Contractor Cindy Kuhs sold homes in two Milwaukee subdivisions before the recession. Now the president of Hales Corners-based Kuhs Quality Homes claims building more would be a losing game unless the city offered construction subsidies.
But the city has no plans to do so, despite both subdivisions being nearly vacant.
The city-owned Walnut Circle subdivision has three houses, and the Josey Heights subdivision, which the city recently bought back from a developer, has four, one of which is a model. The subdivisions are laid out for 69 single-family homes and 16 townhouses.
Maria Prioletta, redevelopment and special projects manager for Milwaukee’s Department of City Development, said the recession derailed efforts at both sites. She said the city is working on a marketing plan to attract potential tenants and expects to reach out to builders soon to discuss the subdivisions’ futures.
Kuhs said she wants to build at both subdivisions again, but unless the city or homebuyers come up with more money, she will not be able to afford the projects.
“There’s just no way around it,” she said.
Milwaukee sold the 7.3-acre Josey Heights subdivision to Josey Heights Development LLC in 2006. The subdivision is bordered by West Lloyd, West Brown, North 14th and North 12th streets. The land was cleared for the never-built Park West freeway spur.
The development group had included George Calaway, Jeff and Gaurie Rodman, and Julie and Sheldon Solochek. According to city records, only the Solocheks remained by fall 2013.
Prioletta said the group fell apart in the wake of the recession. None of the members or former members of the Josey Heights development could be reached for comment before deadline Tuesday.
Milwaukee Mayor Tom Barrett approved an agreement in October where the Redevelopment Authority of the City of Milwaukee paid the development group $224,400 and the homeowners association $600 to regain the rights to the property.
Prioletta said she expects the city’s marketing effort, which is still in the early stages, to address both Josey Heights and Walnut Circle, which the city has always owned.
Walnut Circle is bordered by West Walnut, West Galena, North 22nd and North 20th streets.
Kuhs said she built two homes in Walnut Circle and one in Josey Heights. She said she sold the Walnut Circle homes for $265,000 and $285,000 and sold the Josey Heights home for $240,000.
Now, she said, she would expect to get about $150,000, based on a decline in comparable sales forced by the recession and proliferation of foreclosures in the area.
But it would cost about $220,000 to build that home, she said, based on increasing labor and building material costs. And that home probably would be more basic than the ones she built before the recession, Kuhs said, which had included granite countertops and hardwood floors.
According to court records, a Milwaukee County Circuit judge granted U.S. Bank National Association a foreclosure in April 2013 on a Josey Heights home at 2024 N. 13th Street. Prioletta said she knew about the foreclosure, but it does not change her mind about potential subsidies.
“We remain very sensitive to the fact,” she said, “that we don’t want to do anything to negatively affect the values in the market.”
If the city were to assume homes would sell for $150,000, Prioletta said, and offer a subsidy to make up the difference between that and construction costs, it could drag down the value of existing homes in the neighborhood. Besides, she said, foreclosures affect comparable sales throughout the city, so the problem is not unique to Josey Heights and Walnut Circle.
“I’m sure we’ll think through ways,” she said, “to overcome that.”Follow @bkevit