New Berlin agrees to affordable housing project

Company to drop lawsuit over City Center project

MSP Real Estate officials say that 90 of the 102 units in New Berlin’s City Center area will be rented to qualified tenants who meet low-income standards.

MSP Real Estate officials say that 90 of the 102 units in New Berlin’s City Center area will be rented to qualified tenants who meet low-income standards. Photo By Eppstein Uhen Architects

July 25, 2011

New Berlin will allow construction of a controversial 102-unit affordable housing project without further city action, according to terms of an agreement released Monday that settles a lawsuit between the city and developer MSP Real Estate Inc.

The agreement also allows 34 senior housing units on an adjoining parcel on Library Lane that will require only Plan Commission - not Common Council - approval for the use, site and architecture.

The Common Council signed off on a memorandum of understanding that was the basis for the settlement in a three-hour closed-door meeting last Tuesday by a 4-3 vote. Terms were not made public until Monday because, City Attorney Mark Blum said, revisions and further discussions were needed.

The settlement stems from a dispute over the development of affordable housing in the City Center.

Deer Creek was a previously approved and permitted condominium project at the City Center started in 2004, but construction stalled in 2006 after only one of four condo buildings had been finished.

AnchorBank foreclosed on the investors' mortgage, still owns the property and has a nearly $1 million security deposit with the city to guarantee certain road and other infrastructure improvements.

MSP, of St. Louis Park, Minn., last year sought to build its own 180-unit affordable and senior housing project on the Deer Creek site. The developer had received approval for the project in May 2010, but the Plan Commission rescinded approval in July 2010 after dozens of residents rallied against the affordable housing component. Some said the low-income housing would increase crime and did not reflect the original City Center vision of condominiums and retail shops.

In October 2010, MSP acquired Deer Creek Limited Partnership and announced revised plans, calling for construction of condominiums that could be rented using initially approved condo permits. The plans called for three buildings that mostly would be affordable units. Construction was to be financed using state-allocated affordable housing federal tax credits.

In January, the city refused to issue building permits for that project, arguing that Deer Creek Limited Partnership ceased to exist because of a lapse in paperwork and fees with the state, so approvals that had been issued to that entity were no longer valid.

MSP filed a lawsuit against the city, arguing that racial discrimination was a factor in the city's denial.

The U.S. Justice Department also filed a lawsuit last month against New Berlin in U.S. District Court, contending the city violated the Fair Housing Act. Both lawsuits sought to force the city to issue building permits.

Milo Pinkerton, MSP's president, said the agreement, if fulfilled, settles his firm's lawsuit against the city, and under terms of the agreement, that will be reported to the U.S. Department of Justice. It is unclear whether the Justice Department will drop its action.

Agency not commenting

New Berlin Mayor Jack F. Chiovatero said Monday that while he had not heard from the U.S. attorney's office, "I'm expecting that the Department of Justice will see that we've complied with what they were worried about, that we allowed this building to go forward, and that they'll drop their lawsuit. It was their main issue."

An official from the U.S. attorney's office for the Eastern District of Wisconsin declined to comment Monday.

On July 18, a federal magistrate handed the developer a victory in ruling that the Deer Creek Limited Partnership seeking to build the latest apartments was the same entity that had obtained earlier approval and permits. That ruling was the impetus for the settlement.

"The voters and residents are probably upset," Chiovatero said. "But it was the best decision for the city because of the tax impact (of a prolonged lawsuit.) Unfortunately we can't control what the developer uses for financing," referring to federal tax credits that are contingent upon their use in providing low-income housing. "We also can't control ownership of these buildings," he said.

In a prepared statement, MSP said that because the condominiums are being built using tax credits, 90 of the 102 units will be rented to qualified tenants who meet low-income standards. The units will be targeted for those with household income of $24,750 to $45,840, and rents could range from $663 for a one-bedroom unit to $1,100 for a three-bedroom unit.

The remaining 12 units will be rented at market rate with no income requirements.

The plan for 34 senior housing apartments is scaled down from the original proposal of 100.

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