5 City Projects Get WHEDA Tax Credits
Credits push forward projects with 311 units, more development across the city.
The Wisconsin Housing and Economic Development Authority awarded $13.3 million in tax credits today to create 1,486 units of affordable housing across Wisconsin, including 311 units in Milwaukee.
The announcement was made by Lieutenant Governor Rebecca Kleefisch and WHEDA director Wyman Winston at the recently completed Haymarket Lofts apartment building at 1300 N. 4th St., near the new arena. The developers, Lutheran Social Services and Indianapolis-based Herman & Kittle, received affordable housing credits in 2015 to help finance the redevelopment of the 111-year-old building into 72 apartments. The partners received a new credit allocation from WHEDA to develop senior housing in Franklin.
WHEDA annually awards the federally-allocated credits in a competitive process via their low-income housing tax credit program. The program assists in financing the creation of new housing in exchange for developers setting aside units at below-market rates for qualified residents for 30 years. Residents of qualifying units must earn no more than 60 percent of the county’s median income.
Of the $13.5 million in credits awarded, projects in the city received $883,923. Additional projects in suburban Milwaukee County received $1.8 million. That amount is down considerably compared to the prior two years. In 2017 projects in the city received $3.3 million in credits, and in 2016 Milwaukee projects got $4.9 million in credits.
Additional credits were awarded to two prior winners on the city’s far northwest side. The new Good Hope Library (56 units, Royal Capital Group) and the third phase of the Westlawn redevelopment (79 units, HACM) received just over $200,000 in credits to supplement the $1.8 million allocation projects received in 2017.
Developers often sell their credit allocations for less than face value to syndicators who resell them, frequently to large institutional investors with large tax burdens. The credits are awarded annually for a period of 10 years. For example, a $500,000 award yields $500,000 annually in dollar-for-dollar income tax credits for a period of 10 years. In effect, WHEDA awarded $135 million in credits, when multiplied over 10 years, before discounting for future inflation and their resale value.
Financing projects with low-income housing tax credits has become more difficult in the wake of the federal tax overhaul. The credits have less value if overall tax rates are lower because traditional buyers have a smaller tax bill.
The impact of this can be seen in the increasingly complex financing packages that are being put together for proposals using the tax credits. SEVEN04 Place, for which a ceremonial groundbreaking was held last week, relies on a stack of public and private financing described as a “lasagna” by a city employee. The financing for the Legacy Lofts project at 1500 W. North Ave. is similarly complex.
Both projects were highlighted by Mayor Tom Barrett in his State-of-the-City speech Monday morning. Barrett’s major policy announcement in the speech was a plan to create or rehabilitate 10,000 units of affordable housing over the next decade. While precise details on the proposal are not yet available, low-income housing tax credits are believed to be a key component and Barrett called on WHEDA to participate in the program.
Projects On Hold
Three Milwaukee projects were rejected by WHEDA in the latest round of funding.
The proposal by Que El-Amin, Mikal Wesley and Rayhainio Boynes, in partnership with Roers Investments, to build 55 units (46 of which would have been affordable) at N. 32nd St. and W. Center St., was put on hold by WHEDA. A number of past projects have previously received this status, revised their application and reapplied in future years to ultimately earn credits.
Two other projects were ruled ineligible for credits in their current configuration. The second phase of the redevelopment of the historic Soldiers’ Home complex on Milwaukee’s West Side by the Alexander Company, which would have redeveloped historic buildings and created 21 supportive housing units using $417,000 in credits, was deemed ineligible. Ironically, last year’s credit announcement was made at the complex.
In a statement to Urban Milwaukee, developer Joe Alexander said:”We are thrilled with the strong partnership we’ve established with WHEDA and their generous support of the Soldiers Home. We’re continuing to focus on rehabilitation of Old Main, made possible in part through WHEDA-funded tax credits. While we didn’t receive additional tax credits in this round, we scored well and look forward to reapply to support phase two of the project.”
Also ruled out was the city’s proposal to redevelop the College Court East senior housing tower at 3334. W. Highland Blvd. This is the second year in a row the project has been ruled ineligible by WHEDA.
Across the state $14.2 million in projects were either put on hold or deemed ineligible for credits by the state authority.
Clarke Square Apartments Renderings
Good Hope Library Renderings
If you think stories like this are important, become a member of Urban Milwaukee and help support real independent journalism. Plus you get some cool added benefits, all detailed here.