is tearing down rehab properties that could be rehabbed for a fraction of that cost.

In a recent development, debate has stirred about the allocation of ARPA (American Rescue Plan Act) funds. The $15 million expenditure has raised questions about how the money is being spent regarding abandoned and foreclosed homes.

ARPA money is COVID-19 relief money and was given to local, state and tribal governments.

The money was designed to address the city’s housing challenges with abandoned and foreclosed homes.

City officials also said that they struggle to renovate the homes, which can be very costly, and then they don’t find any buyers or they don’t find buyers who can qualify for loans or are willing to pay that much due to the location.

Amy Turum of the Department of City Development said that she has received complaints from older people in these “undesirable” areas and the types of activities that happen in these homes.

“We’ve had people investigate them and try to rehab them yet they’re still not desirable for purchase even with the very large amount of subsidy we’re offering now through this program,” said Turum of the Department of City Development

The DCD program currently has 61 properties that have been reserved by developers, with 13 development agreements executed and 30 properties sold to those developers. Twelve development teams are actively working on these properties, and 24 more properties are pending closing in the near future.

“Some of these homes go back to city ownership as of 2014 [and] that is a very, very long time ago,” said Turum. “We want to make homes that meet certain criteria, and some cannot meet that criteria without being knocked down and reconstructed as safe homes without lead, without mold, without other issues.”

However, city officials say that’s costly and so it’s tough to find buyers at a price to make it worth it.

Some believe, on the other hand, that something needs to be done about these properties despite what they are. The alternative some are floating: Urban gardens.

“I think they want to see action, not necessarily demolition; they want to see something happen, whether it’s moving up through renovation or whether it’s creating another vacant lot for urban agriculture,” said Bauman.

“Well, the largest hurdles are our compliance, the SBE, the RPP, those we can’t change,” said Chris Crako, Neighborhood Services.

The SBE (Small Business Enterprise) page says it strengthens small businesses by providing them with more support services, contract opportunities, and financial resources.

The RPP (Residents Preference Program) says it helps residents who are either unemployed or underemployed find job opportunities through its Residence Reference Programs.

Those programs are part of the city’s Equity and Inclusion office.

To become certified, businesses must meet specific requirements, including economic disadvantage criteria, and contractors awarded contracts of $25,000 or more must participate in the Compliance Reporting and Certification System (CRCS), according to the City of Milwaukee Government page.

“They’re in the process of one in Bayview right now. Problem is we tried to contract with them. They never returned the contract; they have difficulty meeting the SBE and RPP requirements,” said Crako.

Contractors are not eligible if they operate as a not-for-profit organization, since it does not meet the program’s qualification criteria either. This restriction further narrows the opportunity of potential contractors for redevelopment projects.

“We have one contractor that’s 100% or 104.12 – 124.42 they get about 80 something percent SBE, and then we have others that run over 25%,” however,  “They’re a not-for -profit and they don’t qualify. Not -for -profits are not qualifying,” said Crako.

It’s crucial to explore the intricate details that shape the project’s progress and ongoing developments of Milwaukee’s housing revitalization program. The exclusion of not-for-profit organizations from participation and the impact it has on the program’s objectives are subjects of concern.

“We’ve stopped the practice of going into a home unless it is absolutely unable to be walked into by our staff or referring directly to the demolition list,” said Turum.

Some properties have languished on the market at a mere $3,000 for six long years, with no takers, whether they be investors or potential owner-occupants.

“Some properties have been on the market for $3,000 for six years, and no one wanted them. Investor or owner-occupant, and I think as an owner-occupant,” said Turum.