By Kim McDarison
Two drafts of a proposed affordable housing policy, outlining parameters through which some $1.9 million in taxpayer-supported assistance can be applied, will be presented Thursday to the Whitewater Community Development Authority (CDA).
The policy could receive approval by the CDA for recommendation for adoption by the city council on Thursday.
According to Whitewater City Manager John Weidl, both drafts seek to create parameters through which some $1.9 million in funds can be applied to the development of affordable housing within the city of Whitewater, however one draft, as developed by city staff, stipulates that any single-family units built using the taxpayer-supported assistance funding must become owner-occupied, and may not be owned by a landlord or investor.
A second draft, which uses the city’s draft proposal as a baseline and includes edits made, according to Weidl, by Jim Caldwell, the owner of Whitewater-based First Citizens Bank, also will be submitted Thursday for consideration by the CDA. Among suggested edits, the second draft allows landlords and investors to buy taxpayer-incentivized, single-family housing, Weidl noted recently by email.
In a memo written Tuesday to the Whitewater Common Council, Weidl noted his concerns about allowing taxpayer-incentivized, single-family housing units to become owned by investors, stating: “I need to maintain my stance that owner-occupied is the intent of the policy and that the elected officials moving taxpayer money into units that end up owned by investors for rent only exacerbates the problem we have with too many rentals and not enough owner-occupied units.”
Further, he wrote: “To create a policy that takes $1.9 million of taxpayer money and allows that to flow into single-family units that end up owned by the existing landlords in this community would be a failure of the policy to provide single-family dwellings to those who need it.”
Affordable housing and the $1.9 million earmarked by the city to address such shortages have been a discussion amongst city officials since at least 2020, when a Southern Wisconsin Regional Planning Commission (SEWRPC) study identified the state’s Tax Incremental Financing (TIF) program as a means by which to fund programing to address housing shortages. City officials identified Tax Incremental Financing District (TID) No. 4 as a mechanism through which some $1.9 million in housing funding might be achieved.
In 2020, the city identified TID No. 4 as “expiring,” and looked at two options: allow the TID to expire in the spring of 2021 or extend the TID for one year, as allowed by the state, to procure money to fund a residential project. The city chose the second option, noting in 2020 that, through use of the state program, housing project funding would be realized within the increment from the 2021 tax base and become available to launch a residential project in 2022.
A timeline, as drafted by city officials in 2020, is here: https://www.whitewater-wi.gov/DocumentCenter/View/2042/TID-Extention_Potential-Site-Maps.
Where did the $1.9 million come from?
In December, Weidl reminded council members — as they revisited the SEWRPC study conducted in 2020 — that, through use of the state’s TID extension program, some $1.9 million would be made available to help alleviate issues surrounding a shortage of affordable housing within the city.
Within the report, a history of TIF and its uses were outlined. The report noted that Wisconsin’s TIF program was begun in 1975 for the purpose of providing a method through which communities could promote tax base expansion.
As stated in the 2020 report: “TIF is aimed at eliminating blight, rehabilitating declining property values, and promoting industrial and mixed-use development. TIF is intended to spur development that would not otherwise occur by using increased property taxes from new real estate development to finance the cost of development.”
The report stated that while active taxing jurisdictions that gain revenue from property within the TID do not gain benefit in revenue above the base value until unit project costs are recovered, and the TID is retired, at that point the increase in property value, called “the increment,” is added back to the base and the taxing jurisdictions share the revenue from the increased property value.
In addition, the report stated, in 2009, the state amended its TIF legislation to allow municipalities to extend the life of a TID by one year after paying off the TID’s project costs. The amendment allows a municipality to use 75% of tax revenue received from the value increment for the sole purpose of benefiting affordable housing within the municipality, with the remainder used to improve the municipality’s housing stock.
Within the report, recommendations were outlined for use of the city’s gains procured through the one-year extension as granted through the amendment made in 2009.
According to the report, state law does not specify how the funds must be used in support of affordable housing, and allows funds to be used anywhere within the municipality. The report cited the following uses as examples: funding a new or existing housing trust fund; funding a new or existing down payment assistance program for low-income households; providing gap financing, using vehicles such as low interest or no interest loans, for affordable housing development, including gap financing for Low Income Housing Tax Credit projects; funding new or existing rehabilitation programs for low-income households or for landlords who own low-income properties; funding permanent supportive housing for families experiencing homelessness, and using funds as matches for state or federal affordable housing grant programs.
An earlier story about the housing study as reviewed by council in December, including a link to the full 2020 SEWRPC study, is here: https://fortatkinsononline.com/whitewater-council-revisits-2020-housing-study/.
In 2021, as part of the city’s “State of the City” address, then-City Manager Cameron Clapper stressed a need within the city to address housing shortages, noting that plans were in the preliminary stages to create owner-occupied housing on the city’s northeast side.
In 2021, Clapper said: “The way that we would do that is utilizing some programs that have come our way. One is the tax increment districts that we have established (in 2021); another is an extension of some increment collection that we were able to obtain from the state with old districts that were recently closed also (in 2021). We should have somewhere between $1.5 and $2 million of revenue generated back exclusively for housing development, and then an additional amount to be determined based on need that we would finance through those new tax increment districts.”
An earlier story, including Clapper’s comments about affordable housing needs and TIF monies to fund such projects, is here: https://fortatkinsononline.com/whitewater-city-manager-shares-state-of-the-city-address/.
The Whitewater Common Council, last December, began discussing a process to hire a new CDA/economic development director, during which time Weidl made note of the city’s $1.9 million, achieved after the closing of the city’s TID No. 4, further noting that the city needed to develop a policy about how to spend those funds.
The CDA and the city manager continue their efforts to hire an economic development director.
An earlier story about the hiring of a new CDA/economic development director is here: https://fortatkinsononline.com/whitewater-city-looks-to-hire-new-cda-director-job-description-policy-clarifications-discussed/.
What’s in the staff-prepared draft?
According to the affordable housing fund policy draft, as prepared by city staff, the purpose of the policy is to “assist home buyers and developers by addressing the lack of housing stock available in the city of Whitewater by creation of affordable housing opportunities, such as supporting home buyers in acquiring homes and incentivizing contractors/developers with the construction of new housing units.”
The policy also sets a goal of aiding homebuyers and providing financial support for projects within the city that seek to increase the supply of safe, quality affordable housing and facilitate longterm affordability and sustainability.
The policy next sets “guidelines” that “suggest possible allowable use.”
Within the document, affordable housing is defined as costing no more than 30% of the household’s gross income.
It defines housing costs as the principal and interest payment of the mortgage associated with the housing unit.
The document also notes that funding for affordable housing will become available as the city’s TIDs close and the municipality can continue to make use of the one-year extension, as provided by the amendment made by the state in 2009.
Other provisions within the document allow for down payment assistance, up to $500,000, to be set aside by the city for use within its down payment assistance program, with those funds made available to income-qualifying home buyers who earn 100% or less of the county median income.
Income-qualifying homebuyers could receive a no interest loan for $25,000 to be used as a downpayment for a home.
Programs for developers of single-family or single-family attached homes include incentives up to $25,000 per dwelling unit sold to a person meeting the affordable housing definition, and an incentive up to $15,000 per market rate unit for those units sold to buyers not meeting the “affordable” definition.
Developers could achieve a maximum incentive of $500,000 per project. Incentives would be paid out to developers as homes are sold.
The document states: “Units developed under this program are designed to support family and owner-occupied residential projects.”
Also noted in the document, the city shall have the option to utilize these funds to purchase lots or land and install infrastructure to develop a subdivision that would fit within affordable housing guidelines.
Proposal with edits
The proposal built from staff’s submittal with edits from Caldwell change guidelines such that those qualifying for the city’s down payment assistance program must earn 100% or less of the U.S. Department of Housing and Urban Development (HUD) median income.
Edits remove from staff’s proposal a provision that “all units and/or projects receiving developer incentives are required to be rezoned R-O Non-family Residential Restriction Overlay per: https://library.municode.com/wi/whitewater/codes/code_of_ordinances?nodeId=TIT19ZO_CH19.25NOREREOVDI.
Also stricken is a provision noting “capital contributions to Homeowner Rehab Revolving Load Fund, a one-time contribution to the Homeowner Rehab Revolving Loan Fund to replenish funds for repairs in the amount of $200,000. Units developed under this program are designed to support family and owner occupied residential projects. All units and/or projects receiving monies from the Homeowners Rehab Revolving Loan fund are required to receive the designation R-O …, per: https://library.municode.com/wi/whitewater/codes/code_of_ordinances?nodeId=TIT19ZO_CH19.25NOREREOVDI.”
The document states: “While 75% of funding is required to be spent to advance affordable housing options in the city of Whitewater, the other 25% of TIF increment can be spent on housing that is available to projects and programs supporting residential development which doesn’t have an income-qualification of affordability. This could be a developer incentive … or other means of supporting housing development. Incentives could be provided for land acquisition, infrastructure, or certain amenities which would benefit a development. Up to $475,000 of the initial $1.9 million may be allocated toward projects meeting this criterion. Units developed under this program are designed to support family and owner-occupied residential projects.
Edits remove the following portion of the aforementioned provision: “All units and/or projects receiving funding through this mechanism are required to receive the designation R-O Non-family Residential Restriction Overlay District per: https://library.municode.com/wi/whitewater/codes/code_of_ordinances?nodeId=TIT19ZO_CH19.25NOREREOVDI.”
Under a subheading of “Application-Developers,” edits remove language that states: “To apply for the Affordable Housing Fund, applicants shall submit written correspondence through a letter of intent to the CDA for review at a public meeting. The letter of intent shall describe the proposed development concept and their experience developing and operating multi-family, affordable housing projects and also address items as outlined in sections b through g below.” The edits further omit items associated with the above language designated as sections b through g, opting instead for this language: “Applications will be taken throught the normal process of review by the Planning and Architectural Committee and the creation of a developer agreement as approved by city council.”
In his Tuesday memo to council, Weidl noted that he was “open” to using HUD standards for qualifying income levels and making that adjustment to the policy “provided the elected officials buy in.”
He added: “The area we seem to be stuck is whether or not these properties need to be owner-occupied or can be investor-occupied.”
Thursday’s CDA meeting will be held at the Whitewater Municipal Building, 312 W. Whitewater St., at 5:30 p.m.
An agenda item indicates that CDA members will “review draft No. 2, affordable housing policy (which is the edited version submitted by Caldwell) and (make a) possible recommendation for the consideration by the common council.”
The agenda notes that draft No. 1, as submitted by city staff, will be included for review by the panel for reference.
The full draft policy as prepared by city staff, identified on the agenda as “draft No. 1” is here: http://fortatkinsononline.com/wp-content/uploads/2023/06/602.01-Affordable-Housing-Fund-Policy-As-revised-06092023.pdf.
The full draft policy as prepared by city staff with edits made by local banker Jim Caldwell, identified on the agenda as “draft No. 2,“ is here: http://fortatkinsononline.com/wp-content/uploads/2023/06/06-15-2023-CDA-AGENDA-PACKET_AH-Fund-Section-Edits.pdf.
Whitewater Municipal Building, file photo/Kim McDarison.
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