Tabula Rasa All-Electric, Net-Zero Panelized House Project

Our proposal seeks to address the climate crisis while increasing jobs and raising income for workers by creating a factory that engages in year-round manufacturing of panels that can be assembled into houses.  Our eventual goal involves expanding the availability of ecologically responsible new housing in Wisconsin and other Midwestern states, and preparing for the arrival of Climate Change Refugees.  

The City of Milwaukee owns more than 3000 vacant lots, which require significant expenditures for police oversight as well as seasonal mowing and snow removal but do not currently generate any property tax income. 

A variety of factors, including a history of discriminatory housing policy and de-industrialization, has produced a widening wealth gap in Milwaukee and other US cities.  In 2019, the Center for American Progress stated that the median wealth of America's ~15.16 million Black households was $24,100.00, while the median wealth of America's ~92.12 million white households was $189,100.00.  The burden of paying ever-higher market rents while not having a strategy in place for saving money and building generational wealth falls disproportionately on residents of Black and Brown communities, who make up a majority of Milwaukee residents.  

In Milwaukee's Lindsay Heights neighborhood, for example, just 23% of the occupied housing units are owner-occupied, while 77% are occupied by renters. Home ownership stabilizes neighborhoods and is an important component for building generational wealth.  With much of the available rental housing stock poorly insulated, drafty, and falling into disrepair, it is not surprising that the energy burden faced by residents of Milwaukee's predominantly Black and Hispanic communities is estimated to be roughly double that of households in predominantly white neighborhoods.  

One of the things that deters Black and Brown families from making the decision to purchase a home is the fact that in some of Milwaukee's most troubled neighborhoods, it is difficult to predict whether property values will go up or down. There are many streets in the city where it is possible to see houses that have been damaged by fire or other forms of vandalism. Some houses are covered with black patches of soot or visible gaping holes. Along with the presence of houses that have fallen into disrepair, there are vacant lots that do not seem to be monitored by neighborhood watchers. The vacant lots seem to be outside the illumination zone of streetlights, and they tend to attract individuals who engage in illegal activities. Prostitutes and their johns leave used condoms on the sidewalk, and drug dealers walk in the streets carrying guns.  The sound of gunshots has kept residents awake on too many summer evenings. 

While the home ownership rate among Milwaukee's Black and Brown communities is disproportionately low compared to their white neighbors, the city itself, which is located inside the Lake Michigan watershed, has more than 3000 city-owned vacant lots.  

The Great Lakes Region, which includes cities like Milwaukee, contains more than 20% of the world's supply of surface fresh water.  

Our solution to the climate crisis and the low home ownership rate among Black and Brown communities is to work with philanthropies and the City of Milwaukee's Department of Administration (DOA) - Environmental Collaboration Office (ECO) to build environmentally responsible houses on vacant lots.  Eventually, it is our hope that the availability of attractive, reasonably priced, environmentally responsible housing will entice mobile workers who currently live outside the water-rich Great Lakes Region to leave their homes in water-starved, desert-like regions of our country -- areas where water needs to be imported, states fight against other states for access to water -- and move to the Great Lakes Region, where water is abundant and housing prices are more reasonable.

We intend to partner with local philanthropies and the City of Milwaukee to build a new factory that will facilitate the creation of panels which can be assembled into new houses on vacant lots in Milwaukee.  Our first proposed location is very close to both the Fond du Lac Farmers' Market and the Phyllis Wheatley elementary school redevelopment.  The proposed lots are either included inside, or very close to, the Lindsay Heights neighborhood.  

We intend to work with a panelized house building manufacturer to build houses on vacant lots that will show local residents, representatives of local philanthropies, what they could buy.

By partnering with local philanthropies and the City of Milwaukee, we hope to sell single-family houses to residents of Milwaukee for $125,000 and duplexes for $250,000.  We estimate that before an individual or family can afford to buy a single-family house for $125,000, they need to have an income of ~$50,000 per year.  This translates to one individual earning an hourly wage of $25.00 or two individuals earning $12.50 per hour.  

The median household income in Lindsay Heights is $20,723, which is about half of the median income for the City of Milwaukee ($41,838).*

Over half of Lindsay Heights households make less than $25,000 per year, in comparison to 30% in the City of Milwaukee as a whole.*

23% of the housing units in Lindsay Heights are vacant.  The percentage of housing units that are vacant in the City of Milwaukee overall is 11%.  Of the occupied housing units in Lindsay Heights, 23% are owner occupied and 77% are renter occupied.  This indicates a lower rate of owner-occupancy in Lindsay Heights compared with the City of Milwaukee as a whole (41%).*

According to the Census Bureau, in the Lindsay Heights neighborhood, 39% of neighborhood residents live in households with incomes below the poverty line, compared to 25% in the City of Milwaukee overall.*

In Lindsay Heights, 90% of the population, or about 7,507 individuals, identify as Black or African American, while just 4%, or 294 individuals, identify as white. In the City of Milwaukee as a whole, 38.3% of the population identifies as Black or African American.*

The Lindsay Heights neighborhood has a higher percentage of housing units built in 1939 or earlier than the City of Milwaukee as a whole. Of all the housing units in Lindsay Heights, over half (53.2%) were built in 1939 or earlier, compared to 38.6% in the city overall.*

By helping people find a way to purchase well-built, environmentally responsible houses, we will be able to help families build generational wealth while reducing both their carbon footprint and their monthly energy bills.

According to Data USA, Milwaukee's demographic breakdown is as follows: 

Black or African American (Non-Hispanic) -- 38.3%

Other (Hispanic) -- 8.16%

Asian (Non-Hispanic) -- 4.57%

White (Hispanic) -- 8.03%

White (Non-Hispanic) -- 34%

* Taken from a report titled: Lindsay Heights Neighborhood Data Portrait: Data You Can Use. The report was prepared with the support of the Urban Economic Development Assocation of Wisconsin (UEDA). The framework is based on input and advice from community organizers working in the neighborhoods supported by Milwaukee's Community Development Block Grant (CDBG) program. The original set of neighborhood portraits were released by Data You Can Use

Silicon Pastures is a woman-led, early-stage investment and real estate development firm with operations in Milwaukee, Wisconsin.  Beginning in 2019, Silicon Pastures' principal, Teresa Esser, worked with members of the Rotary Club of Milwaukee's Invest in Milwaukee Committee to figure out how to stimulate local investment. The committee looked at many things before deciding to put its weight behind supporting home ownership for first-time home buyers through building new homes on vacant lots.

During 2022, Ms. Esser spent considerable time engaging with residents of Lindsay Heights, attending neighborhood meetings, walking with residents in the local Park, attending (and winning first prize in!) the Halloween Trunk-or-Treat event, putting on a lecture about the best way to apply for college scholarships, and attending other neighborhood gatherings. During this time, Ms. Esser shared her plan for building houses on vacant lots and learned about the residents' goals and desires for neighborhood development. 

Although he is based in Massachusetts, during 2022 Mr. Stephen Kieras and his colleagues from Green Hammer moved to Milwaukee and lived in a duplex owned by Ms. Esser, located at 2021-2023 N. 28th Street -- just outside Lindsay Heights -- while making extensive renovations. During the time that Mr. Kieras lived on 28th Street he had an opportunity to attend neighborhood community meetings and engage with local residents. 

Once, when a neighbor complained that his roof was leaking, Mr. Kieras volunteered to go up on his roof and make repairs to the homeowner's property.  During 2022, Mr. Kieras learned about the economic needs of households in Lindsay Heights and Milwaukee as a whole and developed ideas about how to achieve fair housing objectives by promoting community stabilization and diversity. 

Mr. Kieras, Ms. Esser, and their Wisconsin-based architect, Mr. Keith Barnes, have spent a great deal of time talking about the best way to design and build 1200-square-foot single family houses on the type of long, narrow, city-owned vacant lots that are available in Milwaukee.  Mr. Kieras, Mr. Barnes, and Ms. Esser have also spent considerable time having conversations with potential manufacturing partners who have experience in off-site panelized house construction.

Module Housing, represented by Mr. Ankur Dobriya, is a startup company located in Pittsburgh which owns and operates a facility called "The Last Mile Lab," which is a 10,000-square-foot factory space that employs about 10-12 people.  Module's Last Mile Lab focuses on workforce training and build-out of affordable, ecologically responsible housing.  At the Last Mile Lab, Module conducts modular research, hosts training programs, and finishes modular units. The Last Mile Lab has partnered with the local trade institute to create a training program which focuses on providing women and people of color with greater access to construction trades. 

The Last Mile Lab provides Module with the ability to work with the existing workforce while also leveraging the power of off-site construction.
Module facilities also focus on building ‘Zero Energy ready’ homes that are in the country's top 1% in terms of energy efficiency, in addition to being low maintenance.

Each of the two units in the duplex that Mr. Kieras and his colleagues have just finished renovating contains four bedrooms, which means the duplex can comfortably house 8-10 people. (Up to 10 people will have access to high-quality housing.)  By accepting an offer for $250,000, we validated our pricing hypothesis and established a market comparable, proving that Milwaukee's 30th Street Industrial Corridor can support the sale of a duplex for $250,000 or $125,000 per unit. (There are 4,219 housing units in Lindsay Heights and 258,444 housing units in the City of Milwaukee, and each unit is owned by someone; each owner benefits from increase in property values.) The buyer is a married couple who intend to use this small-scale landlording business to build generational wealth for themselves and their family (~2-4 people benefit from a low-risk investment.)  Module Housing's Last Mile Lab, located in Pittsburgh, PA, already provides job training for 10-12 people per cohort, which translates to 40-50 people per year. (40-50 people have access to job training.)  Module Homes has already built 15 homes, and they have ~50 homes under contract.  (15-65 people have access to housing and low-risk investment opportunities which will help them build generational wealth.)  Therefore, we believe that as many as 258,573 people are currently being served by our solution.  (10+258,444+4+50+65=258,573)

Silicon Pastures II LLC's Managing Director,  Teresa Esser, has submitted a proposal for Milwaukee's All-Electric, Affordable Net-Zero Energy Homes Project.  The RFP is offered by the City of Milwaukee's Environmental Collaboration Office (ECO), working in collaboration with several local philanthropic partners.  The team will learn during the week of May 22 whether they have been chosen to move forward with this RFP.  If the submission is chosen, the team will have the opportunity to spend/borrow/raise/invest between $500,000 and $1.3 million to build one single family house, one duplex, and a small-scale panelized house assembly factory. If all goes well, the team may decide to work toward raising an additional $40-$60 million to build a larger, state-of-the-art factory.  

Before the team can raise $40-$60 million to build a larger, state-of-the-art factory, they will need to learn what they don't currently know about why previous panelized house construction factories have not worked, and why previous attempts to bring out-of-state factories to Milwaukee's 30th Street Industrial Corridor have not succeeded.  The team may also need to recruit additional team members and use creative methods to insure that all investors are equally focused on making an impact and making a profit.  

Our team sees opportunity where others see only problems.  Instead of complaining about the high rate of unemployment and the low rate of home ownership among Black and Brown communities, we have a plan for helping renters transition to first-time home buyers.  Instead of lamenting the ever-increasing cost of fossil-fuel-derived energy that is purchased from the local power utility, we aspire to help homeowners derive energy from solar panels or other sources.  Instead of making our project solely dependent on donations and volunteer labor, we have strategies for working with philanthropic partners to subsidize the sale of houses in Milwaukee's central city OR, if subsidies are unavailable, selling our houses at market rate.  Our solution is innovative because we are unusually adaptable.  We want to challenge the idea that the only entity that can build new houses on vacant lots in inner-city neighborhoods is Habitat for Humanity.  We also want to challenge the notion that people who are currently renting apartments cannot become caring, empathetic, responsive small-time landlords, by purchasing a duplex.

During the next year, our team has a goal of building one affordable, net zero, all-electric single family house and duplex on two vacant lots in Milwaukee.  We also have a goal of setting up a small-scale panel assembly factory and testing whether we can find investors who are interested in supporting the creation of a larger panelized house construction factory.  During the next five years we have a goal of raising $50 - $60 million to support the creation of such a factory.  When we reach this goal, we plan to build a factory that creates enough panels to build 300 houses per year.

On the housing side, we will measure the number of housing units that are built, the costs associated with actually building the houses, and whether we can cause the houses to generate as much energy as they use.

We will measure the number of people who express interest in buying the houses, after they are built.  We plan to create a waitlist of people who want to purchase additional houses, and we will measure the number of people who choose to join our waitlist.  We will measure how easy or hard it is to partner with local first-time homebuyer education programs to identify prospective buyers.  

On the factory side, we will measure the number of investors who express interest in hearing our pitch and the number of investors who express interest in making an investment.  We will discover how easy or hard it is to raise the $50 - $60 million that is needed to build a state-of-the-art panelized house construction factory.

Communities with stable housing markets offer more employment for residents and a more stable tax base, both of which contribute to lower crime, higher quality schools, and a cleaner environment.

Home ownership has been the most important driver of wealth creation in the US since WWII, but there is a shortage of quality, livable, move-in ready housing inventory in many Milwaukee neighborhoods.

Milwaukee has a well-known racial gap in homeownership, with a white homeownership rate of 72% and a black homeownership rate of just 26%1. This is the second-lowest Black homeownership rate among metro areas.

In recent years Milwaukee’s homeownership decreased by 12%, with a disproportionate amount of this decrease in majority Black neighborhoods.

When members of Black and Brown communities see other residents of their own communities building generational wealth by purchasing houses, they will be inspired to purchase their own houses.  When renters become homeowners, they will be more likely to call the police if they see something going wrong.  The children of home owners are more likely to do better in school and to stay in school until graduation.

Our solution is basic, ancestral, and fundamental: Bring people to the place where the water is, and provide them with decent shelter, once they arrive.  Using a duplex house as an engine for generational wealth creation is not a new concept, but it is audacious to challenge Black and Brown families who have lived in rental apartments for generations to think about becoming both property owners and landlords in a single step.  To achieve this goal we will need to use new forms of technology, community involvement, and genuine social networks to provide members of these communities with educational and emotional support.  We need MIT Solve to help us figure out the best way to do this.

Our solution involves challenging basic assumptions that contribute to existing unsustainable cultural norms.  We challenge the assumption that the Great Lakes Region is not a good place to live, and that remote workers and digital nomads would not choose to live here.  We challenge the assumption that the parts of our country that are most desirable to live and invest in are the regions which currently attract the greatest share of our collective venture capital dollars: Silicon Valley, Boston, and New York.  We challenge the assumption that philanthropic foundations which currently trust investment decisions related to their corpus -- the 95% of their total capital that they do not annually give away -- cannot figure out how to make low-risk, program-related investment decisions that have a positive effect on the regions that they care about.  We challenge the idea that it is right and good for foundations, university endowments, and public pension funds to provide seemingly unlimited amounts of risk capital to the Silicon Valley, Boston, and New York-based VC and private equity fund managers who invest in disruptive technologies that attempt to disrupt the traditional industries that provided the donated capital in the first place -- without also finding ways to replace those lost jobs by investing some growth-related risk capital in regions they are supposed to be looking after.

Our team members are committed to walking the walk with regard to equity, diversity, and inclusion with an emphasis on building an inclusive development team and marketing the homes to diverse individuals, including individuals who identify as women, LGBTQ, and persons of color. Silicon Pastures II LLC is led by Teresa Esser, a woman.

Ms. Esser has learned through the years that the best way to demonstrate that a person is truly committed to diversity is to show, rather than tell, and build genuine human relationships. Ms. Esser is proud of the genuine human relationships she has built over time with individuals of various backgrounds, and she is proud of having put together a diverse and inclusive Advisory Board.  The Advisory Board members are as follows:

• Dr. Keenan Grenell, Manufacturing Diversity Institute and Global Capital

• Mr. Alex Chou, Keller Williams Real Estate

• Mr. Reginald Reed, Mindful Companies

• Ms. Valerie Tatum, Anointed Cleaners

• Dr. Gordon Nameni, August Brown

In addition, Ms. Esser believes that the time she spent engaging with residents in the Lindsay Heights neighborhood during 2022 has resulted in some genuine human relationships, and she can use these relationships to do things like find potential home-buyers.

Assuming that we win our RFP, our business model will look something like this:

Receive philanthropic grant funding of $500,000 to finance the initial phase of the project.  The timing of the delivery of this grant remains to be seen.

Silicon Pastures II, LLC intends to invest somewhere between $90,000 - $200,000 in equity for the project.

Silicon Pastures II, LLC intends to work with a local economic development agency or community development corporation to borrow somewhere between $260,000 and $760,000 for the initial phase of the project.  Funds will be used to purchase the panels that are needed to build a single family home and a duplex, do site development work, dig the foundation, and finish the units.  The amount to be borrowed will depend on when the grant funding is received.

Sell the single family house for $125,000 and sell the duplex for $250,000.

Develop a waiting list of prospective home buyers.

Capital invested in Phase 1: Approximately $850,000.

Revenue from Phase 1: $875,000.  ($500,000 from grants; $125,000 from single family house and $250,000 from duplex).

Receive philanthropic grant funding of $325,000 to finance the second phase of the project.

Silicon Pastures II, LLC intends to invest somewhere between $25,000 -  $175,000 in the second phase of the project.

Create a small-scale panelized house construction factory in Milwaukee.  Total cost: Approximately $500,000.

Measure the number of jobs that are created.

Measure the number of people who express interest in joining a waitlist of prospective home buyers.  Keep track of whether the buyers live in the City, the suburbs, or rural areas.

Reach out to angel investors, local economic development agencies, state economic development agencies, impact investors, family offices, venture capitalists, private equity funds, and others.  Begin efforts to raise $50 - $60 million to be used for the creation of a larger, more state-of-the-art panelized house construction factory.

Measure the number of people who express interest in joining the waitlist.

Work closely with members of the Community Development Alliance to obtain grant financing that will subsidize the cost of creating 20-100 houses per year and selling them for $125,000 per residential unit.

Our plan depends on whether we are chosen for an RFP that we applied for on April 18th.  We will know whether we have been chosen for this RFP during the week of May 22nd.

If we are chosen for this RFP, we will have an opportunity to work with the City of Milwaukee and several local philanthropic foundations through an organization called the Community Development Alliance, or CDA.  The CDA and its collaborators will provide $500,000 to subsidize the creation of the initial single family house and duplex and $325,000 to subsidize the creation of the initial factory.  The CDA will continue to provide the funding that is required to support the creation of 20-100 housing units per year.

(According to the CDA's Website, housingplan.org, there is a need for 32,000 new housing units which can be sold to Black and Latino Homeowners, and 32,000 rental units for families making $7.25 - $15 per hour.  The houses we would create would fit into this overall housing plan.)

To finance the creation of a larger factory, we intend to raise capital from a combination of local economic development agencies and community development corporations, statewide economic development agencies and community development corporations, and the private market.  We intend to reach out to angel investors, venture capitalists, family offices, private equity firms, and others. 

We also plan to sell panelized housing to residents of suburban and rural areas.

During July, 2022, Silicon Pastures II LLC purchased a dilapidated duplex in Milwaukee's 30th Street Industrial Corridor for $45,000.  Shortly thereafter, Silicon Pastures borrowed $96,000 from the Great Midwest Bank to finance the cost of repairing and renovating the duplex.  The total cost of renovations, which were performed by the Green Hammer Group, was $175,000.  

The duplex is now under agreement, and we expect that it will be sold for $250,000.  By selling this duplex, we are creating a market comparable which validates our hypothesis that attractive, well-built, well-maintained duplexes in Milwaukee's 30th Street Industrial Corridor can be sold for $250,000. 

We look forward to learning, at some point during the week of May 22, whether we have been chosen to work with the Community Development Alliance and the City of Milwaukee to create subsidized housing.