Those who want to increase real estate fees to pay for affordable-housing projects face familiar opposition from market-rate home developers.
Milwaukee affordable-housing proponents, in need of a grant program to fill the gap between project costs and available money, say an increase in the state’s real estate transfer fee could be the solution.
“We need to develop a reliable, productive source of funding for these types of projects,” said Leo Reis, executive director of the Milwaukee Local Initiatives Support Corps. “We don’t have that now.”
State and county governments in Wisconsin collect a fee from the buyer when property is sold. The fee is $3 for every $1,000 of the property’s value.
Reis said an increase of $1 or $2 per $1,000 of property value could support a statewide grant program for affordable housing. He said the idea, which Milwaukee housing groups have supported for years, has been used in other states but faced opposition in Wisconsin.
“When you are buying a $100,000 house,” Reis said, “I don’t think a $2 fee would be much of a problem for them.”
Any new tax on real estate is a problem because many buyers can barely afford a house, said Joe Murray, director of political and governmental affairs for the Wisconsin Realtors Association. He said the fee increase has been a point of legislative debate throughout the 23 years he has worked in Madison.
“All taxes on housing have that effect,” Murray said, “and we’ve argued that for years, and we will continue to argue that. There are buyers on the market who are on the margins.”
Affordable-housing supporters continue to suggest a transfer fee increase because grant programs, such as Milwaukee’s Housing Trust Fund, do not have enough money.
A real estate fee could help projects such as the more than $5 million Silver City Townhomes, said Jeremy Belot, project manager for the Layton Boulevard West Neighbors, which partnered with Milwaukee-based Wisconsin Redevelopment LLC for the project. The 20-unit, four-building development at 35th and Pierce streets in Milwaukee needs $150,000 before it can begin, he said.
The partnership applied for a $150,000 grant last year from the city’s Housing Trust Fund — the trust fund received requests for $3.1 million in grants — but the board that oversees the grants last week recommended that Common Council deny the application.
“Right now, it just seems very difficult to do development without some kind of subsidy,” Belot said, “especially in the urban neighborhoods.”
But while Reis considers the transfer fee a good source of money because it is directly connected to development, Murray said what would help affordable housing will hurt market-rate housing.
Murray said real estate agents are open to the idea of using the state’s general budget to pay for an affordable-housing grant program.
“If affordable housing is a goal, it is a goal for all of society,” he said. “And it should be paid for like all other goals for society.”