Milwaukee Strikes Out In WHEDA Awards

Milwaukee’s pipeline of affordable housing developments just got a little bit thinner.

No new Milwaukee projects were among the winners of the annual, competitive low-income housing tax credit allocation process administered by the Wisconsin Housing and Economic Development Authority (WHEDA).

A single project, planned for W. Highland Blvd., received a supplemental credit award to help close a financing gap. AbleLight received an additional $191,000 credit on top of its $1.09 million 2021 award.

The proposal involves a new building at 3200 W. Highland Blvd. with 68 apartments, 62 of which would be rented at affordable, below-market rates. The units would be set aside for those aged 55 or older and suited for individuals with intellectual or developmental disabilities. Quorum Architects, which has its office next door, is leading the building’s design. Cardinal Capital Management is serving as a development partner and Milwaukee Center for Independence will assist with programming.

Three projects, the Perlick Lofts proposal, a secretive Walker’s Point development and the rehabilitation of a housing authority complex, were all placed on hold by WHEDA.

The credits are the most common tool used to create affordable housing in Wisconsin and require developers to set aside a pre-determined number of units at a discounted rate for those making no more than 60% (with few exceptions) of the area’s median income for a period of at least 30 years.

From 37 communities across Wisconsin, developers applied to build or rehabilitate 2,952 apartments through the program, 2,685 of which would be affordable. The Milwaukee proposals represented 299 of the 2,685 proposed affordable units.

But as is common, the applications outweighed the number of available credits. WHEDA awarded $23.3 million in credits to 23 projects spread across 20 communities. The awards advance 1,466 apartments, 1,310 of which would be affordable units. The state received fewer federal credits to award this year, due to the expiration of a federal program.

“WHEDA’s housing tax credit program continues to be one of the most successful financing resources to attract private equity capital to build high quality, affordable housing options all across our state,” said WHEDA CEO Elmer Moore, Jr. in a statement announcing the awards. “I commend our developer partners for their commitment to advancing housing equity and economic opportunity despite the challenging market conditions we are all facing. With thoughtful consideration for this year’s tax credit allocation, we are working hard to get as many projects as possible built so that people can access housing where they want to live, work, raise a family, and prosper.”

The decline in Milwaukee projects can be attributed to a surge in credits awarded last year and the number of projects that are still on the drawing board, having been delayed by rising construction costs.

In 2021, 13 of the 54 applications were Milwaukee projects and 10 city projects ultimately received credits, yielding 713 planned affordable units. Projects in the city were allocated credits for 520 units in 2019 and 317 units in 2020.

Developers leverage the credits, often selling them to institutional investors at a slight discount, to create equity. The credits offer a dollar-for-dollar reduction on income tax bills. Depending on the program, the awards are made for up to 10 years, meaning a $1.2 million award turns into $12 million.

Help is on the way for the awardees stuck with projects for which the economics have shifted.

On April 28, Governor Tony Evers announced a $20 million allocation from the federal American Rescue Plan Act (ARPA) to plug financing gaps. That announcement came on top of a February announcement that Evers would use ARPA funding to plug financing gaps in five specific affordable housing projects in the city. Including the five February awardees, 17 Milwaukee projects are eligible to access the $20 million allocation. The City of Milwaukee is also using its ARPA allocation to fund its Housing Trust Fund, which can support the projects, with a record amount of funding.

The low-income housing tax credits come in two different forms. A traditional 9% credit is intended to cover 9% of the applicable project costs by awarding a state-administered federal income tax credit. In recent years, Wisconsin also enacted a non-competitive 4% credit program. It allows developers using tax-exempt bonding to access a 4% federal tax credit that doesn’t reduce the state’s supply of 9% federal credits.

The only other Milwaukee County project to win credits was a 80-unit building near Mayfair Mall in Wauwatosa.

2022 Milwaukee Project List

AbleLight Cornerstone Village Highland – Additional Credit

• Developer: AbleLight
• Status: Awarded
• Units: 68 (Affordable: 62)
• Type: New Construction – Supportive/Elderly
• Credit Request: $191,000
• Program: 9% Federal
• Location: 3200 W. Highland Blvd.
• Description: This request would build on a $1.09 million 2021 award to fill a project financing gap

Highland Gardens

• Developer: Housing Authority of the City of Milwaukee
• Status: On Hold
• Units: 114 (Affordable: 114)
• Type: Acquisition/Rehabilitation – Preservation
• Credit Request: $1.2 million
• Program: 9% Federal
• Location: 1818 W. Juneau Ave.
• Description: HACM applies annually, leveraging the credits to rehabilitate housing often built with earlier federal housing programs

Historic Perlick Lofts

• Developer: McClendon Capital Group and Heartland Housing
• Status: On Hold
• Units: 80 (Affordable: 66)
• Type: Adaptive Reuse – Majority Elderly
• Credit Request: $1.2 million
• Program: 9% Federal
• Location: 3100 W. Meinecke Ave.
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Walker’s Point

• Developer: Heartland Housing
• Status: On Hold
• Units: 68 (Affordable: 57)
• Type: New Construction/Adaptive Reuse – Family
• Credit Request: $1.2 million
• Program: 9% Federal
• Location: Unknown
• Description: Heartland previously declined to publicly discuss the proposal. The project type field declaration indicates it could involve the purchase and rehabilitation of a building with existing tenants.