Milwaukee department wants to offer tenants chance at lease-to-own
A Milwaukee department is betting at least $75,000 a year that it can persuade tenants in foreclosed properties to lease-to-own their homes.
The money would cover the annual salary of a new full-time position to lead the lease-to-own program. That housing rehabilitation specialist would guide people through the program, assess the amount of repairs needed for each home and oversee the contracting for repairs.
The program is designed to rid the city of the 156 tax foreclosures it now rents out as well as others the city would take over. Of those 156 tenants, 32 would qualify for the lease-to-own based on rent payment history and other financial information, said Clifton Crump, real estate project manager for the Redevelopment Authority of the City of Milwaukee, which is within the Department of City Development.
The authority, he said, has not contacted any of those qualified tenants to gauge their interest in buying their homes. In fact, Crump said, the city has not even discussed the program with any tenants.
“There are qualified tenants out there,” he said. “And there’s been interest in the past, so we know this is a good investment and something that will work.”
In the past two years, the city has sold four foreclosed properties to tenants, he said. Crump said he had no proof but expected the number of sales to increase when the program begins.
He would not provide the names of any of the 32 tenants who would qualify for the program.
On top of the full-time position, the authority would pitch in as much as $10,000 in major repairs for each home that qualifies, he said, and $500 for potential buyers to meet with housing counselors.
In exchange, tenants would have to pay $500 a month for two years before the city sells the home for $1.
“The program is designed to begin to see results two years from now,” Crump said. “Once that happens, if we can sell 10 a year, that’s great. If we can sell 20 a year, that’s even better.”
The city will be lucky if the program even makes it off the ground, said Mark Kivley, the owner of Milwaukee-based Kivley Property Management LLC, who specializes in foreclosed homes and has worked with the city on tax foreclosures.
“The city’s assuming people want to take on all of the responsibilities of becoming a homeowner,” Kivley said.
That’s an assumption that easily could backfire, he said, costing the city, at the very least, its $75,000 staffing investment. Instead, the city should be researching how many tenants want to take on those responsibilities, Kivley said.
If tenants aren’t ready for ownership responsibilities, he said, they’ll follow the same paths as their predecessors.
“They’ll fall behind on their taxes, and the city will end up owning the homes again,” Kivley said. “It’ll just circle back to being a foreclosure.”
But the city needs this program, said Alderman Willie Hines, who sponsored a Common Council resolution that directed the development of a lease-to-own program.
The city continues to get foreclosures, Hines said, and needs to find a way to sell some of those properties. If the program works, he said, it’s money well spent because homeownership will stabilize struggling neighborhoods and get properties back on the tax roll.
Hines said he had not gauged interest in the program.
“That’s the Department of City Development’s job to get it up and running,” Hines said. “That’s what the resolution asked them to do.”
The problem isn’t about getting the program up and running, Kivley said. It’s about the city taking a gamble on long odds.
“That’s a lot of invested money,” he said, “in something they have no proof people want to do.”