In a Nutshell
What: A new, mixed-use development that will serve as an anchor for community and economic development in a neighborhood heavily impacted by decades of systemic disinvestment, and, more recently by the total loss of a significant portion of the community’s infrastructure during civil unrest following the police shooting of Jacob Blake. The development – Uptown Lofts – will create affordable rental housing and enable a full-service grocery store to open, among other community benefits.
Sectors: Affordable Housing, Healthy Foods
Location: Kenosha, WI (Uptown)
Size: 151,346 square feet
Cost: $30 million
Sources of Funding/Financing: IFF, Kenosha Area Business Alliance, City of Kenosha, Wisconsin Housing and Economic Development Authority, Wisconsin Economic Development Corporation, developer equity
IFF Support: $2.5 million loan closed in December 2022 for construction and permanent financing
IFF Staff Lead: Stephanie Socall, Managing Director of Lending, Affordable Housing
Design: Korb + Associates Architects
General Contractor: Gorman & Company
Impact: Creation of 71 units of quality housing affordable to residents earning up to 60 percent of the Area Median Income; creation of a full-service grocery store in a community with limited access to affordable and nutritious food; retail space that will support local small businesses and enable a satellite location for the local public library
At the corner of 22nd Avenue and 63rd Street in Kenosha, WI, construction is proceeding rapidly on a project that would have been difficult to imagine only a few years ago. On track to be completed by the end of this year, the 151,346-square-foot building is a $30 million investment in the city’s future that’s symbolic of a new chapter in the Uptown neighborhood where it’s located. More importantly, it’s a tangible piece of high-quality infrastructure that’s going to support community and economic development in a variety of ways.
The mixed-use development – known as Uptown Lofts – will offer 71 one-, two-, and three-bedroom apartments affordable to residents earning up to 60 percent of the Area Median Income; bring a full-service grocery store back to a community with limited access to fresh, affordable food; create retail space for small business owners committed to the community; and provide the local public library with a new satellite location geared solely toward children.
“Transformational and catalytic are two words I’d use to describe what this project represents for the Uptown neighborhood,” says Ted Matkom, the Wisconsin Market President for Gorman & Company, which is the project developer. “Uptown Lofts is going to be an anchor for community development and a stabilizing influence for everything around it.”
It’s a welcome project on a site that in August 2020 was a major flashpoint in Kenosha following the police shooting of Black resident Jacob Blake, which exposed longstanding racial fault lines in the city and underscored systemic inequities contributing to stark disparities in life outcomes between people of color living in Kenosha and their white peers.
These disparities were particularly acute in the predominantly Black Uptown neighborhood, where the primary development activity in recent decades was the demolition of tax-foreclosed homes, and the community was the site of intense civil unrest as protests and riots rippled across Kenosha. More than 100 buildings in the city were damaged in the span of several days, with fires destroying more than half of the Uptown neighborhood’s business district. Where the Uptown Lofts is now being built, a strip of five buildings housing several small businesses was completely gutted by fire, leaving the owners without a means to earn a living and the neighborhood without a grocery store, among other community assets.
As Kenosha grappled with complex issues of race and socioeconomic inequality in the aftermath of the civil unrest, and residents began cleaning up the wreckage in Uptown, the Kenosha Area Business Alliance (KABA) began working to develop a vision for a mixed-use project that would provide new retail space in Uptown for small business owners who lost their buildings, as quickly as possible, while also creating new community assets in the neighborhood.
After inviting Gorman & Company into the ideation for the project, conceptual plans for the Uptown Lofts project were approved by the Kenosha Plan Commission within three months. With that, the Oregon, Wisconsin-headquartered developer purchased the lots with financial support from KABA and began assembling a complex capital stack for the project that leveraged myriad public and private sources of funding and financing to bring the Uptown Lofts to fruition – all while navigating rising interest rates and inflationary cost pressures that increased the initial estimate for construction from $18 million to $30 million.
“The city was steadfast in its support for the project, though, and did whatever it could to help us get across the finish line. And then IFF was extremely innovative in helping us fill a gap in financing after construction was underway, and this project doesn’t get done without that.”
“We’ve worked on some challenging projects before, but getting the financing in place for this project in a way that would make it feasible for the small business owners from the neighborhood to reopen in the building’s ground-floor retail space is the most challenging thing I’ve encountered,” says Matkom. “The city was steadfast in its support for the project, though, and did whatever it could to help us get across the finish line. And then IFF was extremely innovative in helping us fill a gap in financing after construction was underway, and this project doesn’t get done without that.”
Working quickly because of the community need that existed for the project, Gorman & Company applied for, and received, 4% Low-Income Housing Tax Credits for the project from the Wisconsin Housing and Economic Development Authority (WHEDA), and, with additional funding from KABA and its own money, began construction on the project in July 2022 before finalizing the capital stack. Ultimately, the developer secured short- and long-term bonds from WHEDA, funding from the City of Kenosha and the Wisconsin Economic Development Corporation, and an interest-only, non-amortizing loan of approximately $2.5 million from IFF in a deal that closed last December. It was the seventh Gorman & Company project IFF has supported with affordable financing, continuing a relationship that began in 2011.
Structured so the affordable rental units and each of the retail spaces are individual commercial condominiums, the small business owners occupying the ground floor will be able to build equity through ownership, which Gorman & Company and KABA are helping facilitate by offering affordable financing for the buildout of the spaces.
A Multi-Faceted Anchor for Community Renewal in Uptown
Among the small businesses planning to move into the Uptown Lofts facility are La Estrella Supermarket and The Uptown Restaurant, both of which operated in the buildings previously located on the site. In both cases, the small businesses will benefit from more space than they previously had, and in ground-floor retail spaces designed with their needs in mind.
The full-service grocery store, owned by Abel Alejo, will more than double in size when it reopens in its new, 9,500-square-foot space. In addition to Mexican food offerings, the supermarket will provide Uptown residents with an easily accessible location that’s walkable from anywhere in the neighborhood to buy fresh produce, meats, and prepared meals at affordable prices, which hasn’t been an option since the store’s previous facility was destroyed. Uptown and an adjacent neighborhood were once home to several grocery stores, but, by 2020, La Estrella Supermarket was the only one still operating in the neighborhood.
Aside from the community benefits associated with the grocery store’s return to Uptown, it’s new location in the Uptown Lofts building will also enable Alejo to get back to work after the disruption of the past several years and to continue building the business he launched in 2014, which had just started to become profitable in the two years before it was lost.
“I came to the United States from Mexico in 1985 and worked for other people until 2005, when I started a flooring installation business,” says Alejo. “In 2014, I opened La Estrella Supermarket, which gave me the opportunity to fulfill the neighborhood’s need for fresh produce, meats, general groceries, and basic services such as bill payment and money transfers. I’m so happy to be able to get back to work in this new space and to once again be of service to the Uptown neighborhood.”
“I’m so happy to be able to get back to work in this new space and to once again be of service to the Uptown neighborhood.”
Next door to the grocery store, on the ground floor of the facility, will be The Uptown Restaurant, owned by Yolanda Hernandez. Like La Estrella Supermarket, the restaurant was an anchor on the block before it was destroyed, and it will also benefit from a larger space built specifically to support the business – roughly 1,000 square feet more than its previous space.
The additional square footage will help Hernandez expand the business, which will benefit from the built-in customer base provided by the apartments on the upper floors of the building. The restaurant has been operating since July 2021 in a temporary location, and its return this summer to 22nd Avenue will be an important step toward restoring a sense of community in Uptown.
New to the neighborhood by virtue of the ground-floor space available at Uptown Lofts – and another asset that will contribute to the fabric of the community – will be a 7,000-square-foot branch of the Kenosha Public Library (KPL) focused on providing play-based learning for children. KPL has long needed additional space to create a child-centric location, and opening the new branch in the Uptown Lofts facility will enable the library system to transition an existing 2,000-square-foot location elsewhere in the neighborhood to a space that exclusively serves teenagers and adults. KPL expects to open its new space in Uptown Lofts in the spring of 2024, and the library system is already surveying the community and exploring partnerships to guide the programming that will be offered to children and their parents.
Beyond the community benefits provided by the library, restaurant, and grocery store, each will be attractive amenities for residents at the Uptown Lofts, who will live in high-quality, modern apartments with balconies and free underground parking that will preserve a surface parking lot for grocery store patrons. The affordable rental units will contribute to residential density needed to attract and retain additional businesses that will contribute to continued economic development in the community.
With construction slated to finish by the end of the year, residents will begin moving into the apartments in 2024. Given the complexity of the project and its cost, that’s a remarkably fast turnaround for the completion of the project – a testament to the public-private partnerships that helped expedite the process.
“There’s been a lot of support for this project, driven by an understanding of the positive impact it’s going to have in Uptown,” says Matkom. “This type of investment is unlike anything that’s occurred in the neighborhood in decades, and it’s going to create an anchor for additional investments in the years ahead that change the trajectory of Uptown.”