Experts share ideas on how to encourage more development in Milwaukee’s lower-income neighborhoods

It’s no secret that Milwaukee has extremely segregated neighborhoods, and that neighborhoods predominantly made up of people of color face issues of poverty, lack of opportunity and lack of economic investment.

Real estate developers often face significant challenges in successfully putting together projects in these neighborhoods. A group of industry experts, most of whom have found success with projects in Milwaukee neighborhoods, detailed what those impediments are and shared steps they say would make developing in the city’s lower income neighborhoods more feasible.

Kevin Newell, president and chief executive officer of Milwaukee-based Royal Capital Group LLC, said two huge impediments to progress in building up neighborhoods are based in policy and a lack of investor optimism. Specifically, it has at times been hard to get government incentives such as city tax-incremental financing to be made available where they’re most needed.

Another major obstacle is simply getting the real estate opportunities in front of the right faces, including brokers and commercial users, said James Phelps, president of Milwaukee-based JCP Construction. Other challenges include access to capital for financing these projects and the loss of young talent to other cities, said Ryan Pattee, president of Milwaukee-based Pattee Group.

“Without that capital stack (being able) to work, the projects don’t work,” Phelps said. “If there was more flexibility in the different programs or the way banks look at projects as well, I think you would see a lot more.”

Barry Mandel, chairman and CEO of Milwaukee-based Mandel Group Inc., shared ideas of how the city could better assist development outside of downtown.

One idea would be to take tax revenue generated in a successful “donor TIF district” and place it into a recipient district that needs assistance. Right now state law only allows increment to be used within a half a mile of the TIF district boundaries, he said.

But, this idea of a non-contiguous TIF district, he said, would allow a successful downtown TIF district to share its increment in the neighborhoods to help finance developments where it’s needed.

But help needs to come from more than the local level, he said.

“The city of Milwaukee alone through TIF can’t do everything,” Mandel said. “I think it’s going to take federal, state, local, it’ll take the CDFIs as well as foundation and all the other capital sources that everyone on this panel rely on to be able to create a menu of where you can get the various parts of your capital stack.”

Pattee likewise said there needs to be legislative changes that give the city more tools to assist with development projects.

“The city needs another vehicle to be able to generate more revenue for the city,” he said. “We (the city) are the main revenue driver of the entire state, so they need to have other ways to generate revenue to be able to keep the city going other than just property taxes.”

Newell also pointed to a policy shift around 2019 by Mayor Tom Barrett, when he said his administration would begin allowing TIF assistance for affordable-housing projects.

These comments came during a panel discussion as part of the 18th annual BizTimes Milwaukee Commercial Real Estate and Development Conference, held virtually on Thursday. Click here to watch the program on demand.

Mandel shared further thoughts he had on the matter in a recent BizTimes op/ed.

More details and a recording of the event can be found here.