Housing Proposal for West Bend
This post is more directed at our readers from West Bend, but may have some larger implications.
Tomorrow the West Bend Board of Public Works and Common Council will vote on the developer’s agreement for River Bluffs Townhomes. Here’re the facts:
River Bluffs is a $7 million, nine-building, 36-rental unit development proposed for 2.9 acre lot east of the Eisenbahn State Trail. It’s a site once part of an industrial railroad yard and now in the city-owned Tax Incremental Financing District 5.
Concept drawings give River Bluffs the appearance of separately-owned townhouse condominiums.
Considerable opposition to the project has risen in the city because of the funding strategy the developer plans to use.
Real Estate Equities Development LLC of St. Paul, Minn. is set to sell federal tax credits offered through the Wisconsin Housing and Economic Development Authority to raise capital for construction of the apart- ment buildings.
Because of that, Real Estate Equities will be required to hold its rental prices at a level affordable to families with annual incomes 50 percent to 60 percent of Washington County’s median figure, which is around $64,733, according to the U.S. Department of Agriculture’s Economic Research Service.
[...]
He describes it as 36 private-entry town houses, each costing around $185,000 to build with monthly rents ranging from $650 to $935.
Here’s a picture of the basic layout.
And here’s the location on Google Maps.
For those familiar with the area, it is where they just moved The Binkery restaurant (which may or may not ever actually open) and next to where they are going to build the new museum.
ARGUMENTS FOR THE DEVELOPMENT:
There are basically two primary arguments for the development. The first argument is bogus and the second argument is valid. The first argument is that West Bend needs more housing targeted at the economic demographic for which this development is being designed. A quick look around West Bend puts this argument to rest. There are plenty of units available in that same price range. In fact, a quick look at Rent.com shows 65 units available for prices ranging from $595 to $825 per month. There isn’t a need for more rental units in this price range.
The second argument is much more valid. This parcel of land is in a TIF district that was created ten years ago in an effort to spur economic development. To date, that effort has failed to attract any development, but the TIF district is still draining half a million dollars a year out of the city budget. Nobody is arguing that this development is the ideal development, and the WHEDA rules mean that they won’t even pay the full property tax burden, but at least it’s something.
This is basically the, “let’s not make the perfect the enemy of the good” argument. What we can never know is how many projects were never brought forward or were summarily rejected by the city’s staff in the last ten years. John Capelle, the Director of Community Development, has a reputation for making things difficult for businesses if they don’t meet his personal vision for the city. Given the economic track record of West Bend in the past ten years, it’s difficult to characterize Capelle’s office as successful. But irrespective of that, there is a development proposal on the table and we must decide whether to go forward with it or wait for an indefinite amount of time for something else to come along.
ARGUMENTS AGAINST THE DEVELOPMENT:
The primary argument against the development is that it would be putting low income housing in the heart of West Bend. Low income housing results in more crime and a higher drain on city services at the same time they are contributing less to the tax base because of the WHEDA rules. I’ve looked at the statistics from the police department for the number of calls and number of arrests to the three other major low income housing developments in West Bend and the statistics bear this out. Putting this in the heart of West Bend – next to the Eisenbahn, the new museum, and the pedestrian heart of downtown – is asking for trouble and could hurt the surrounding businesses.
Furthermore, developments like this might look nice when originally built, but generally decline fairly quickly. The original developer makes most of their money off of the original construction – particularly from the tax credits. There’s nothing to stop them from selling the property or ignoring it after it’s built. The low rents mean tight budgets for physical maintenance and aesthetic upkeep, even if they are fully occupied.
WHAT DO I THINK?
In general, I do not like the city meddling in development projects. If someone wants to build something, the city should make sure it is built safely and then get out of the way. What changes the dynamic here is the tax credits being used to build it. It’s one thing if a developer is putting in all of their own money and saying it will work. They have more skin in the game and will do whatever they can to get a return on their investment. When tax credits of this magnitude are involved, the developer’s risk is much lower and they make a lot of money on the initial build. In other words, they capture most of their ROI in the original construction and have less interest in the ongoing viability of the project. Given the developer’s primary self-interest is in building something – anything - that captures for them the immediate tax credits, the city needs to take an even harder look at the long term implications of the project because the developer is less interested in that aspect.
While I appreciate that this TIF district has been a failure and that city officials would like to save some face by seeing to it that something is built there, they should decline this project. It is true that the TIF district remains a financial drain on the city budget, but the long term financial drain will be even greater if they approve this project.
One must remember that whatever they build will be there for probably 30 or more years. This is a very long term decision. West Bend doesn’t need any more low income housing in the short term. Let’s face it, there isn’t a brand new massive factory going into the city that needs a slew of new low income workers. Plus, as I pointed out, there isn’t any shortage of housing in this same price range already available.
Furthermore, the inevitable increase in the use of city services, police, etc., for this development and the prospect of it harming nearby businesses, make this a project that should be denied.
I appreciate that we don’t want to make the perfect the enemy of the good, but right now there isn’t a perfect on the table. We have to choose between a bad – doing nothing and the TIF remains a drain – and a worse – building something that will become a larger drain on city services, attract more crime, and possibly damage the downtown economy.
Choose the bad.
I’ve looked at the statistics from the police department for the number of calls and number of arrests to the three other major low income housing developments in West Bend and the statistics bear this out.
Simply looking at number of calls/arrests is not the right methodology, since these areas are also more densely populated. Did you compare the per-capita rates? That would be meaningful. Otherwise, you’re just using false statistical reasoning to justify a false premise.
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 1539 hrs
Bleep, bloop, blahdee, blunk, George….more low income housing means more crime, more drugs, more suspicious apartment fires, more property damage, more transient residents who don’t give a rip about the roof over their head, and more drain on more government services.
Take your methodology, per-capita, false statistical, goobledy-gook someplace else. Forty plus years of history has shown that more government-financed, low-end housing attracts more government-financed low-end people; and with them comes the crime, the gangs, and the problems that are always associated with low-income housing.
Broken freakin’ record.
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 1627 hrs
I agree with Owen’s entire post .
This is a desperate move- to fill an area that has been oversold in it’s possibilities from the beginning.
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 1632 hrs
I think you likely grossly overestimate the value of the tax credits as a cash cow. Nothing has been built on the property. That indicates to me that market rate housing, which would have higher rents, is not feasible there. Thus, the tax credits need to make up not only the difference between market rate and restricted rate rents, but also the difference between a market rate project that is feasible, and one that is not.
Presumably a market study has been done that indicates a need for housing with a certain distribution of rents. It would be difficult to obtain the private portion of the financing without such a study.
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 1909 hrs
There would be no government rent payment for families who
rent these units. The subsidy is for the developer so that he can build decent housing in the community. As a condition of receiving a WHEDA subsidy for construction, the developer agrees to rent half of the units to families who earn 60% of the median income in this area and half of the units to families who earn 50% of the median income in this area. The River Bend Housing Apartments is a WHEDA project in the 5th TIF District: A criminal background check, credit check, and annual review of finances are done on each tenant under the WHEDA provisions. The mean income in Washington county is $74,000, the average income in West Bend is around $36,000. One decision maker is concerned that not enough renters with an annual income of $50,000 will be found to rent these subsidized (not low income) housing units.Daily News: “Andrew Schaefer, vice president of development for Real Estate Equities, has said River Bluffs is being unfairly portrayed as cheap, subsidized housing. He describes it as 36 private-entry town houses, each costing around $185,000 to build with monthly rents ranging from $650 to $935.”
On another note: A state grant for $700,000 will pay for the extension of Forest Avenue east to Indiana Avenue West Bend to accommodate a new housing project for frail elderly, primarily 80 to 90-year-old seniors. The estimated value of the CBRF is $4.8 million for a 20-bedroom building. This is the first development project in the 12-acre Tax Incremental Financing District 12.
A $7 million, nine-building, 36-rental unit = $185,000 per unit
for workers and their families
vs.
A $4.8 million, 20-bedroom building, cent. kitchen = $240,000
for for frail elderly, primarily 80-90-year-old seniors on social security, medicare, and personal finances.I simply find this interesting: One herein is portrayed in the light of a blight; the other “...will create up to 60 jobs and will be a welcome addition to the city’s tax base” (Deiss), and receives far less scrutiny though it receives far more subsidies to exist.
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 1933 hrs
I wasn’t writing as to imply a subsidy of the renters, JPenterman. I wasn’t clear. I was writing to the idea that the developer will receive his return on investment through the construction and tax credits. This outfit is a developer, owner and manager of housing. I see little to suggest that they are some fly by night firm. I put the odds of the tax credits providing the return on investment up front at something close to zero. The tax credits simply provide the capital necessary to provide a sufficient return on investment for the private capital at the reduced rent rates, without which the project would not be built at all.
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 1949 hrs
I know a lot of West Bend residents from 20 years back who weren’t real keen on the idea of putting in the first round of low income housing. And they still view that move as the loss of the town’s character from independent burg to apartment dominated bedroom community of Milwaukee.
Why is it that West Bend has to do this anyways? Can’t they be content with what is there? Maybe do another industrial park to bring in jobs perhaps?
Mequon seems to be thriving with the no-growth mantra they have had for years. High quality of life. Low taxes. Why is that the case? Because the residents are smart enough to realize that the community exists FOR THEM and not for out of city developers to MAKE PROFITS.
But these developers simply find other rube communities to make their dough (See West Bend and the project at hand)
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 1954 hrs
Bleep bloop: racist bastard. But, you know that already.
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 1958 hrs
George—is there a housing shortage in Washington County?
If there were, developers would come in and fill the void with projects that didn’t need to be subsidized by the government.
Where does all this money come from to do this project? The taxpayers.
Read that MJS story today about how the City of Milwaukee was running out of money so Barrett robs the waterworks budget. Now the waterworks has to raise rates to stay in business and is going to drive out jobs. Wouldn’t we be better off diverting these tax dollars on the waterworks as opposed to building subsidized housing in West Bend?
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 2004 hrs
George: did I say anything about race in my post? No, I did not, you race-baiting prick.
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 2033 hrs
He describes it as 36 private-entry town houses, each costing around $185,000 to build with monthly rents ranging from $650 to $935.
No one in their right mind would build something for $185,000 that they can only rent for $935 or less. The tax subsidies are not enough to change the rates that much. The numbers do not add up. We must conclude that the developer won’t spend that much. He’ll cut corners and bail out.
Tax subsidies for housing should not go to developers. The subsidies should be direct for rent/mortgage payments. TIFs are a horrible idea at all times and tend to be abused repeatedly.
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 2055 hrs
George—is there a housing shortage in Washington County? [etc]
I haven’t mentioned—let alone questioned—whether the development is good/bad, necessary/frivolous. I merely pointed out a potentially significant flaw in Owen’s statistical analysis…...which he hasn’t confirmed or denied…..
Honestly, I don’t give a shit about whether they build it or not.
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 2055 hrs
Ok, bleep boop, then you’re simply a class-ist bastard. (generally the same thing, from Washington County)
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 2056 hrs
Don’t do it West Bend. They did it in Dubuque Iowa and the crime and dirt can with the subsidized housing. Just last Friday I was pan handled out side of our newly remodeled library. Fight subsidized housing.
What used to be a nice park on the north side of town is now very scary in the late afternoon.
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 2137 hrs
BVBigBro,
I wasn’t writing as to imply you were implying a subsidy of the renters. I’m just comparing two subsidized situations. The more subsidized item which houses no producers would house the lowest level of consumers (i.e. little purchased clothing, food, furniture, cars); it’s an apartment complex all the same yet receives no criticism.
That’s an interesting statement of social values.
I’m wonder if the younger generation will take this good of care of us when we all go down this road.
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 2159 hrs
I don’t disagree JPenterman, but these situations exist in the first place because of tax situations. I don’t know what remedy would exist that wouldn’t involve a reduced tax liability. I’ll run a proforma tonight and see if the numbers make sense for the developer. Given that the application was approved I’m guessing the answer will be yes.
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 2209 hrs
George -
1. I’m not from Washington County.
2. I was born with parents in wedlock, thus I’m not a bastard.
3. However, I’m not able to tolerate one class of citizens taking tax dollars from another class of citizens and then thanking them by shooting up the neighborhood.So, you’re correct on one of your three remarks; I, however, am correct on mine: you remain a prick.
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 2215 hrs
After a criminal background check, credit check, and annual review of finances are done on each tenant under the WHEDA provisions, and if one can afford monthly rents ranging from $650 to $935, I doubt said tenant(s) will be “shooting up the neighborhood”. Too much investment; too much to lose.
Unless you are referring to elected representatives and city officials, which makes “shooting up the neighborhood” far more unlikely, at least nationally.
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 2322 hrs
shooting up the neighborhood
Ignorant slut.
Posted by .(JavaScript must be enabled to view this email address) on June 06, 2010 at 2342 hrs
I’m not necessarily talking about the tenants who’ve signed their name on the lease; I’m talking about their family members or friends who stay with them for extended periods of time, set up shop, and engage in such behavior.
And George, you’re welcome to come to my neighborhood anytime and see for yourself…slow-witted ass clown.
Posted by .(JavaScript must be enabled to view this email address) on June 07, 2010 at 0753 hrs
George, spare us all the tedium of your posts, and simply post the word “racist”. We are all aware that that is your estimation of anyone who disagrees with you. And God knows, if anyone believes they know how better to use their (yes, it is Their’s) money than Government, obviously they have to be a racist, Right?
Good thing for you idiocy isn’t a crime punishable by death.
Posted by .(JavaScript must be enabled to view this email address) on June 07, 2010 at 1015 hrs
The problem that we are overlooking is how did we get this far in the first place.
This land has been overhyped, it was the center of action 100 years ago when commerce depended on freight trains. Why didnt the city tell this developer a year ago they were not interested? instead they drag him along and he invests a 100 grand or more in design and studies , if it was me I would be fit to be tied and demand my costs be recouped if the city now has a change of heart.
A clear policy needs to be set between what the city wants and what community development wants, if you dont learn by your mistakes and take corrective actions it will certainly happen againPosted by .(JavaScript must be enabled to view this email address) on June 07, 2010 at 1056 hrs
Still waiting to hear if Owen’s statistical methodology was valid.
Posted by .(JavaScript must be enabled to view this email address) on June 07, 2010 at 1924 hrs
What is the big secret that they are meeting in closed session on this issue ? What are the elected gods hiding from us this time. I hope people remember at election time stunts like this.
Posted by .(JavaScript must be enabled to view this email address) on June 07, 2010 at 1944 hrs
And Scott, shut up. Peoples racist ideologies here have little to do with their ability to agree (or not) with me.
Bunch of fucking privileged pigs.
Posted by .(JavaScript must be enabled to view this email address) on June 07, 2010 at 2013 hrs
Shut up!?! George, it’s a blog for crying out loud. But then again, as seems normal you just don’t get the concept of the free exchange of ideas.
Tell you what, the day you give someone who is “poor” half of everything you own then I’ll believe you to be a man of your convictions. Until then you will remain nothing more than a jealous blow hard who thinks he has a right to that which others have earned. Like all Liberals you’re free and easy with other people’s money, but a tight ass with your own.
Jack, you missed your chance, which was 1917 Russia. And if you haven’t noticed, that system failed miserably.Posted by .(JavaScript must be enabled to view this email address) on June 07, 2010 at 2155 hrs
Owen takes the time to find an issue and give a reasoned pro and con analysis, and then a couple of yahoos start swearing at each other or debating another topic (see Helen Thomas thread). STOP IT - you are ruining my B&S experience.
That ranted, I’m not sure I would vote against this at this time, but it is very disappointing that the City in the past was unable to pull the trigger on a number of more appropriate opportunities for TIF 5, e.g. boutique hotel, office building, small retail center. And to demolish a tax paying resident (Fields) too early – not smart.
We needed to get this done in our hey days.Posted by Charlie Hillman on June 07, 2010 at 2309 hrs
goog
Posted by .(JavaScript must be enabled to view this email address) on June 08, 2010 at 0555 hrs
I wasn’t able to make the meeting, and I don’t know where to find the minutes. Did this pass?
Posted by .(JavaScript must be enabled to view this email address) on June 09, 2010 at 1748 hrs
Well…I guess we are all entitled to our OPINIONS
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Maybe you shold look it up
see googlePosted by .(JavaScript must be enabled to view this email address) on July 05, 2010 at 1336 hrs
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