Milwaukee's largest office to housing conversion to get city cash--in return for lower rents

Milwaukee's largest conversion of an office building to housing would get city financing help − in return for setting aside some apartments at lower rents, under a plan that's won an initial city approval.

The underused 100 East office tower's redevelopment would create 373 apartments by early 2028.

That includes 75 "workforce housing" apartments with rents affordable to people earning no higher than the Milwaukee area's median income. Those monthly rents would initially be just over $1,900 for a studio and nearly $2,100 for a one-bedroom unit.

The conversion of the underused 100 East office tower to apartments is to get city financing help.

Mayor Cavalier Johnson's Department of City Development is proposing tax incremental financing of $14.4 million for the $165 million project.

That plan, endorsed by the Redevelopment Authority board on July 17, would use property tax revenue generated by the apartments to pay for part of the construction costs. The proposal is to undergo Common Council review in September, and renovations could begin in October.

100 East's conversion is being led by Klein Development Inc. and investor/developer John Vassallo. Their investment group bought the 35-story building, 100 E. Wisconsin Ave., in 2023 for $28.75 million.

The financing plan's supporters include Alderman Robert Bauman, whose district includes downtown.

100 East would be the first workforce housing development to receive such financing under the city's new policy, Development Commissioner Lafayette Crump told authority board members.

The Department of City Development defines workforce housing as apartments for people earning up to to 100% of the Milwaukee area median income. That amounts to $77,500 for an individual, or $110,700 for a family of four, according to updated federal guidelines.

Workforce housing typically targets people who earn too much to qualify for tax credit-financed apartments with below-market rents, but still have trouble finding affordable market-rate units.

Developers say inflated construction costs and higher loan interest rates have made it difficult to build such apartments without city help.

Meanwhile, a new study from Moody's Analytics Inc. says the nationwide housing shortage is worse among rentals than home to purchase.

That study recommends a focus on improving the housing supply "in modest- and middle-income communities."

"With subsidies already providing some support for housing in low-income communities and the market in most places adequately serving upper-income communities, those in between are falling through the cracks," the study said.

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The 100 East development also would convert a nearly-vacant office building, with a $27 million assessed value, into one of downtown's largest apartment communities with an estimated $120 million value, Crump said.

The city financing plan calls for annual payments to the developers from the project's property tax revenue.

Those payments would stop after 16 years, Crump said, with the tax revenue then flowing to the city, Milwaukee Public Schools and other local governments.

The financing package includes federal and state historic preservation tax credits, and a commercial loan with a guarantee from the U.S. Department of Housing and Urban Development − a program also used for The Couture high-rise.

Tom Daykin can be emailed at [email protected] and followed on Instagram, Bluesky, X and Facebook.

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This article originally appeared on Milwaukee Journal Sentinel: 100 East conversion to housing to get city financing--for lower rents