It’s May in Milwaukee, the sky is cloud-free, and the 2400 block of West Galena Street is bright and calm. But the inside of Barbara Taylor’s home is busy. Contractors have piled living-room furniture chin-high so they can install new floorboards. And Taylor’s grandchildren are darting amongst the towers hoping to swipe a sweet from the kitchen before dinner. But Grandma Barbara is presiding at the kitchen table, and even the questions of a visiting reporter can’t distract her from guarding the larder.
Taylor has lived in this house for 20 years, first as a long-time renter, and now as a homeowner. Her original landlord was her brother, who showed little interest in maintaining the home after he moved to Cleveland. Upon his death, the title transferred to Taylor’s niece, who was also out of state and had even less commitment to the property, which by this time needed a new roof and a long list of other repairs. At some point the niece stopped paying the city of Milwaukee its property taxes, and Taylor learned that the place she called home would soon enter foreclosure. After final overtures to her niece yielded no solution, Taylor turned to a neighborhood organization, ACTS Housing, for help.
ACTS (Allied Churches Teaching Self-Empowerment) is headquartered a mere six-minute walk from Taylor’s home, where the growing nonprofit is renovating the old convent of St. Michael’s Church into its new operations base. St. Michael’s was established in the early 1890s by German Catholics, and after it became a gathering place for displaced Germans following World War II, the parish developed a reputation for helping refugees resettle in the U.S. When Father Dennis Lewis arrived in 1988, the newest arrivals were refugees from Burma speaking a language called Karen.
As the parish cared for this group, it became apparent that there were few healthy or financially viable housing options in the neighborhood for newcomers. Many locals were renting from one neighborhood slumlord who owned about 90 poorly maintained, poorly let properties surrounding the church. “People didn’t care about the neighborhood,” says Lewis. “They’d trash places, skip rent, get displaced. We had this cycle at the end of the month of people constantly moving.”
Then in 1990 a 95-year-old woman was robbed inside her home near the church. The woman’s family moved her out of the neighborhood, and word came to Lewis that her house would be on the market. The listing price was $7,000. The church connected a local family to the property and they bought it. St. Michael’s was in the home-matchmaking business.
The effort picked up speed when Lewis found out that the city was taking over the slumlord’s 90 local properties. He went to see Mayor John Norquist to inquire what the city planned to do with them. Norquist connected the priest to a real-estate pro named John Worm, and two bankers named Jeff Stock and John Cleary who were some of the most active home-loan officers in the city. The four men started visiting Dennis’s parishioners and others in the neighborhood and asking about their housing situations.
“We would meet with families in church offices and do intakes,” says Lewis. “It was very unusual, bankers coming out into the field.” Often bringing in translators, they would document the family’s income, any government assistance, and regular expenses. Then they would ballpark a reasonable home-purchase price, aiming for a mortgage payment smaller than their current rent. Once that number was established they would look for properties that fit the bill, which in that neighborhood were in abundance if the buyer was willing to put in some sweat equity and rehab work.
Worm trained a Hmong woman, Blia Cha (who had learned English by watching “Wonder Woman” and “Star Trek” on television), and helped her get her real-estate license. She then went out among friends and neighbors and made the case for homeownership. “It’s a big investment, but I know it’s the best thing for them,” she told the Milwaukee Journal Sentinel, and for “improving your neighborhood.”
In 24 years with ACTS, real-estate agent Blia Cha helped nearly 800 low-income families buy homes.
“I keep telling my buyers if there’s a house nearby on your block and you want your relatives to buy, you call me. I can help your family stay together so you can help each other babysitting, and watch after each other for safety.” Cha retired in 2017 after 24 years with ACTS—having helped nearly 800 families buy homes.
From network to nonprofit
In 1992 this little group of agents, loan officers, and clergy created a separate nonprofit to formalize their effort. ACTS Housing, its board decided, would work with city officials, as it was the keeper of foreclosed properties, but not rely on any local, state, or federal government monies. To avoid the red tape on government funds, “we went after private grants and foundation money,” says Lewis.
They also clarified their vision—“putting people in charge of their own lives.” ACTS wasn’t interested in more affordable rental housing; the organization wanted occupants to become owners, as soon as possible. As more churches joined the alliance, and additional realtors joined the team, and the work of the nonprofit spread by word-of-mouth, people from a variety of ethnic groups and different neighborhoods began to participate.
Today ACTS helps over 100 Milwaukee families every year buy a home (a total of 2,200 since its founding). Between 50 and 70 percent of the homes ACTS clients purchase are foreclosures. ACTS offers credit-counseling services, knowledgeable real-estate agents, access to loan officers at reputable banks, and a rehab team that aids homeowners in assessing their property and hiring reliable contractors to repair problems. Clients obtain a mortgage through mainstream private banks; ACTS itself is not a bank and does not guaranty loans made by private banks. However, starting in 2014, it created a revolving loan fund, ACTS Lending LLC, to help with renovations, particularly aiming to help those who buy a distressed foreclosed home that needs extensive repair. (Properties that could otherwise blight an entire block.) In many cases the home is purchased with cash for as little as $3,500, and an ACTS loan for renovations, around $25,000, is the only mortgage on the property. Right now that fund has 100 loans out, and 97 are current on payments.
The amount of money it takes to occupy a home purchased through ACTS ranges between $20,000 and $35,000 for about a third of the sales, plus additional investment to make it livable. The other two thirds of their houses cost between $60,000 and $90,000. An average ACTS family saves $240 a month by switching from renting to owning. Current director Mike Gosman thinks this is part of why people stay current on their loans. “They’re smart. If they’re saving $240 a month through ownership, they’re going to pay us first,” he says. “They know that if they become delinquent everything else falls apart.”
ACTS homes often don’t have much curb appeal or any fancy amenities. That’s not their niche. “Most of our homeowners can’t capitalize all their needs right at the get-go,” says Lewis. “So you get them in a place that meets health and safety standards. Upgrade the electrical system. Upgrade the plumbing system. Get lead out. Fix safety issues. But it’s not going to look like a Cadillac, because nobody can afford that at first. Those upgrades will come down the road, as the owners progress.”
This no-frills strategy lets ACTS turn more families into homeowners more quickly, with a lower price tag. In most cases, the loan terms for ACTS clients are just five to ten years (in contrast to the common 30-year mortgage term). So people fairly quickly own their houses outright, which frees up cash flow for aesthetic upgrades. “Our preference is to provide families with opportunities to rapidly build up significant equity,” says Gosman. This accrual of home value is accelerated by the fact that ACTS is helping so many neighbors become owners, instead of renters of rotten houses, at the same time. An entire neighborhood rises, if slowly, at once.
ACTS does all this nonprofit work on a remarkably slim annual budget of around $2 million. And depending on the year, almost half of its budget comes from earned revenue—realty commissions, modest fees for rehab work, and limited transaction fees. The staff of 16 includes six real-estate agents, three financial coaches, two rehab counselors, and five people in operations. When the group first began, the Milwaukee-based Lynde and Harry Bradley Foundation contributed about 40 percent of its budget. Now Bradley funding hovers between 5 and 10 percent.
“The Bradley Foundation is proud to have supported ACTS Housing for many years,” says CEO Rick Graber. “The merits of its work are multifaceted: it helps families improve their daily living conditions and build wealth; it improves public safety and restores the city’s housing stock; it creates networks of mutual support and helps refugees and other immigrants assimilate into American life; and it gives private lenders confidence to invest in the community.” Graber also notes that it “accomplishes all of this in the context of a free-market model that doesn’t distort but, rather, restores the housing market in the neighborhoods in which it works.”
In 2016, ACTS won funding from Stand Together, a Koch-funded nonprofit, that allowed it to make three new hires. They will help the group better document its impact on neighborhoods, measuring not only housing indicators but things like accompanying decreases in crime rates, improved school performance, and more. The organization’s leadership is also examining the possibility of expanding—to serve more families and new neighborhoods in Milwaukee, and to bring its model to other cities with older housing stocks.
Adding a for-profit companion
Meanwhile, former ACTS director Carl Quindel turned to a for-profit model to reach even more families in Milwaukee. Five minutes away from the ACTS office in the former convent, Quindel now runs a business from a second-floor office over the Amaranth coffee shop. Outside in the sun, Quindel explains his transition.
“I just became more and more interested in this group of families that wasn’t qualifying with ACTS,” he tells me. Families didn’t fit the ACTS model because of poor credit history, inadequate income, or other inability to qualify for a bank loan. Or they didn’t have the family support, physical strength, or time to put in the sweat-equity on renovation work that ACTS expects. Quindel considered creating a special program at ACTS, or a subsidiary. Eventually he and the ACTS leadership made an alliance. He would start a company to do low-income rentals and landlording in a way that incrementally led many participants to ownership.
Quindel’s company, Strong Blocks, purchases homes in a target neighborhood as an investor. It rehabs them with its own funds, creating a livable housing product. Then Quindel approaches neighborhood renters, advertising a rent-to-own program. Interested clients apply and meet with him to pick a property and come up with a buying plan.
After they start renting one of the company’s properties, Quindel and his partner start meeting with families to rationalize their finances, and get their financial documents bank-ready. They sometimes draw on credit counselors at ACTS. Once the family is ready, Quindel connects them to a bank, and they purchase the house they’ve been renting. The average timeline for each property is five years from the moment Strong Blocks buys it and starts renovations to the new homeowner popping the cork.
Strong Blocks has been in operation for two years, and already owns 94 units. It’s starting to have its first renters become owners. In the next year, the company plans to purchase another 100 units, many of them city tax foreclosures, all of them acquired at very low prices.
Strong Blocks customers David and Dolores Price were at first hesitant to participate. They had been renting one property for 12 years, and were firmly settled. But when Strong Blocks bought the house across the street and turned it around, that caught their attention. David carefully cultivated his yard, and was working on it one day when Quindel stopped by to make his argument: the Prices were acting like homeowners, but receiving none of the benefits. They could take their cultivating spirit across the street and reap the rewards of owning property.
After talking it over, the Prices decided to take the leap. David explains, “Anytime you’re taking an adventure that’s new, and as bold as becoming a homeowner, which I’d never done before, it’s a little bit scary. But it’s working out.” The couple now own a restored home. “It was one of the worst looking houses on the block. Now it looks like one of the best houses on the block.”
Advantages for all
With ACTS and Strong Blocks working across numerous low-income neighborhoods of Milwaukee, the benefits of homeownership are accumulating for many families. As the ratio of homeowners on a block grows, the houses take on a different look. Loitering and crime are reduced.
People used to “walk through the neighborhood and throw trash and bottles everywhere,” says David Price, but now “they pick them up.” He describes “elements” who “didn’t live here, but hung out here.” He talked it out with some loiterers one day: “We appreciate you not hanging on the sidewalk or bringing a bad element to our block.” He told one person that “even though it’s not lakefront property, we should be able to live in a decent place.” At first the response from the group was icy, but “now they say ‘hi.’ ”
When asked how the neighborhood around the church has changed since the founding of ACTS, Father Dennis says it’s “quiet.” He says kids do better in school if they’re not in a rotating rental situation. The parish now knows its congregant families are “going to be here long-term,” which has many advantages in creating neighborhood coherence.
And benefits for individuals are clear. Families that were being evicted over and over are finally stable. The quality of the houses is better. And owning has even proven to be cheaper than renting as an immediate proposition. The typical ACTS family has four members and earns $2,600 a month, and saves $240 a month by purchasing a home and rehabbing it instead of renting.
It takes effort, though. Barbara Taylor went to seminars and worked on her financial management for two and a half years to get her credit score up to the point where she could buy her home. And as soon as she purchased the home she took out a $15,000 loan from ACTS and put a new roof on the place. She redid the kitchen, the porch, the windows, the floors. “It was going down,” she says. “A lot had to be done in here.”
But as Taylor worked to remake her residence, others on her block did the same, and Galena Street has slowly transformed. “It was a little tough around here at one time…the gangs were forming, but we complained, and now it’s more families.” She appreciates her neighbor who is a policewoman. “She said she’s not going to ever move, and that’s fine with me!” Thanks to the help of ACTS Housing and Barbara’s own hard work, the Taylor family won’t be moving anytime soon, either.
Ashley May is Managing Editor of Philanthropy.