Contacts: Ron Legro, Wisconsin Housing and Economic Development Authority, 414-227-2291
Ethnie Groves, Office of the Governor, 608-261-2156
Modernization Would Create As Much As A Half Billion in Economic Impact
Governor Jim Doyle today announced bipartisan state legislation that would boost the economic impact of affordable housing and business finance programs offered by the Wisconsin Housing and Economic Development Authority (WHEDA(r)) by as much as half a billion dollars annually.
“It’s time to modernize WHEDA so it can work harder to help grow Wisconsin’s economy,” Governor Doyle said.
WHEDA estimates that the legislation could provide additional lending capacity generating as much as $483 million annually, enabling the authority to serve many more residential and business borrowers. No state tax dollars would be used in funding the increases.
Also, additional WHEDA lending volume enabled through the bill’s changes would have the spin-off effect of annually helping to create the equivalent of 3,755 full-time jobs in construction trades and other sectors of the state’s economy.
“WHEDA has served our state well for more than 30 years, but still relies on legislative mandates that are out-of-date,” Governor Doyle said. “This bill represents the first comprehensive reshaping of WHEDA. It will ensure that more residents realize the dream of owning their home and it will help expand the supply of quality affordable apartments for lower income families, seniors, and the disabled.”
In a joint statement, three of the bill’s authors, Representatives Steve Wickert and Leon Young and Senator Lena Taylor said the bill’s proposed changes “will significantly modernize WHEDA’s mission and expand its toolkit. WHEDA will thus be able to serve more people and businesses throughout Wisconsin.”
In home lending, WHEDA would be empowered to upwardly revise income limits for borrowers, making them consistent with more generous federal guidelines. That would enable more residents to qualify for below-market, fixed-rate WHEDA mortgages. WHEDA could use the greater of county median gross income or statewide median income in calculating borrower income.
“This one change alone will noticeably expand our customer base statewide and have particular impact in 26 rural counties where incomes have seriously lagged,” said Antonio Riley, WHEDA Executive Director. “Alone, this change would increase the economic impact of our lending by up to $100 million annually.”
The bill would also expand WHEDA rental housing finance programs by increasing the outstanding principal amount of bonds and notes that WHEDA may issue for such purposes from the current $325 million to $600 million.
“We only have bonding authority for rental housing development to last us through the end of this year,” Riley said. “Additional funding is needed for preservation and new construction of affordable rental housing in the balance of this decade.”
Among other changes, the bill would allow WHEDA to determine property value consistent with current industry practices, and to offer mortgages without down payments.
“Mortgages without down payments are common in today’s lending environment,” Riley said. “This change would not affect a creditworthy borrower’s ability to pay, and it would allow WHEDA to help more first-time homebuyers.”
Home improvement loans would also be updated.
“This bill would make WHEDA home improvement loans more attractive and more widely useable by eliminating the maximum loan limit and removing some restrictions,” Riley said.
Borrowers would be able to finance construction of decks, patios, fencing, landscaping, and other purchases that are conventional by today’s market standards. The change also would enable WHEDA to better support Wisconsin’s Energy Star program by encouraging the purchase of energy efficient equipment.
For WHEDA’s business and agricultural financing, the bill would modernize programs in numerous ways. Among other measures, WHEDA could:
▪ Refinance debt where a business is expanding and creating new jobs;
▪ Eliminate the current $750,000 loan amount cap and provide an unlimited loan amount for growing businesses;
▪ Lengthen the term of its agricultural loan guarantee from five to 10 years for the construction of improvements to facilities or land.
WHEDA is an independent state authority that works with lenders to provide low-cost financing for housing and small business development in Wisconsin. WHEDA home mortgage lending does not use state tax dollars.