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Rehab Money Available for Mixed-Use Buildings

by Stacy Conroy

Ever wonder what Riverwest was like when all the little storefronts were booming family businesses serving the neighborhood with things like meat, bakery, dairy, hardware, clothing, and dry goods? Isn’t it inspiring to see shops and restaurants like the Riverwest Food Co-op, The Milwaukee School of Massage, Fuel Cafe, and the West Bank Cafe, among others, thriving in our neighborhood? Perhaps you wish all the little storefronts were quaint businesses or galleries run by neighborhood folk instead of being converted into apartments like so many have in the past 20 years. If so, there may be something you can do. There’s good news for people in Riverwest who own a mixed-use building or are interested in buying one. (Mixed-use means the lower unit is zoned for commercial use, such as a storefront, and there is at least one residential unit above.) The Neighborhood Improvement Development Corporation (NIDC) currently has approximately $700,000 available to use as matching funds for the rehabilitation of mixed-use buildings in targeted areas of the city. Riverwest is one of the qualifying areas. The wonderful thing about this program is that the city matches, dollar for dollar, up to $10,000 per unit, what the owner puts in for rehab work. So if you own a building that needs a total of $20,000 worth of work to both a commercial space and a residential unit above, the city will loan half the money for the job. The loan is forgivable at a rate of 20% per year for five years, meaning it doesn’t have to be paid back. If the property is sold before the five years is up, the pro-rated loan would have to be repaid. There are a few contingencies that are not difficult to meet. First, the rent for the residential units must be kept at a level, predetermined by the city, to accommodate lower income families. Second, the property must be kept insured and code compliant at all times for the entire 5 years. Lastly, city monies will only be used to rehabilitate the residential unit and/or any common space shared by the residential and commercial unit. The owner’s dollars only must be used to rehab the commercial space. Sometimes it is difficult to secure bank loans to buy these buildings, since they don’t often come with a tenant already running a successful business in the commercial space to show the viable rental income of the property. However, with the property being fixed up to code and cosmetically attractive, it is much easier for prospective tenants to see the possibilities for their business in these spaces. Eligible improvements include: Code items, plumbing, heating, electrical, siding and paint, roofs and gutters, windows (including lead based paint abatement), energy conservation items, bath and kitchen remodeling, other cosmetic items to make residential units more clean, safe and livable. For more information or to request an application call Greg Johnson, Rental Rehab and Mixed-use Program Manager at NIDC (414)286-5618. There is no waiting list, and applications are being accepted and processed immediately. NIDC also has a list of banks familiar with these types of programs and can assist in your finding a willing lender. Riverwest Currents – Volume 1 – Issue 7 – August 2002