With housing in short supply, Wisconsin communities, developers look to shuttered schools

As communities around Wisconsin look for solutions to housing shortages, some developers are transforming shuttered schools into apartments.

Since 2017, communities and developers have sought state grants or tax credits to redevelop about 20 former school buildings. Others have used a mix of financing to redevelop vacant schools statewide.

In the Columbia County village of Randolph, a former school building will become 31 units of market rate and affordable apartments. The community of nearly 1,800 residents is receiving a $250,000 grant for the project from the Wisconsin Economic Development Corporation, or WEDC.

Village President Ken Ireland said one of the community’s greatest needs is senior housing. He said some older residents might want to downsize and rent apartments or buy condominiums.

“You have the need for housing more acceptable to the elderly that isn’t available,” Ireland said. “They stay in their homes, so then there isn’t that turnover of workforce housing available because there’s nothing available for those that are looking for a smaller home.”

In September, the village entered into an agreement with developer Obsidian Estates. Most of the new apartments will be offered at less than market rate. The project is estimated to cost around $1.5 million. WEDC’s review states that renovation may not proceed without financial assistance.

Missy Hughes, secretary and CEO of WEDC, said state grants often bridge the gap when traditional financing is unavailable.

“They provide the community and the developers with capital that doesn’t have to be repaid and helps to mitigate some of the risk in the project,” Hughes said.

Communities explore vacant assets to find solutions to housing crisis

Hughes said she thinks the agency has seen more requests for state aid for similar projects. She expects that to continue as communities look for solutions to meet demand for housing.

Many communities have been left with vacant buildings as districts have closed schools in recent years due to ongoing challenges with declining enrollment and state aid that hasn’t kept pace with inflation.

WEDC provides grants for community development and redevelopment of idle sites, as well as tax credits for rehabilitating historic buildings. In the last several years, the public-private agency pointed to grants that have helped offset costs of converting school buildings into housing in Ladysmith, Mayville and Arena.

A spokesperson with the Wisconsin Housing and Economic Development Authority, or WHEDA, said it has provided financing to support redevelopment of 13 schools since 2017.

WHEDA has awarded tax credits for projects to convert schools into housing in Sparta and Milwaukee, including the McKinley School Lofts and Edison School Apartments.

Developers in Oshkosh also converted the Smith Elementary School into low-income housing, and efforts are underway to turn six shuttered schools in Kenosha into a potential housing development.

Most recently, the city council in Superior approved a development agreement with Lake Superior Apartments to convert the former Lake Superior Elementary School into a 50-unit apartment building. The city is creating a tax incremental district to help pay for building improvements through tax incremental financing, a method of funding redevelopment projects.

Superior seeks housing for the ‘missing middle’

Under the deal in Superior, the developer will receive a $300,000 grant from the city’s Redevelopment Authority, as well as a $500,000 loan from the city’s affordable housing fund. The developer could also receive up to around $1 million in tax increment grants.

Superior Mayor Jim Paine said 23 units will be rent-restricted, which means they’ll be rented to tenants making less than the area’s median income. The project attempts to provide housing for what has been dubbed the “missing middle.” Paine said those units are aimed at people who aren’t living in poverty, but they may not be able to afford market rate housing.

“We’re actually investing in the affordability aspect of it,” Paine said. “We’re targeting the actual cost of rent in these buildings and holding that down, holding it so a few more people would be able to access these apartments than otherwise would have been able to.”

Last year, a Wisconsin Policy Forum report found the median sales price of homes grew by more than half, while median household income grew by only 19.7 percent from 2017 to 2022. At the same time, the share of renters paying more than 30 percent of their income on housing grew to 45.4 percent in 2022. Researchers cited the slow pace of housing development amid growing demand for homes.

One recent study found the city of Superior, which is home to nearly 27,000, has potential demand for more than 3,200 new housing units through 2035. Superior is far from alone. One 2022 analysis found the state needs to build up to 227,000 housing units by 2030 to keep up with demand, according to the research arm of the Wisconsin Counties Association.

Gov. Tony Evers and lawmakers provided $525 million under the 2023-25 state budget to expand access to affordable housing through creation of revolving loan funds and regulatory reforms designed to spur development.

Evers will unveil his plans for the state’s next two-year budget on Feb. 18.