WHEDA: Governor Doyle Announces $10 Million to Help Preserve Affordable Housing
Brenda Marquardt, Wisconsin Housing & Economic Development Authority, 414-227-2294
Anne Lupardus, Office of the Governor, 608-261-2162
Governor Jim Doyle today announced that the Wisconsin Housing and Economic Development Authority (WHEDA) has committed another $10 million for the Wisconsin SOS program - "Saving Our Stock" of Affordable Housing, which focuses on Section 8 housing developments.
The SOS program was first introduced in March of 2004 and was seeded with $10 million in funding from WHEDA. This initial funding has assisted Wisconsin in preserving 21 developments, representing 938 units in 20 counties across Wisconsin. WHEDA has committed the second $10 million in funds in its continuing efforts to preserve affordable housing.
"Additional funding for the Wisconsin SOS program will enable us to preserve affordable housing units across the state that are at risk because of deterioration or sale to owners who will not keep the rents affordable," Governor Doyle said. "Everyone deserves a decent place to live, and by preserving Wisconsin's affordable housing, we can ensure our seniors and lower income residents can find a safe place to call home."
Governor Doyle also announced a new WHEDA loan program targeted towards affordable housing preservation. The Preservation Plus loan program will provide loans a quarter percent below WHEDA's standard tax-exempt interest rate. To qualify for this loan, developers must use the funding to buy or rehabilitate existing affordable housing.
"This type of financing product is critical in the housing preservation arena," Antonio Riley, WHEDA Executive Director said. "These types of deals are unique and can be difficult to finance. Preservation Plus offers developers a creative solution to reducing the financing gaps that may prevent the deal from coming together."
Section 8 is a federally subsidized program that promotes the construction of new affordable housing units. Under Section 8's continuing rental subsidies, residents pay 30 percent of their adjusted gross income toward rent, the difference being paid by the U.S. Department of Housing and Urban Development (HUD).
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, nationwide, more than 160,000 apartments where rents once were kept affordable through the federal Section 8 program have been converted to market-rate apartments. Where this conversion has occurred, rents have soared by an average of more than 40 percent.
Under the new SOS effort, preservation dollars will be made available to address debt restructuring or needed capital improvements. Funds may be used to:
Facilitate transfers of ownership that will preserve affordable housing;
Fund operating deficits that are a result of frozen rents and increasing expenses;
Address capital needs, not only for decent, safe, and sanitary reasons but also to make apartment units competitive in the local market;
Restructure current debt, for example through lower interest rates, and lengthened amortization.
The SOS program and the new WHEDA Preservation Plus loan 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 Wisconsin SOS initiative ties into Governor Doyle's Grow Wisconsin plan to create more family-supporting jobs in the state by preserving affordable housing that can serve lower income workers.
WHEDA has received a national housing award for program excellence for the Wisconsin SOS initiative. The award was presented to WHEDA by the National Council of State Housing Agencies (NSCHA) at its 2005 annual conference in Boston.
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.