Waunakee Village Board Evaluates Guidelines for Affordable Housing Funding | Business
The proposed workforce housing project at 701-705 W. Main St. helped spark more discussion about the use of extensions of tax incremental financing (TIF) to finance such housing and improve the existing housing stock in Waunakee.
Although the village council has yet to take a formal vote on Cohen-Esrey’s proposal, members voted in favor of a resolution allowing the use of affordable housing extensions at their meeting on the 1st. February.
Projections show that over the next 10 years, the closure of three additional TIF districts is planned, allowing the village council to use a significant amount of tax increase for what staff have proposed to establish in as Waunakee Housing Improvement Program (WHSP).
Waunakee chief financial officer Renee Meinholz called the estimates rough, noting that they were based on projections for 2020, but shared with the board at its February 15 meeting a scenario of the dates of closure of all TIF districts in Waunakee. Using the 2020 projections, it shows the amount of the tax increase that could be allocated to the WHSP:
When the board passed a resolution to extend TID 2 at its February 1 meeting, board members asked staff to research how other communities are using TIF in this way. Some have expressed the wish that a policy be in place before deciding on the Cohen-Esrey proposal.
Wisconsin law included the extension of affordable housing to its TIF law in 2009, so it’s relatively new to many communities.
“At this point, very few communities have landed any funding from this program,” Schmidt said.
The trend has been to use the funds for single-family or duplex properties with basic improvements to improve the housing stock, he added. One example is the town of Menasha, where Strong Neighborhoods programs help citizens invest in their homes.
In Fitchburg, the city plans to close two TIF neighborhoods over the next two years, according to Schmidt’s memo to the board. This city plans to add $ 6 million to its Affordable Housing Fund. Fitchburg is also using part of its Affordable Housing Fund to develop a housing plan with the help of a consultant.
Schmidt suggested that the council look to the Waunakee Community Development Authority to suggest other policy programs other than improving the existing housing stock.
But he said he had found no other example of guidelines for using affordable housing extension funds for projects like that of Cohen Esrey, who received low housing tax credits. income (LIHTC) through the Wisconsin Housing and Economic Development Authority.
“As far as something perfect, take in this case a LIHTC product, and its limitations and constraints, and then put some kind of metrics and metrics to provide a reward, that information just wasn’t there,” Schmidt said.
Draft parameters of the housing policy and fund
Schmidt suggested that the village establish a housing improvement program in Waunakee that would offer 50% forgivable loans for the projects.
Nicole Solheim, executive director of the Wisconsin Partnership for Housing Development, explained the benefits of forgivable loans. Solheim consulted with the Waunakee Community Development Authority as they work on the recommendations of the Village Housing Task Force.
In large cities, Solheim said, the grants are structured as loan programs so that communities can see some of the funds for affordable housing projects go back to their housing fund. Loans also have different tax implications than grants.
“A lot of them are loans, both from a tax point of view and from a transaction structure, and also again, wanting to be able to fund future projects,” Solheim explained.
Schmidt presented parameters to guide a Waunakee housing improvement program with five points.
One identifies qualifying proposals as “qualified income units affordable to 100% or less of the median income of the HUD area, where” affordable “means no more than 30% of a household’s income. “
Another limits the loan to a maximum of 10% of the acquisition and construction costs.
A single project should not use more than 80 percent of the housing fund balance.
Half of the loan will be canceled 15 years after the completion of the project, the remaining 50% being repaid at a time to be negotiated between the village and the beneficiary and no later than 30 years after the completion of the project.
The project must demonstrate financial need.
Board members expressed support for the loan program and the award criteria.
“I love that we are pioneers,” said administrator Kristin Runge of the village’s use of the relatively new use of TIF. A community development specialist at UW Extension, Runge helped lead the village housing task force. She is working with other communities on housing projects in the Dane County area, she said.
“I said I think Waunakee is going to come up with something pretty innovative about how they use the TIF extension,” she told the board.
Runge supported the idea of a revolving credit fund.
“We’re not just using that extra year that we earn from TIF or TID to fund a project, but we’re really making a long-term investment that we can use over the course of our lives as a community,” he said. she declared.
Administrator Nila Frye noted that 20-year TIF districts are being created for businesses. She encouraged the board to be flexible when considering different housing projects and their ability to repay 50% of the loan over a 15-year period.
Administrator Bill Ranum suggested a bidding process for the funds.
In Madison, an annual request for development proposals allows city council to set priorities, Solheim said.
Administrator Gary Herzberg said the draft policy will facilitate the decision-making process of the village council and the Community Development Authority. Herzberg pointed out that each of the TIF districts closes before their statutory deadline, allowing them to provide a benefit to taxpayers through an extension.
“This is how we sold all these TIFs. I don’t want the public to start thinking, ‘We’re going to do this on every TIF because then we’ll have this pool of affordable housing’ and forget about why all of these TIFs were approved in the first place, ”Herzberg said. .
Herzberg noted that several residents oppose the use of the TIF and view the economic development tool as unfavorable to taxpayers while benefiting business owners.
“And now we’re just going to extend them for another year,” Herzberg said.
Administrator Phil Willems also supported the forgivable loan program and said the criteria could be fine-tuned.
Village president Chris Zellner said he wanted the housing improvement project to be streamlined and questioned the process.
He asked if the village council was rushing policy because of the Cohen-Esrey project.
“For me, I don’t like it when we are rushing,” Zellner said. But he added that the process for receiving tax credits for low-income housing is rigorous and difficult.
Zellner said he didn’t want Cohen Esrey to miss the opportunity, adding that it would also be lost to Waunakee.
The Community Development Authority will likely discuss the creation of a housing improvement program in Waunakee, as well as the criteria for a 50% forgivable loan program at the next meeting.