Gov. Doyle: Governor Doyle Announces $10 Million WHEDA Initiative to Help Preserve Affordable Housing for Seniors, Low Income Wisconsin Residents
3/2/2004

Contacts:
Ron Legro, Wisconsin Housing & Economic Development Authority, 414-227-2291
Jessica Erickson, Governor's Office, 608-261-2156

During visits to Woodland Meadows in Menasha and Kannenberg Plaza in Wausau, Governor Jim Doyle announced today a $10 million initiative to help preserve affordable housing for seniors and other lower income Wisconsin residents. The Wisconsin SOS program - "Saving Our Stock" of Affordable Housing - will focus on project-based Section 8 housing developments. The Wisconsin Housing and Economic Development Authority (WHEDA) is committing the funds as an additional step in its continuing efforts to preserve housing.

"A significant number of these properties are at risk of being taken out of the affordable housing stock either through deterioration or sale to owners who will not keep the rents affordable," Governor Doyle said. "Wisconsin SOS will strengthen our efforts to preserve affordable housing and ensure that every Wisconsin citizen has a decent place to live."

The Governor also announced that he has named 12 public members to a Task Force for Housing Preservation. Staffed and assisted by WHEDA, the task force will look at additional measures the state and other organizations can implement to preserve affordable housing. Task force members include professionals from the housing development industry, financial experts, community organizations, and government officials.

Section 8 is a federally subsidized program that promoted the construction of many new affordable housing units beginning in the 1970s. Under Section 8's continuing rental subsidies, residents pay 30 percent of their adjusted gross income toward rent, the difference being paid by the US Department of Housing and Urban Development.

From 1974 to 1983, WHEDA issued $367 million in bonds to provide financing for 11,802 units of project-based Section 8 housing in Wisconsin. WHEDA serves as contract administrator for more than 30,000 units of such housing statewide, processing over $120 million in annual rental subsidies.

The Governor said several factors threaten Section 8 housing, including looming federal subsidy expirations, changes in tax law, aging investors in the properties, and dwindling federal resources.

"In the past five years, more than 160,000 apartments nationwide, where rents once were kept affordable through the federal Section 8 program, have been converted to market-rate apartments," Governor Doyle said. "Where this conversion has occurred, rents have soared by an average of more than 40 percent. Other rental units have been allowed to deteriorate. The ultimate result - displacement and disruption for low-income seniors and others who in some cases lived many years in these apartments."

Until now, Wisconsin has avoided some of the most severe effects, thanks in part to WHEDA's existing preservation programs. WHEDA has not had any of the developments that it financed opt out of the Section 8 program. However, in the past three years, seven HUD properties representing 230 units have opted out. Among Section 8 developments financed by WHEDA, 34 assistance contracts representing over 3,400 units statewide will expire between now and 2010. Of those units, 82% house elderly residents.

Some housing experts estimate that 70 percent of all assisted housing eventually will encounter unmet capital needs. "The great majority of affordable housing is at risk unless we take action now," Governor Doyle said. "Affordable housing is too precious a resource."

WHEDA Executive Director Antonio Riley said that besides financing thousands of affordable apartments in Wisconsin, WHEDA already has invested in maintaining the state's affordable housing stock. Efforts so far have helped preserve 57 developments representing over 5,500 affordable housing units. Also, in the past year, WHEDA set aside 40 percent of the federal low-income housing tax credits that it administers to preserve affordable housing -- the highest such set-aside in the nation.

Under the new SOS effort, preservation dollars will be made available to address debt restructuring or needed capital improvements. Funds may be used to:
o Facilitate transfers of ownership that will preserve affordable housing;
o Fund operating deficits that are a result of frozen rents and increasing expenses;
o Address capital needs, not only for decent, safe, and sanitary reasons but also to make apartment units competitive in the local market;
o Restructure and refinance current mortgages, for example through lower interest rates, and lengthened amortization.

The SOS program will be targeted to Section 8 housing, but could include any other affordable units, including those that use expiring Section 42 Affordable Housing Tax Credits and Rural Housing units.

The Governor made his announcement in Wausau and Menasha at private housing developments with affordable rents subsidized through project-based Section 8 federal funds administered by WHEDA. The two housing developments were chosen as examples of affordable housing that may be endangered in the near future.

The Kannenberg Plaza elderly housing development in Wausau is operated by that city's housing authority. Winnebago County Housing consists of scattered-site housing in Neenah, Menasha and Oshkosh. The Governor spoke in Menasha at Woodland Meadows, family and elderly town homes owned and managed by a private firm, Dominium Development and Acquisition.

The Wisconsin SOS initiative ties into the Governor's "Grow Wisconsin" plan to create more family-supporting jobs in the state and preserving affordable housing that can serve lower income workers.

WHEDA is an independent state authority that works with developers and lenders to provide low-cost financing for housing and small business development in Wisconsin. For more information on WHEDA's housing programs, call 1-800-334-6873 or visit www.wheda.com.