Joaquín Altoro: Testimony before the Senate Committee on Housing, Commerce and Trade.

Good morning Chairman Jagler, Vice Chairman Roth and members of the Senate Committee on Housing, Commerce and Trade. It’s an honor for WHEDA to join with these other housing thought-leaders to speak before you today.

• SLIDE 1: I’m Joaquín Altoro, CEO of the Wisconsin Housing and Economic Development Authority. Joining me today for your questions is our WHEDA Chief Financial Officer Sherry Gerondale. We know that housing means many things to so many different people:
  • It’s an economic driver;
  • It’s an essential tool to attract a qualified workforce;
  • It’s a path for people to begin saving and building wealth;
  • It’s a place for our vulnerable community members to find security and access services that improve community well-being.
  • It’s also a place we all need to call home.
    
    
  As you’ve just heard, Wisconsin has been experiencing underproduction of housing for years – housing of all types, in all price ranges. Our presentation today aims to highlight the scope of WHEDA’s operations and our efforts to expand access to housing and economic opportunity. We’ll start by providing some background on WHEDA as well as the current housing environment. We’ll conclude with our efforts to cultivate an ecosystem that involves people, partners, programs and policies working together to address the state’s housing gap.
  
  
• SLIDE 2: WHEDA is a self-supporting public corporation that receives no tax dollars for its operations. For more than 45 years, WHEDA has worked to provide low-cost financing for housing and small business development in Wisconsin. Since 1972, WHEDA has financed more than 75,000 affordable rental units, helped more than 133,000 families purchase a home and provided more than 29,000 small business and agricultural loan guarantees. With some 160 employees, we manage approximately $3 billion in assets.
  
  
• SLIDE 3: To aid first-time homebuyers and working families, during fiscal 2020, WHEDA supported some 2,400 households with loans valued at $351 million. WHEDA’s multifamily programs also have seen success. In fiscal 2020, WHEDA financing created 3,141 affordable rental housing units through the allocation of federal and state tax credits as well as loans totaling $150 million.
  
  
• SLIDE 4: Through our work to cultivate an ecosystem that expands equitable access to affordable housing and economic opportunity, WHEDA is addressing a number of underlying factors that contribute to the shortage of affordable and workforce housing. Through our single-family operations, WHEDA is strengthening our lending network to better serve underrepresented communities so that more people can access financing for homes in the communities where they work. This is Latonia Ford, a teacher in Milwaukee who recently bought her first home using a WHEDA loan. She’s saving about $300 per month compared to the cost of renting and she’s using this savings to reinvest in the property.
  
  
• SLIDE 5: Our efforts to expand access to housing include affordable multifamily rental housing for working families. Ashley Wilson and her four children recently moved into Oak Grove in Dodge County, a rural project made possible by WHEDA financing and state and federal tax credits. Wilson’s fiancée passed away unexpectedly last year, so she had to move in with her parents while continuing to work. She was on a waiting list for several months until this project came online and she is excited to have a place of her own now. The Oak Grove neighborhood is right across the street from the local school in Horicon and is targeted to working families.
  
  
• SLIDE 6: WHEDA’s administration of state and federal tax credit programs is among our most powerful tools to directly increase the supply of housing. We are happy to speak for informational purposes regarding some of the current proposals in the Legislature. For now, it’s important to emphasize that the strength of these tax credit programs derives from:
  • WHEDA’s ability to administer them through a competitive and strategic Qualified Allocation Plan;
  • The ability to pair different tax credit programs – particularly the state 4% housing tax credits – with federal housing tax credits.
  • The ability to leverage these tax credits with additional private and public investment such as loans and TIF funding;
  • The ability to fund these projects with additional gap financing and our tax-exempt bonding authority. This bonding authority is tied to affordability.
    
    
  Accomplishing these complex deals requires a certain percentage of the housing units to be affordable for those with incomes at or below 60% of the area median income. This slide shows our allocation of federal 9% tax credits – we announced these deals yesterday.
  
  
• SLIDE 7: This shows our allocation of state 4% housing tax credits, which are paired with federal 4% housing tax credits to make the deals feasible. In all, for the 2021 allocation cycle WHEDA awarded $35.1 million in federal and state housing tax credits to create 2,343 units through 33 projects in 19 communities statewide. This total includes 2,200 low- to moderate- income units affordable for those earning at or below 60% of the area median income. Going back to the concept of leverage I mentioned earlier, if recent history is any indication, this year’s awards will leverage some $290 million in additional investment.
  
  
• SLIDE 8: While the tax credit projects announced this week will help expand the supply, demand for the affordable housing tax credits far outstrips supply. This year’s highly competitive process drew requests totaling more than $57 million for the $35.1 million available. To address the mismatch in demand and supply, WHEDA worked to develop the expansion of the annual state 4% housing tax credit authorization to $100 million from the current $42 million through the provision now contained in the Evers administration’s 2021-23 budget proposal. The proposal would increase the annual allocation to $10 million from the current $7 million.
  
  
• SLIDE 9: As we’ve shown, WHEDA’s financing tools are effective given their scope and purpose. We can safely say that – but for WHEDA – hundreds of thousands more working families in Wisconsin would lack access to quality, safe, affordable housing. However, WHEDA’s financial tools alone are not sufficient to overcome Wisconsin’s longstanding housing gap.
  
  
• SLIDE 10: So, rather than rely on just our financial impact to drive systemic change, we at WHEDA are working to leverage the collective strengths of our people, partners, programs and practices. Collaborative, adaptive, innovative approaches are needed.
  
  
• SLIDE 11: Our Rural Affordable Workforce Housing Initiative is one important example of this ecosystem approach. The $10 million initiative includes a workforce housing pilot effort in three rural communities as well as supplemental financing tools. While the supplemental financing tools tackle technical gaps in existing programs, the rural, affordable workforce housing pilot establishes an adaptive framework to identify needs, evaluate choices and implement solutions. Although you’ll hear various definitions of what affordable workforce housing is, for the purposes of the rural initiative, we settled on housing affordable to those earning 120% or less of area, or county median income. By leaving out a lower threshold, we kept the door open to the prospect of mixed income projects that may access existing WHEDA financing tools of 60% and below. Three pilot communities were chosen: Door County, Marinette County and Chequamegon Bay which includes portions of Bayfield and Ashland counties. Our public engagement process in Door County already has turned up some surprising findings and potential paths forward. Specifically, we are seeing that many of the barriers to housing must be addressed at local, state and federal policy levels.
  
  
• SLIDE 12: This slide depicts one of the Door County group’s top solutions to help address the affordable workforce housing gap. And we’ve heard this theme echoed in other areas as well. Yes, it’s infrastructure. The high cost of roads, bridges, water, sewer and other hard costs are constricting the supply of buildable lots and adding costs once the lots are made available. The Door County pilot team is exploring sources of financing to make an infrastructure fund possible. Other high priority challenges identified by the Door County group and others include zoning, lack of community capacity, limited developer interest and financing, to name a few.
  
  
• SLIDE 13: Wisconsin’s aging housing stock also presents a significant structural barrier to increasing the supply of safe, desirable, affordable workforce housing. The fact is that for many working families, single family housing is preferable to apartment living. Homeownership also offers an important path forward to build savings and strengthen communities. Yet at present, some 60% of Wisconsin’s housing stock is more than 40 years old while nearly 35% is more than 60 years old. Some communities far exceed these averages. Why is this a big deal?
  
  
• SLIDE 14: From foundation work to siding, to mold, to lead abatement, to energy efficiency and aesthetics, the cost of rehabilitating these properties often exceeds the capacity of the current owners or would-be buyers. The current state of some of this housing exceeds what WHEDA’s excellent single-family mortgage and home improvement loan prodcts are capable of doing. Lack of financing tools available to help get this work done contributes to the legacy of underinvestment and gentrification trends in many communities.
  
  
• SLIDE 15: In response to the concerns we’ve heard from our stakeholders, WHEDA is engaging to a greater extent than ever before in seeking collaborative policy solutions. That’s one reason we are especially grateful for the opportunity to appear here today. Housing transcends partisanship and WHEDA believes the level of energy being devoted to these issues is sure to put positive results in motion.
  
  
• SLIDE 16: One opportunity on the horizon may stem from federal efforts to link significant infrastructure investment with housing revitalization. The American Jobs Plan currently includes the Neighborhood Homes Investment Act, a proposal that earned wide bipartisan support in previous sessions of Congress. The act – one of many housing provisions contained in the plan – would create a new federal single-family affordable housing tax credit program. This credit could be used to address many of the concerns identified above and it would be an entirely new tool in WHEDA’s toolkit. WHEDA is engaging with our Congressional delegation to discuss ways the overall plan might address other community capacity issues while strengthening the provisions of the single family housing tax credit to be of greatest benefit here in Wisconsin.
  
  
• SLIDE 17: We’ve covered a lot of territory and we appreciate your interest. Again, thank you for including us in this important dialogue. Questions?
  
  
• SLIDE 18: Thank you.