CITY OF WAUWATOSA, WISCONSIN HOUSING POLICY & ACTION PLAN DRAFTDRAFT October 30, 2017 CITY OF WAUWATOSA HOUSING POLICY & ACTION PLAN
TABLE OF CONTENTS
1 DRAFT HOUSING POLICY 3 HOUSING ACTION PLAN 5 Potential Implementation Strategies 5 Policy Priority A: Increase Availability and Improve Affordability of Housing for the Local Workforce, Lower Income Families, Seniors and People with Special Needs 5 Identify and Solicit Affordable Housing Developers through an RFP Process 6 Develop Incentive-Based Inclusionary Housing Policy 7 Identify or Prepare Affordable, Senior or Supportive Housing Development Sites 8 Develop a City-Administered Affordable Housing Fund 9 Target Use of Community Development Block Grant Funds for Housing Production 9 Create Down-Payment Assistance Program and/or Employer-Assisted Housing Program 10 Promote Use of HOME Funds 11 Develop/Enhance Partnerships with Affordable Housing Organizations 11 Policy Priority B: Preserve Existing Housing by Addressing Accessibility and Deferred Maintenance Issues Associated with an Aging Housing Stock 11 Develop a General Housing Fund 12 Create Modification Programs for Owner-Occupied and Rental Properties 13 Acquire and Make Available City-Owned Accessibility Improvements 14 Redevelop Select Properties 14 Policy Priority C: Enhance Ability of Current Residents to Age in Place within the Community 14 Develop New Senior Housing Options 15 Develop Financial Assistance Programs for Fixed-Income Seniors 15 Connect Seniors to Service Networks 16 Consider the Built Environment and its Impact on Seniors 16 Policy Priority D: Ensure a Mix of Housing Types is Available 16 Refine Regulatory Framework 18 Provide Financial Assistance 21 Toolkit 21 Tax Increment Financing 22 Community DevelopmentDRAFT Block Grant Funding 23 HOME Investment Partnership Program Funding 24 Regulatory Tools 24 City-Administered Housing Funds 25 Dedicated Housing Department or Staff 26 Strengthened Relationship with WHEDA 29 Administrative & Implementation Considerations 33 Appendices & Additional Information
SB FRIEDMAN DEVELOPMENT ADVISORS 221 N. LaSalle St. Suite 820 Chicago, IL 60601 Contact: Fran Lefor Rood, AICP T: 312.424.4253 E: [email protected]
TABLE OF CONTENTS CITY OF WAUWATOSA HOUSING POLICY & ACTION PLAN
City of The City of Wauwatosa recognizes the need to ensure housing Wauwatosa options are available in the community for households of all ages, incomes and levels of physical ability; that the City’s housing stock is a significant asset that should be maintained Housing Policy over time; and that an array of housing options is necessary to accommodate a diverse population and attract and retain (DRAFT) businesses. As outlined in the 2016 Comprehensive Housing Study and Needs Analysis, the City’s existing housing supply and pipeline of private market development is not adequately For consideration on November 14, 2017 addressing the range of housing needs. The City therefore seeks to implement a comprehensive housing policy to ensure availability of a range of high-quality housing options today and in the future.
The City intends to use available tools and resources to proactively address existing and future housing issues. The policies outlined below will guide the City’s housing investment and regulatory programs, with a menu of specific strategies outlined in the attached Housing Action Plan.
Policy Priority A: Increase Availability and Improve Affordability of Housing for the Local Workforce, Lower Income Families, Seniors and People with Special Needs
Finding affordably-priced housing units in Wauwatosa can be challenging for households with low or fixed incomes DRAFTand residents with special needs, such as physical or mental disabilities or those at risk or with a history of homelessness. A lack of affordable units for these populations limits their ability to benefit from the high quality of life, employment and educational opportunities, and amenities that Wauwatosa offers. Furthermore, Wauwatosa is a major employment center that supports a workforce with a diversity of skill sets and incomes. The availability of affordable housing allows employees of Wauwatosa businesses to live nearby, decreasing commute times and increasing reliability.
Recognizing the importance of providing housing options to a range of income levels and physical abilities, the City will proactively increase the availability of housing units affordable to a wide range of households and segments of the population that often face housing challenges, especially as new development occurs.
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Policy Priority B: Preserve Existing Housing Therefore, the City will undertake efforts to enhance the ability Stock by Addressing Accessibility and Deferred of residents to remain in Wauwatosa as they age by addressing Maintenance Issues Associated with Aging Housing both the challenges of remaining in their current homes over the Stock long term, and ensuring sufficient alternatives exist for seniors of different incomes, ages and ability levels once they have Wauwatosa’s housing stock represents a significant local asset decided to move. which requires ongoing investment to maintain. Without proper maintenance, declining housing quality may over time reduce Policy Priority D: Ensure a Mix of Housing Types is property values and remove units from the stock entirely, Available in Wauwatosa requiring more substantial investment in new construction to simply maintain the current number of housing units in the Different types of households prefer and can afford different community. Investing in existing units prevents their loss and types of housing units. Anticipated population growth and permits new construction to expand housing options, allowing demographic shifts over the coming years are expected to the existing housing stock to serve as a more moderately-priced drive demand for a different mix of housing types than currently option relative to new construction. Investments in maintaining exists in Wauwatosa, including additional rental multifamily and updating the existing housing stock, specifically and for-sale attached housing, such as townhomes and through updates to major building systems and accessibility condominiums. Furthermore, a diversity of housing options is improvements, are critical to preserving Wauwatosa’s existing important to ensure the local workforce is attractive to current housing resources and ensuring safe, accessible living spaces. and potential businesses.
The City recognizes that financing home improvements can To ensure that Wauwatosa’s housing stock includes options be challenging, especially for lower- or moderate-income for households of all types, City policies and programs will be households, including senior households on fixed incomes, designed to ensure a variety of housing types in Wauwatosa. and private owners of small rental buildings. Therefore, as an investment in this community asset, its existing residents and overall housing affordability, the City will prioritize assisting property owners who may not otherwise have access to funds for home maintenance. DRAFT Policy Priority C: Enhance Ability of Current Residents to Age in Place within the Community
Growth in households headed by empty nesters and seniors are expected drive a significant share of Wauwatosa’s housing growth over the next five to 15 years. Therefore, special consideration should be given to the needs of this group to ensure that the housing stock accommodates a range of physical abilities and incomes. Furthermore, the City recognizes the importance to its senior residents of remaining in their homes as long as possible and that when relocating, either by choice or by need, appropriate housing options exist within the community.
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City of In 2015, the City of Wauwatosa (the “City”) engaged Wauwatosa SB Friedman Development Advisors (SB Friedman) to assess the City’s housing stock, evaluate its ability to meet the current and future needs of residents, and identify unmet housing needs and Housing other housing-related issues. The resulting 2016 Comprehensive Housing Study and Needs Analysis (the “Housing Study”) Action Plan identified several key housing issues, including: • Lack of available and/or affordable housing options for the local workforce, lower income families, seniors, and people with special needs; • Accessibility and deferred maintenance issues associated with an aging housing stock; • Challenges to the ability of current residents to age in place within the community; and • Limited availability of a mix of housing types.
The City’s Common Council then authorized City staff to work with SB Friedman in developing a Housing Policy and Action Plan to address the issues identified in the Housing Study.
PURPOSE
This Housing Policy and Action Plan outlines a draft City Housing Policy (see page 1-2) and presents a number of potential strategies to proactively implement the Policy and address unmet housing needs. Many of the strategies DRAFTrecommended within have been successful in peer communities in the Midwest in advancing similar housing objectives, while others reflect best practices nationwide. Peer communities (detailed in Appendices E and H) are either: demographically and geographically comparable to Wauwatosa, recognized for having model housing programs/policies and/or have experience with strategies currently under consideration.
STRUCTURE
Strategies are outlined in Section 1 (pages 5-19) and organized by the four policy priorities identified in the City Housing Policy. The Housing Action Plan is intended to provide the Common Council and City staff with a menu of potential options, rather than a prescriptive sequence of implementation steps. It is anticipated that the Common Council and City staff
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will work together to identify near- and long-term priorities and select relevant strategies for implementation.
Many of the strategies will require modifications and/or enhancements to existing City administrative processes, policies and programs. Potential additions to and modifications of City and Community Development Authority (CDA) financial and regulatory tools are presented in Section 2 (pages 21-26) with key administrative and implementation considerations outlined in Section 3 (pages 29-31).
DRAFT
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1. Housing Policy Priority A: Increase Availability and Action Plan: Improve Affordability of Housing for the Local Workforce, Lower Income Families, Potential Seniors and People with Special Needs
The Housing Study identified a need for additional housing Implementation units for residents and the local workforce with lower or fixed incomes, and for residents with special needs. Outlined below Strategies are strategies to incentivize the construction of new units targeted to these populations.
IDENTIFY AND SOLICIT AFFORDABLE HOUSING DEVELOPERS THROUGH AN RFP PROCESS
Pursue a request for proposal (RFP) process to alert developers to City or Community Development Authority (CDA)-identified priority redevelopment areas, assembled sites, and financial resources available to support construction of new affordable housing that meets identified specifications (i.e., serving specific low-income populations, providing particular accessibility features or creating supportive housing for people with special needs and those at risk or with a history of homelessness).
• Conduct developer solicitation. Before releasing an RFP, conduct outreach to active developers in the region with experience developing the City’s priority project types to DRAFTenhance publicity and encourage developer responses. • Streamline application process. Align the RFP process with applications for other forms of assistance such as Community Development Block Grants (CDBG) or City- administered housing funds. Streamlined application processes reduce administrative load on both the developer and City staff. Aligning the application with external financing sources such as the Milwaukee County HOME Consortium or Wisconsin Housing and Economic Development Authority (WHEDA) may encourage developer participation. Structure and time the City’s RFP process such that local funds are committed prior to the developer applying for funds from other public entities, in order to demonstrate required local support.
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• Provide coordination and developer support. Use the WHAT IS INCLUSIONARY HOUSING? RFP as a vehicle to source promising projects that meet Policies that require or incentivize developers to include units local priorities and are likely to receive public financial affordable to low-to-moderate income (LMI) households assistance, then “quarterback” the interface between when building new market-rate housing. In communities the developer, other City departments and other public experiencing growth in market-rate housing, IH policies financing sources. provide a way to maintain a range of housing affordability.
Immediate Action Steps IH policies are typically structured as either mandatory policies, which require the creation of affordable units in new • Identify timing of City, county and state assistance housing developments, or incentive-based, which require programs and time release of RFP and award decisions affordable units only in exchange for financial or regulatory before other funding applications are due. (zoning) assistance from the municipality, including waived • Identify developers active in the region with relevant requirements surrounding density and design, reduced experience. parking requirements, etc. It appears based on the legal • Conduct initial outreach to developers to gauge interest framework and local development considerations that and discuss City policy changes and priorities. an incentive-based inclusionary policy is feasible in • Identify and outline in an RFP/property offering document Wauwatosa. (Additional Information in Appendix H) the City resources to be made available, potential structure(s) of assistance, target population and/or location, and housing type sought. • Determine characteristics of projects covered by • Identify and list CDA priority development sites where policy. IH policies often apply regardless of the project’s development could be incentivized through the RFP. intended tenure (whether rental or ownership), though • Release RFP and conduct additional outreach to some communities target only rental or ownership units. developers to answer questions and ensure responses. Some communities have created spatial distinctions, only • Work with developers to identify other sources of public applying IH in certain areas or increasing requirements funding to leverage City support. near transit. There are often minimum project size requirements, with the policy only applying to projects DEVELOP INCENTIVE-BASED INCLUSIONARYDRAFT above a certain size (e.g., 15 units). HOUSING POLICY • Determine number of affordable units required. The Craft an inclusionary housing (IH) policy that requires developers number of required affordable units varies in communities receiving City financial assistance to include affordable units in that have instituted IH policies, ranging from 5% to 20% otherwise market-rate housing developments. Implementation of total units. Some policies require a set percentage of steps include: units be affordable, while others have tiered requirements based on characteristics of the project and affordability • Clearly define the forms of City assistance that trigger IH of the units. requirements. TIF is the most likely IH trigger, but others may include city loans or grants, reduced sale prices for • Set affordability targets. Affordability targets identify the publicly-owned land, flexibility in development standards incomes of households allowed to live in the units. Some (e.g., greater height or density or reduced parking communities set flat affordability targets (e.g., households requirements), reduced permit fees, or other City financial at 60% of area median income (AMI))[1], while others allow assistance to which a project would not otherwise be some units to serve higher income households in exchange entitled. for serving lower-income households as well (e.g., at least
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half of affordable units at 60% of AMI and the remaining [1] Area Median Income (AMI), as calculated by the U.S. Census, is a metric units at 80% AMI). The Housing Study identified units for used by the U.S. Department of Housing and Urban Development (HUD) and other entities, to determine eligibility for programs targeted for low-to-moderate households with incomes below $15,000 as a particular income households. For a family of four in the Milwaukee-Waukesha-West Allis need in Wauwatosa, therefore the City may consider Metropolitan Statistical Area, 2017 AMI thresholds were as follows: 30% of AMI the latter structure as a way to benefit a wider range of -- $21,700; 50% -- $36,200; and 80% -- $57,900. A table of AMI figures by households. household size is included in Appendix C.
• Determine required affordability period. There is wide Immediate Actions Steps variation in affordability periods which range from 10 years to perpetuity, regardless of tenure. • Prepare an outline of a draft inclusionary housing policy including the parameters outlined above and brief • Decide alternatives to on-site affordable units. To account Common Council members. for situations where providing affordable units on-site may • Incorporate feedback and revise policy appropriately to not be feasible or practical, IH policies often allow for develop a draft inclusionary housing policy. alternatives: creating affordable units elsewhere in the city • Conduct outreach regarding draft inclusionary housing (through new construction, dedication of existing units, or policy to impacted stakeholder groups (e.g., affordable dedication of land), payments into an affordable housing housing advocates, housing developers, other communities trust fund (commonly called a fee-in-lieu payment), with similar policies). participation in a third-party affordable housing • Revise policy based on feedback from stakeholder development elsewhere, or proposing an alternative outreach as necessary. which furthers other City affordable housing goals. • Prepare inclusionary housing ordinance.
While an IH policy may not create large numbers of affordable IDENTIFY OR PREPARE AFFORDABLE, SENIOR OR units at once, and is dependent on the pipeline of private- SUPPORTIVE HOUSING DEVELOPMENT SITES sector development, IH has the advantage of distributing affordable units throughout the City in buildings that would • Make City-owned land available. Make surplus City- not otherwise provide housing opportunities for residents with owned land available for developers at a discount, a range of incomes. Implementing an IHDRAFT policy may require provided that it is used for affordable, senior or supportive City staff to reach out to the development community to explain housing development. requirements, discuss alternatives and offer guidance on process and compliance. Where possible, aligning IH policy • Identify surplus land held by major landowners in requirements with policies in neighboring communities can Wauwatosa. Work with Milwaukee County and other make administration and compliance easier for developers major landowners in Wauwatosa to identify surplus sites and can enhance support for the policy. that could be made available for affordable, senior or supportive housing development. Appendix H analyzes the impacts of a sample IH policy on a hypothetical development project to illustrate the potential • Undertake site assembly in key areas. Given that impacts of IH on development in Wauwatosa. This appendix Wauwatosa is landlocked and has limited redevelopment also includes a matrix of inclusionary housing policies and sites available, consider undertaking site assembly profiles of Midwestern communities with incentive-based in areas identified as promising for future affordable policies. St. Louis Park, Minnesota’s, inclusionary policy, which housing development. Once site assembly is complete, has resulted in the development or approval of more than 280 make the land available either through sale or RFP for the affordable units since 2015, is profiled in Appendix E. development of affordable, senior or supportive housing.
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Immediate Actions Steps financing for private projects that would otherwise be financially infeasible. An AHF could also be used for • Inventory existing City-owned land to identify sites that City-led site acquisition, assembly and preparation, as could be made available for housing development well as a match for leveraging external funding sources. through either sale or RFP. For example, the Wisconsin Housing and Economic • Work with Milwaukee County and other major landowners Development Authority (WHEDA) has indicated that in Wauwatosa to identify surplus land. including local funds in a project reduces the amount of • Monitor listings and potential sales in areas targeted for LIHTC allocation needed and can improve a project’s future housing development and strategically purchase competitive LIHTC score. sites that could be used for affordable, senior or supportive housing. Place special emphasis on monitoring areas of • Determine mechanism to distribute funds. AHFs often use obsolete land uses and deteriorated or abandoned sites. a request for proposal (RFP) process (see pages 5-6) to • Make sites available through listing for sale or as an award grants or loans . Award terms could be variable incentive in an RFP. to incentivize certain priorities, such as providing more attractive terms for addressing pressing local priorities. DEVELOP A CITY-ADMINISTERED AFFORDABLE HOUSING FUND • Capitalize the fund. An AHF can be funded by amending/ extending existing Tax Increment Finance districts (TIDs) to Develop an Affordable Housing Fund (AHF) as a primary capture the one additional year of increment earmarked tool to achieve local affordable housing priorities (see pages for affordable housing. Other sources of capital to explore 24-25 for additional detail). To create an AHF, the Common include general City funds and outside grant funding. Council needs to: Immediate Actions Steps • Develop an administrative structure. Prepare a framework to guide operations, oversight and compliance (e.g., how • Craft a policy outlining AHF administration, form of priorities will be set, projects evaluated, funding distributed assistance, awards process and compliance requirements. and projects monitored over time). • Identify potential target uses, e.g. the populations to be DRAFTserved or the housing types to target. • Identify target populations and project types. Develop • Conduct outreach to solicit input from the stakeholder guidelines outlining the types of projects that the AHF will groups identified above. Consider aligning program support, including considerations for the built form (e.g., requirements with QAP requirements and deadlines to single or scattered site, single- or mixed-use, geographic award funds prior to WHEDA deadlines and leverage area) and the population to be served (e.g., household City funds into projects well-positioned to score highly on income levels, special needs populations, specific age LIHTC. cohorts). Determine programmatic requirements of • Prepare annual estimates of anticipated AHF requests funding sources the AHF may leverage (e.g., the State’s based on targeted uses and City housing goals. Qualified Action Plan (QAP) for Low-Income Housing • Identify potential one-time and ongoing sources of Tax Credit (LIHTC) awards). Consider the input of revenue and prepare five-year revenue projections. affordable housing advocacy groups, the development • Capitalize the AHF with funds from the affordable housing community, the public and other stakeholder groups. extension year from TID #5 closing in 2018. • Extend existing TIDs to capture the one additional year of • Identify appropriate uses of AHF assistance. Typically, increment earmarked for affordable housing. AHF for new housing development is used as “gap” • Identify additional sources of funding for the AHF.
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TARGET USE OF COMMUNITY DEVELOPMENT BLOCK households to be assisted (e.g., seniors, families, the GRANT FUNDS FOR HOUSING PRODUCTION homeless, people with disabilities). • Modify City CDBG policies and practices to achieve Enhance the City’s ability to support the development of new long-term housing goals, including spending goals and affordable and/or accessible housing units through targeting leverage targets. of community development block grants (CDBG) funds to the • Identify and solicit housing service providers that match development of housing units. City housing priorities to begin operations in Wauwatosa.
• Define housing priorities. The City’s current five-year CREATE DOWN-PAYMENT ASSISTANCE PROGRAM CDBG Consolidated Plan covers the 2014 to 2018 AND/OR EMPLOYER-ASSISTED HOUSING PROGRAM programming period. As City staff prepare its next five- year plan for the 2019 to 2023 period, establish concrete, Implement a down-payment assistance program, possibly in long-term, attainable housing goals (for an example of this, partnership with one or more large local employers, to increase see the goals matrix from La Crosse’s 2015 Consolidated the ability of lower-income employees to reside in Wauwatosa. Annual Performance and Evaluation Report (CAPER) in Appendix E). Encourage a more proactive pursuit of • Develop a down-payment assistance program. housing-focused programs by establishing a percentage Down-payment assistance programs reduce barriers of annual CDBG allocations to devote to housing, rather to homeownership for households that can afford the than responding to external partners requesting funding. monthly mortgage payments but face barriers in saving sufficient funds for a down payment. Down-payment • Expand operations of existing housing service providers assistance is typically offered as either a grant or a second and/or solicit additional providers. Work with existing mortgage. Second mortgages can be structured either partners to identify opportunities to expand current as an installment loan for moderate-income households programming and/or actively solicit housing service or a deferred loan due at a future date (e.g., upon sale providers whose services align with City’s housing priorities or transfer of the home) for lower-income households. and that have capacity to work regularly in Wauwatosa. The City of Madison, Wisconsin, has implemented a • Leverage CDBG funds for housing.DRAFT When allocating home-buyer assistance loan program, described further CDBG funds, prioritize investments that leverage funds in Appendix E. The Wisconsin Housing and Economic from other sources. Aligning the CDBG application Development Authority (WHEDA) also offers down- process with complementary programs from other units of payment assistance but limits participation by home government demonstrates local commitment to desirable purchase price, currently $253,809, which may limit projects. As part of program monitoring and goal-setting, applicability in Wauwatosa. Similarly, the Milwaukee track CDBG investments to monitor the leverage the City County HOME Consortium offers a limited amount is able to achieve in terms of additional resources brought of HOME funds for down-payment assistance in into a project and target a benchmark rate. Wauwatosa, West Allis and suburban Milwaukee County.
Immediate Action Steps Wauwatosa has provided CDBG funding to Housing Resources Inc. in the past for a down-payment assistance • Define long-term housing goals as part of U.S. Department program, but the program has faced challenges in of Housing and Urban Development (HUD) consolidated attracting households who could both afford to purchase planning process, including, for example, quantifiable in Wauwatosa and meet program income requirements. goals of units to be assisted or created or types of Therefore, funding for a new down-payment assistance
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program may be needed from sources without affordability expertise drafting EAH policies for employers, as requirements as strict as CDBG funds. A new program described in Appendix F. could evolve into a revolving loan fund over time as initial • Consider using a City-administered, down-payment loans are repaid. assistance program as a source of matching funds to induce employers to establish EAH programs. • Implement rental assistance program. To address rental • Based on employer feedback, define City role and affordability, offer assistance for renters by providing funds potential program structure for EAH program and needed when a lease is signed – either a security deposit implementation steps. and/or first/last month’s rent. A rental assistance program could be capitalized with federal entitlement program PROMOTE USE OF HOME FUNDS or City-administered funds. This program could develop into a revolving structure rather quickly as tenants move Become more engaged and proactive in the use of HOME in and out of units and the City recovers capital. Specific funds within Wauwatosa. eligibility criteria can be defined (e.g., income eligibility, renters who work in Wauwatosa). • Increase coordination with the Milwaukee County HOME Consortium (MCHC). Enhance contact and coordination • Initiate Employer-Assisted Housing (EAH) program with MCHC to increase awareness of MCHC priorities discussion. EAH describes efforts by employers to and resources and improve opportunities for Wauwatosa incentivize their employees to live nearby through a variety to obtain HOME Partnership program funds to achieve of means, including down-payment or rental assistance. its affordable housing goals. An improved relationship Depending on local employers’ interest in participation, with MCHC and understanding of HOME investments employer contributions may be used as a financing source may allow the City to proactively request and negotiate in a City-administered program. Alternatively, employers funding for local projects or programs. could operate funds independently as a benefit for employees. (See Appendix F for more information on case • Monitor and advocate for HOME funding in Wauwatosa. study EAH programs). Proactively track and monitor HOME funds used within Wauwatosa to gauge success in meeting housing goals. Immediate Actions Steps DRAFT • Target use of HOME funds for local priorities. Leverage • Coordinate with providers of existing down-payment the relationship with MCHC and understanding of local assistance programs to identify ways to make those funds HOME spending to better understand the HOME funds as widely available in Wauwatosa as possible. available and the local projects/programs best suited • Identify gaps in the provision of down-payment assistance to attract those funds. Given the regulatory compliance from existing funders and design Wauwatosa’s program associated with the HOME program and the common to supplement existing programs. preference to invest it in larger amounts across fewer • Create a program to provide deposit funds to renters who projects, the City may focus its efforts on providing funding meet City-defined eligibility terms. for new affordable housing developments (whether single- • Begin discussions with major local employers to gauge site rental housing or scattered-site single-family homes). interest in and encourage participation in an EAH program. Identify a preferred model – City-operated • Coach prospective projects and developers through fund, employer-operated program or another structure. process. Identify promising projects and work with • For an employer-based EAH model, offer financial developers to prepare their applications to MCHC to assistance to work with an outside organization with increase chances of receiving HOME funds.
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Immediate Actions Steps Immediate Actions Steps
• Conduct regular meetings (e.g., quarterly) between City • Identify and meet with affordable housing organizations and MCHC staff. active in southeast Wisconsin relevant to Wauwatosa’s • Develop stronger understanding of existing MCHC housing needs. funding availability and the opportunity to leverage funds • Produce a briefing document to inform these organizations to address Wauwatosa’s unmet housing needs. of Wauwatosa’s housing needs and available resources. • Annually track the use of HOME funds in Wauwatosa. Recommended Next Steps Recommended Next Steps • Maintain contact with relevant organizations over time. • Identify projects which meet City priorities that may be • Act as a point of coordination for affordable housing viable candidates for HOME funding. service providers. • Work with developers to prepare applications for MCHC funds. Policy Priority B: Preserve Existing Housing by Addressing Accessibility and Deferred DEVELOP/ENHANCE PARTNERSHIPS WITH AFFORDABLE HOUSING ORGANIZATIONS Maintenance Issues Associated with an Aging Housing Stock Build relationships with organizations dedicated to affordable housing creation and preservation to leverage the City’s The Housing Study found Wauwatosa’s existing housing stock investment into its affordable housing programs and capitalize to be of high quality but also aging, with seven in 10 housing on the expertise and financial resources of the outside units built before 1960. Proper maintenance and rehabilitation organizations. of these older housing units is critical in maintaining the quality of housing and ensuring safe and accessible living spaces. • Coordinate with affordable housing organizations. Ongoing maintenance for aging properties can be financially Reach out to organizations active in southeast Wisconsin challenging for some homeowners, particularly those with fixed focused on issues that align with Wauwatosa’sDRAFT housing incomes. The City currently provides Community Development goals, including affordable housing developers, service Block Grant (CDBG) funding to the non-profit Community providers (e.g. supportive housing groups), lenders (e.g. First in support of a program for emergency substantial home Wisconsin Housing and Economic Development Authority repairs. In addition, a Milwaukee County program provides (WHEDA) or the Federal Home Loan Bank of Chicago), no-interest loans using HOME funds for the rehabilitation of stakeholder groups representing prioritized populations owner-occupied units for income-eligible households. The (such as Movin’ Out, a provider of housing solutions City should leverage and expand these programs to aid more for people with disabilities and their families), and other residents in addressing deferred maintenance and making stakeholders. Connecting with these groups creates accessibility improvements. opportunities to connect Wauwatosa’s needs with each organization’s area of focus and available resources. DEVELOP A GENERAL HOUSING FUND
• “Quarterback” the process. Coordinate between Create a General Housing Fund (GHF) as a more flexible developers, funders, service providers, and groups companion tool to the Affordable Housing Fund (AHF) (see representing priority populations. (The City of Madison’s page 8). experience with this role is described in Appendix E).
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• Target populations and project types. Craft the GHF to modification program funds include CDBG, HOME, City- target priorities and populations not covered by the AHF administered AHF/GHF, and/or Tax Increment Financing (e.g., offering assistance to households with a wider range (TIF). To implement the program, leverage existing of incomes). relationships with non-profit organizations providing home rehabilitation services. A home modification program • Identify appropriate uses of GHF assistance, develop could be structured in one or more of the following ways, mechanism to distribute funds, and develop administrative depending upon City goals and funding sources: structure. Once the priorities for GHF funds have been identified, follow the same programmatic steps described • Funds for third-party service providers. Expand in the creation of the AHF. existing programming and provide additional funds directly to third-party organizations which work with Immediate Actions Steps homeowners to perform home modification work. New funding sources, such as the AHF and GHF, • Follow the same steps outlined for the AHF to establish a would expand existing programming to help improve GHF. Priorities will vary, but other steps are the same. aging housing stock.
CREATE MODIFICATION PROGRAMS FOR OWNER- • Grants or forgivable loans. Award grants or OCCUPIED AND RENTAL PROPERTIES forgivable loans – which are forgiven/converted to a grant once a homeowner satisfies certain • Create home modification program for owner-occupied conditions (such as length of residency) – to support properties. Financing for home improvements may be maintenance and improvement of aging housing difficult and/or costly to obtain from conventional lenders stock. Community First, a current Wauwatosa CDBG for certain residents who own their own homes. The beneficiary, employs a forgivable loan model in Wisconsin Housing and Economic Development Authority Milwaukee, with loans forgiven five years after (WHEDA) currently offers low-interest loans for home origination for single-family homeowners and after a improvement through private lenders but has indicated specified affordability period has elapsed for owner- that the program is not widely used. Existing City and occupied duplexes. St. Louis Park, Minnesota, uses Milwaukee County programs are relativelyDRAFT limited in scale a grant program to provide funds for emergency and availability. A new City program designed to serve repairs to necessary building systems for low-income residents who own their homes, but cannot access existing households (described further in Appendix E). programs (because of income limits, lending terms, or other reasons) would provide grant funding and/or • Revolving rehabilitation loan fund. Capitalize a financing with favorable terms for home repair (e.g., for revolving loan fund empowered to make new loans major systems like roofing, windows, plumbing, HVAC), only after outstanding loans are repaid. Provide loans weatherization and/or accessibility improvements. to homeowners meeting specified criteria related to home age, improvements and/or income. Because Uses of funds under a home modification program would such loans would require regular servicing to ensure be limited to the types of improvements the Common homeowners have completed the improvements and Council wishes to prioritize. Terms of assistance can be tied are making required payments, consider working with to income levels, with more favorable grant or loan terms a third-party entity to administer this program (e.g., available to lower-income homeowners who have less for loan distribution and servicing) or ensure City staff access to capital and potentially greater financial burdens has the capacity to disburse and service the loans. related to home maintenance. Potential sources for home
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• Reverse mortgage/deferred loan fund. Develop affordable housing” and may benefit from below-market a reverse mortgage and deferred loan program loan terms for rehabilitation. Rent limitations (e.g., to HUD- to provide either an upfront lump-sum payment or identified fair market rents) for a period of time could be stream of payments to the homeowner, to be repaid included as a term of this assistance. only when the property transfers ownership. Such funds can be used by homeowners with substantial • Clearly publish licensing requirements for home home equity but limited income to improve and/or improvement vendors. Provide a resource for residents maintain homes. A reverse mortgage or deferred seeking home improvement services by publishing a loan structure would have simplified compliance, with clear description of the licensing requirements for relevant a single lump sum repayment rather than the annual firms. Residents should be encouraged to verify firms are loan servicing responsibilities associated with a more appropriately credentialed, and residents using City funds traditional loan (as with a revolving rehabilitation should be required to do so. loan fund). A reverse mortgage/deferred loan fund could be structured as a revolving loan fund, though Immediate Actions Steps the longer term of such loans may make the revolving component somewhat limited. • Coordinate with providers of existing owner-occupied and/or rental property modification assistance programs • Create a rental housing modification program.Develop to identify ways to make those funds more widely a residential modification loan program for rental available. housing similar to that for owner-occupied units offering • Identify gaps in service among the existing modification below-market terms (e.g., lower interest rates, more programs available. flexible repayment features) relative to conventional • Publish licensing requirements for home improvement bank financing. Loans under a rental housing revolving vendors. fund would likely be structured as standard loans, not as deferred or potentially forgiven loans. Rental properties, Next Steps if maintained, should support a steady stream of income to property owners, allowing them to fully amortize • Craft a policy to address identified gaps in resources for the costs of apartment unit improvementsDRAFT over time. owner-occupied and/or rental property modifications. Outline program administration, funding, intended WHEDA’s commercial lending programs provide limited purpose (targeted uses, populations, housing types), form options for private market owners of existing buildings of assistance and compliance requirements for any new exploring rehabilitation of their properties. WHEDA’s programs. main tool for rehabilitation for existing owners is primarily • Determine if additional licensing requirements are to be available to non-profit property owners. Eligible owners required for home improvement vendors conducting work should be directed to WHEDA’s existing multifamily using City funds. If so, incorporate additional requirements rehabilitation lending programs. A new Wauwatosa into relevant program guidance. program funded with the GHF could then target private, generally market-rate multifamily properties ineligible for ACQUIRE AND MAKE AVAILABLE CITY-OWNED WHEDA funding. The City should determine parameters to ACCESSIBILITY IMPROVEMENTS limit the loan funds to properties that may have challenges in obtaining conventional financing (e.g., older single-site • Acquire and make available City-owned accessibility two- to eight-flat buildings). This segment of the market improvements. Purchase mobile/temporary ramps or has been recognized as providing “naturally-occurring chair lifts and loan them to homeowners with accessibility
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needs. Refurbish and reuse the improvements once they Policy Priority C: Enhance Ability of Current are no longer needed at a particular home. Fund the Residents to Age in Place within the program with CDBG or City-administered AHF or GHF. Community Immediate Actions Steps Aging in place often refers to two goals: 1) allowing residents to remain living independently in their homes as long as • Identify the types of accessibility improvements the City possible, and 2) ensuring alternative housing options exist in will offer. the community so that residents can move within the community • Outline process for purchasing and managing an inventory when they want or need to move out of their long-term of City-owned accessibility improvements. home. The City already provides support to service providers • Make improvements available to residents through long- and dedicated senior housing facilities with Community term leases. Development Block Grant (CDBG) funds. Strategies to enhance the ability of seniors to age in place in Wauwatosa are outlined REDEVELOP SELECT PROPERTIES below. • Redevelop select properties. In cases of extensive home or DEVELOP NEW SENIOR HOUSING OPTIONS rental property deterioration where rehabilitation may not be financially viable, implement a selective redevelopment • Develop new senior housing options. Apply programs program modeled on the program in La Crosse (described for the creation of new affordable units (see pages 5-11) further in Appendix E). Using Community Development to senior-targeted projects. For example, offer financial Block Grant (CDBG), HOME, City-administered assistance through a request for proposals (RFP) process Affordable Housing or General Housing Funds (AHF/ for the construction of new housing for seniors, with GHF), or Tax Increment Financing (TIF) funds, acquire and specific accessibility guidelines or supportive housing demolish dilapidated single-family properties, and then requirements. In a senior housing-focused RFP, emphasize use dedicated housing funds to support construction of new development of new units within existing neighborhoods single-family homes or small rental buildings for low-to- with a range of services, as opposed to outlying areas moderate income (LMI) households. This program would where mobility challenges may limit senior’s access not be intended to provide large-scale redevelopment DRAFTto community resources. Target the creation of a mix but would address locally-problematic properties and of housing types (e.g., townhomes, condominiums or provide an opportunity to develop high-quality, fully- accessory dwelling units (ADUs)) (see pages 16-19) to accessible, scattered-site affordable housing. enhance options for seniors, and, in the case of ADUs, generate potential income streams for homeowners. Next Steps Recommended Next Steps • Develop program of selective redevelopment of properties where rehabilitation is not financially viable • As the City releases RFPs for construction of new housing with scattered-site, affordable, accessible single family or units, consider adding preferences for new housing for small multifamily properties. seniors, with specific guidelines related to accessibility, supportive services and geographical locations within existing communities with nearby services.
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DEVELOP FINANCIAL ASSISTANCE PROGRAMS FOR Common Council to identify funding and implement FIXED-INCOME SENIORS proposed program.
• Develop financial assistance programs for home operating Next Steps costs. Reverse mortgages or deferred loan funds (see page 13) provide funds to homeowners that are repaid when a • Convert home operating cost assistance program into a property transfers ownership. For seniors with substantial revolving loan fund. home equity but fixed incomes, a similar structure could assist with substantial ongoing home operating costs CONNECT SENIORS TO SERVICE NETWORKS such as property taxes, special assessments (i.e., for sidewalk, curb or gutter improvements) and city-operated • Identify concentrations of senior citizens. To better utilities. Initial capital provided by the City or Affordable target the City’s and partner agencies’ senior services, Housing or General Housing Funds (AHF/GHF) could conduct detailed demographic research and work with be used to pay the borrowers’ taxes or utility bills. service providers to identify areas of the City with high concentrations of senior citizen residents. Reinforce Borrowers typically apply to such programs annually and service provision to these “naturally occurring retirement have a lien placed against their home for the borrowed communities” (NORC) and direct other programs there as amount to be repaid upon sale of the home. For borrowers well. who reapply annually, the lien is essentially refinanced with the balance increased to include the newly borrowed • Connect seniors, especially within identified NORCs, amount plus previous principal. This structure is used for a to service networks. Serve as a point of coordination, property tax assistance program in the City of Madison, connecting housing service providers/servicers with non- Wisconsin, and is described in more detail in Appendix E. profit organizations serving the senior population. Use Such a program could eventually evolve into a revolving the City’s relationship with Interfaith Older Adults as a fund, but would need several years of up-front financing building block to connect housing programming with the from other sources to sufficiently capitalize the fund, given senior-specific services provided by Interfaith, and vice the potentially lengthy terms of loans. As part of the intake versa. For example, the Milwaukee County Department of process for any real estate tax assistance,DRAFT ensure that Aging (MCDA) is the City’s Area Agency on Aging and homeowners are receiving all proper property tax credits uses federal funds to contract with senior-oriented service allowable under Wisconsin law. providers (including Interfaith). Convene a working group with representatives from MCDA, Interfaith and the City’s • Develop financial assistance for home maintenance costs. housing programs to develop a detailed operations Ensure that the full suite of programs to assist with expenses and outreach strategy to connect senior services, for home modification and accessibility improvements (see housing services, and the seniors who could use them. pages 11-14) are available and marketed to any low- Replicate the Interfaith model for other types of service income seniors meeting income requirements specified for providers (e.g., health services) to increase the range of each program. services assisting seniors to remain in their homes longer. Train any City staff with high levels of interaction with the Immediate Actions Steps senior citizen community on the suite of housing programs offered through the City and provide information to likely • Conduct outreach with senior citizens groups and elected beneficiaries. officials to develop a framework for a new program to assist seniors with home operating costs. Work with the
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Immediate Actions Steps Policy Priority D: Ensure a Mix of Housing Types is Available • Conduct demographic research and interviews with service providers to identify NORCs. The Housing Study found that anticipated population growth • Educate city workers in contact with the senior citizen as well as demographic shifts among Wauwatosa residents community about the housing assistance programs are likely to drive demand for a different mix of housing types available through the City. than what currently exists. In particular, this shift is expected • Identify and meet with senior citizen service providers to increase demand of for-sale attached housing in the active in Wauwatosa. Connect them to City and non-profit form of townhouses or condominiums. The Housing Study housing programs and services. also anticipated increased demand for market-rate rental • Explore replicating the Interfaith model with additional multifamily and higher-end single-family units. Diversifying service providers for other types of senior services (e.g., the City’s housing stock would address these trends. The health services). private market has recently responded to demographic and market changes, producing hundreds of units of multifamily Next Steps rental product. Higher-end detached single-family homes are typically provided by the private market as well. The City can • Conduct outreach to senior citizen service providers/ therefore direct its support to housing types that may not be senior citizen groups as part of any future outreach as easily produced by the private market, through mechanisms effort to improve relationships with affordable housing described below. organizations. The Housing Study identified starter homes as a missing CONSIDER THE BUILT ENVIRONMENT AND ITS IMPACT component of the local housing stock. Developing alternative ON SENIORS housing types in the community like attached single family and condominiums may help in this regard by providing this option • Consider the built environment and its impact on seniors. to first time home-buyers but also by providing alternatives The built environment plays an important role in whether to existing homeowners looking to move but remain in the seniors are able to comfortably age in place, especially community, thereby potentially making their units available to as options for mobility decrease. AsDRAFT the City develops first-time home-buyers. In this way, other strategies described and implements policies regarding its built form, consider in this document may indirectly aid in making starter homes impacts to seniors. This includes emphasizing accessibility available. requirements and universal design in changes to the building code; emphasizing walkability; implementing REFINE REGULATORY FRAMEWORK the City’s complete streets policy; improving transit connections (especially in NORCs); encouraging mixed- • Specify desired housing types in the City’s Tax Increment use development; and locating City services in locations Finance (TIF) Program Policy. Specify the missing housing accessible by walking or transit. types identified in the Housing Study as a new line item in the Public Purpose Objectives of the City’s TIF Program Next Steps Policy or as a specification of item B.6 to more explicitly incentivize such housing types. • As the City implements policies impacting the built form, consider effects on senior citizens and the City’s NORCs. • Expand multi-unit residential zoning options. Consider expanding the range of multi-unit residential zoning options to include:
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• At least one multi-unit “R” district that does not place C2’s current residential density restriction, which would an absolute cap on the number of dwelling units accommodate smaller residential dwelling units, larger allowed on a parcel (e.g., an “RM” district that limits residential buildings (in appropriate settings) and greater building scale and density without an absolute cap on housing choice. Along with an increase in density, consider the number of units that can be located on a lot); and imposing an overall maximum building height restriction in the C2 district in alignment with the new density regulation. • An expansion of the uses allowed in the “SP-MED” (Medical Center) zoning district to include multi- Under the City’s current zoning ordinance, all zoning unit residential or creation of a companion special districts that allow multi-unit residential and mixed-use purpose zoning district specifically intended for buildings limit the number of units allowed on the subject application near the medical center campus or in lot through the imposition of minimum-lot-area-per-unit other predominantly commercial or industrial areas (MLA) requirements. Applicable MLA regulations are as where multifamily development could be appropriate. described in the table below.
The City’s zoning ordinance currently includes two multi- With an allowed density of up to 27 units per acre and unit residential districts: R4 and R8. Both districts allow a maximum height of 35 feet, the R4 and R8 districts detached houses, semi-detached houses, duplexes appear to be roughly aligned. In other words, it is at least and multi-unit (apartment or condominium) residential theoretically possible to achieve the maximum allowed buildings. These districts are differentiated solely on the density while complying with the maximum allowed basis of the number of dwelling units allowed on a single building height. The same is generally true in the C1 district. lot, with the R4 district capped at four units and the R8 However, since the C2 district allows unlimited building district at eight units. Because of these dwelling unit height, the current MLA requirement imposes an artificial caps, any development project that includes more than constraint on residential density. eight dwelling units must either be located in a C1 or C2 district or be processed as a PUD, which are the only One alternative could be revising the C2 district’s MLA other zoning options for multi-unit residential buildings. requirement to 400-500 square feet per dwelling unit and imposing a maximum building height limit of 90-100 feet Changes to the zoning code would beDRAFT subject to the City’s (7-9 stories). Another option would be to establish multiple typical public input process. versions of the C2 district so that maximum height limits vary based on the area’s character and context. Under • Relax residential density limits. Align all of the regulations such an approach, the district could include multiple height (e.g. density, building height) within a given zoning district classifications, identified by a height designator appended so that buildings could be reasonably constructed and not to the district name (e.g., C2-45, C2-60, C2-90, C2-120). limited by any particular regulation. Consider relaxing
District Minimum Lot Area per Equivalent Density Maximum Height Dwelling Unit (sq. ft.) (units per acre) (feet) R4 1,600 27 35 R8 1,600 27 35 C1 1,000 43 40 C2 1,000 43 No maximum
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• Allow for construction of Accessory Dwelling Units. To materials outlining the process and guide developers facilitate a greater variety of housing types, adjust the through conversion. City zoning ordinance to allow accessory dwelling units (ADUs), which are small rental dwelling units on single- • Address other regulatory barriers to multifamily housing family home lots. ADUs can be contained within the development. Municipal regulatory structures can often principal dwelling unit (e.g., basement apartment) or unintentionally hinder development of certain land uses. within a separate structure entirely (e.g., carriage house To address this, implement regulatory changes that can or apartment above a detached garage). ADUs increase reduce the costs of producing multifamily housing including rental options, present potential new income streams for parking requirements, unit size/amenity requirements, homeowners and provide additional living arrangement rehabilitation requirements for existing buildings, and options (e.g., family members or caretakers living on- permissiveness of innovative building techniques. site) for the elderly or other residents with special needs. (A proposed zoning ordinance text amendment to allow Immediate Actions Steps ADUs is presented in Appendix G). • Specify desired housing types in the City’s TIF Program • Modify Planned Unit Developments (PUD) process for Policy. selected housing types. Explore use of an expedited • Work with Common Council to expand multifamily PUD approval process for projects providing certain City- residential zoning options and recalibration of zoning identified public benefits, such as inclusionary, senior or district density limits. supportive housing. If the City does not pursue expansion • Expedite the PUD process for projects providing certain of multi-unit residential zoning options or recalibration City-identified public benefits. of residential density limits, the primary mechanism for • Facilitate multifamily rental to condominium conversions. multifamily development will continue to be the PUD zoning Resolve any points of ambiguity in the process, prepare option. PUDs are intended to allow for a variety of housing document outlining process, and guide developers types and compact development patterns with mixed land through the process. uses by providing greater flexibility in land use, density • Work with consultants/Common Council to implement and site design requirements relative to underlying zoning. revisions to City zoning ordinance to allow ADUs. Due to the lack of multifamily residentialDRAFT zoning options, most recent multifamily projects in the City were built in PUD PROVIDE FINANCIAL ASSISTANCE overlay zones. The review and approval process for PUDs extends beyond that required for as-of-right development • Proactively solicit developers. Conduct outreach to and the outcomes of case-by-case project review can developers experienced in building the range of housing be highly unpredictable for developers and neighbors. types targeted by the City. This may be done as part of an RFP process but does not need to be restricted to that • Facilitate conversion of rental units to condos. Developers process. active in Wauwatosa have designed or have considered designing multifamily rental projects such that they could be • Provide financial assistance. The City has made financial converted to condominium units in the future. To facilitate assistance available in the form of Tax Increment such conversions, undertake a review of the relevant Financing (TIF) gap financing to support the construction regulatory process, including steps such as filing a plat of of multifamily rental buildings in the City. While this has subdivision and seeking approval through the Planning increased available housing choices, not all housing types Commission and Common Council, to identify points of identified in the Housing Study are being developed. ambiguity and take steps to clarify the process. Prepare Condo and attached single-family projects are currently
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difficult to finance due to the inability of sale prices to Next Steps support development costs and conventional lenders’ pre-sale requirements. To enable these projects to move • Review City zoning ordinance for areas where revisions forward, provide financial assistance to address at least may reduce the costs/barriers to the production of one of these issues: multifamily housing. • As the City releases RFPs for construction of new housing • Development Costs. Offer low-interest construction units, consider adding preferences for specified housing loans or private loan guarantees, short-term types in demand but generally unavailable in Wauwatosa. financing through project stabilization, or reduced- • Using information gained during developer outreach, price City-owned land. If the project meets other design financial assistance tools to overcome financial community development objectives, such as challenges to the production of desired housing types. including a mix of housing types or being located • Include a first-time home-buyer component to any in a target neighborhood, waive development- proposed Down-Payment Assistance Program. related fees or loosen other requirements (e.g., the hypothetical inclusionary policy). In addition to TIF, City-administered Affordable Housing or General Housing Funds (AHF/GHF) and HOME are possible funding sources.
• Pre-Sale Requirements. Work with local real estate agents and brokers to identify potential buyers and direct them to proposed projects. Provide or guarantee a portion of construction financing, which is typically limited by pre-sale requirements and often challenges the feasibility of condo development.
• Issue a Request for Proposals (RFP) for new housing types. Offer financial assistance throughDRAFT an RFP process (see pages 5-6) that prioritizes housing types the Common Council has identified as missing from its local housing mix. The Housing Study identified for-sale attached housing as one type of housing that is not generally available in Wauwatosa but which is desired by residents. An RFP for a particular housing typology could be combined with some of the other RFP strategies discussed in this document, such as for senior-focused, special needs/supportive, or affordable housing.
• Support first-time home-buyers. Offer a first-time home- buyer down-payment assistance program as a subset of the Down-Payment Assistance Program (see pages 9-10) with below-market terms targeted to prospective home- buyers who have not previously owned a home.
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DRAFT
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2. Housing Key to implementing the Housing Policy and Action Plan is Action Plan: identifying available resources that the City already uses and additional resources that could be available to supplement current resources. City financial and regulatory tools available Toolkit to address unmet housing needs include:
• Tax Increment Financing (TIF); • Community Development Block Grant (CDBG) funding; • HOME Investment Partnership Program funding; • Land use zoning; • Zoning ordinance and design standards; • City-administered housing funds; • Dedicated housing staff; and • Organizational relationships.
This section provides an introduction to each tool, outlines its historic use in the City, and presents case study research into best practices from Midwestern peer communities. Options to modify and/or supplement existing tools to more effectively address unmet housing needs are presented here, with specific programmatic options for the use of each tool outlined in the subsequent section.
TAX INCREMENT FINANCING
Tax increment financing (TIF) is an economic development tool that allocates future increases in property taxes from a DRAFTdesignated area, or TID, to pay for improvements within that area. TIF is often used to leverage other public and private financing sources in support of private development.
TIF-eligible costs in Wisconsin include capital costs, land assembly, and infrastructure, among others. TIF can be used to directly benefit affordable housing projects by providing “gap” financing that improves a project’s financial feasibility. Municipalities in Wisconsin may extend a TID for one additional year after TID project costs are fully paid to fund housing improvements, with 75% of the additional increment required to be used to benefit affordable housing within the municipality and 25% used to improve the municipality’s overall housing stock. This is a relatively new feature of Wisconsin’s TID law, enacted by the legislature in 2009.
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HOW DOES TAX INCREMENT FINANCING WORK? • Land assembly and site preparation; • Housing construction/rehabilitation; Real estate property is taxed by several different government • Financing of extraordinary site costs (e.g. remediation or entities, including cities, counties and school districts, which parking); and apply an annual tax rate against the total assessed value • Incentivizing developers to include community benefits in (AV) of the property. Taxes collected by these government their project (e.g. setting aside a portion of the units in their entities are then used to provide municipal services that project for affordable housing). benefit that property, such as police and fire protection, education, and public health. Currently, two TIDs contain language permitting the extension of the TID for one year to support affordable housing. City staff When a TID is formed, the AV of the real estate property, has indicated that this language will be included in all future upon which real estate taxes are levied, is frozen for a TID plans, and existing TID plans could be amended to provide specific period of time (as allowed under state statute). Local for the housing extension. Based on SB Friedman’s review of taxing bodies continue to collect taxes based on this frozen the TID feasibility studies and council minutes, doing so could base value, while taxes levied against any increases in AV produce approximately $10 million over the next 25 years to due to new development, rehabilitation/improvement, or support housing efforts. property appreciation are allocated to a special fund that is used to pay for improvements within the TID. More information on TID use in the City is presented in Appendix D. Upon expiration of the TID, the government entities are able to levy taxes against the full value of the property, including COMMUNITY DEVELOPMENT BLOCK GRANT any increase in AV. FUNDING
The community development block grant (CDBG) program Use of TIF in Wauwatosa is a federal entitlement program administered by the U.S. Department of Housing and Urban Development (HUD). TIF has been the primary economic development tool for The program provides grants to cities and counties to assisting and incentivizing redevelopmentDRAFT in Wauwatosa address locally-identified community development needs and the use of TIF has been successful in facilitating the including housing conditions and the availability of economic redevelopment of blighted and underutilized properties, opportunity, with an emphasis on benefitting low- and supporting job creation efforts, and assisting with mixed-use, moderate-income persons. Funds are awarded annually market-rate development that has increased taxable value. on a formula basis to entitled counties and cities, including Through the seven active TIDs, the City has supported over Wauwatosa. Grantee communities have the freedom to plan 1,000 units of housing, more than 80,000 square feet of retail, how best to achieve HUD-defined goals locally and program and associated parking facilities since 2014. Estimated taxable their funds accordingly; however, most funds (70%) must be value of these six projects totals more than $125.0 million. used to benefit low- and moderate-income (LMI) households, defined as those with incomes up to 80% of AMI. In Milwaukee TIF can also be leveraged to address housing-related challenges, County, 80% of AMI for a family of four is $57,900 (2017). as noted in the 2014 City TIF policy, which prioritizes using TIF funds for “creating a range of lifecycle housing opportunities” Typically, CDBG funds for housing are spent on the following: and “protecting and revitalizing neighborhood character by removing blight in, or adjacent to, residential areas.” Potential • Residential rehabilitation; uses of TIF in support of housing objectives include: • Homeownership assistance;
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• Public housing improvements; takes a different approach to connecting CDBG funding to • Energy efficiency improvements; service providers by setting internal policies mandating certain • Lead-based paint remediation; percentages of CDBG funds be spent on housing, discussed in • Code enforcement; Appendix E. An application of this more proactive strategy in • Historic preservation; and Wauwatosa is discussed further on page 9. • Operation and repair of foreclosed property. Best Practices for the Use of CDBG Housing practitioners interviewed by SB Friedman typically viewed CDBG funds as being easier to deploy in small- SB Friedman reviewed HUD best practices and conducted case scale projects, such as rehabilitation and home modification study research in peer communities to identify best practices programs, due to their less onerous oversight terms when in the use of CDBG funds, many of which the City is already compared to other HUD-administered programs like HOME. practicing.
Historic Use of CDBG in Wauwatosa Short descriptions of HUD-identified projects with effective uses of CDBG funds are available in Appendix E. Best practices for From 2013 to 2017, Wauwatosa received roughly $900,000 the use of CDBG funds are also presented in case studies of annually in CDBG funds, with an average of 15.3% of funds peer communities in Appendix E. being spent on housing activities, 65.2% on all other non- housing community development activities, and 19.5% on HOME INVESTMENT PARTNERSHIP PROGRAM planning and administration. FUNDING
Housing-related CDBG expenditures since 2013 have ranged The HOME program is administered by HUD, and consists from 6.2% to 26.9% of Wauwatosa’s annual allocation, and of block grants to states, counties, and municipalities to have been used to support: fund solutions to locally-identified, eligible housing needs. Communities are determined to be eligible via a formula which • Greek Manor. Upkeep of a 34-unit subsidized residential takes into account the local housing market and demographic facility for low-income seniors and residents with physical conditions. Eligible uses of HOME funds include: disabilities; DRAFT • Community First. Rehabilitation of homes occupied by • Tenant-based rental assistance; LMI households, prioritizing code violations, health/ • Housing rehabilitation; safety hazards, accessibility modifications, security • Assistance to home-buyers; improvements, and structural repairs; and • New construction; • Housing Resources Inc. Funding of a down-payment • Site acquisition; assistance program. • Site improvements; • Demolition; Most of the City’s CDBG funds are committed in response to • Relocation; and organizations’ requests for assistance, rather than through a • Other necessary and reasonable activities related to the process driven by City priorities. Historically, the City’s ability development of non-luxury housing. to direct CDBG dollars to housing uses has been limited by the organizational capacity of partner organizations to request Units developed with HOME funds must have rents that meet and deploy CDBG funds annually. Potential barriers to meeting HUD-published standards for their markets. Households housing objectives include: shortage of available land for new occupying HOME-funded units must also meet affordability construction, low vacancy rates and high land values. La Crosse standards – with incomes no greater than 80% of AMI and
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a majority with incomes at or below 60% AMI. Affordability overlay are to allow for a variety of housing types and to standards for Wauwatosa are outlined in Appendix C. create “compact, mixed-use development patterns” where land uses may be situated in close proximity to one another. In SB Friedman’s interviews with housing practitioners, HOME This zoning designation is an existing tool that the City can use funds were often considered as having the most onerous with developers to encourage the mixing of land uses and the compliance terms, making deployment in small-scale projects creation of housing types that may not otherwise be allowed. more difficult. Ongoing eligibility certification and inspection requirements, among others, can be challenging for small Zoning Ordinance and Standards (Design, Parking, projects. Therefore, HOME funding is often provided to a Density) smaller number of relatively larger projects. The City’s zoning ordinance establishes maximum allowable Historic Use of HOME in Wauwatosa densities as well as lot and building regulations governing setbacks, building coverage and building height. The Wauwatosa does not receive HOME funds directly from ordinance also includes off-street parking requirements and HUD, as the City is a member of the Milwaukee County landscaping regulations. All of these regulations work to affect HOME Consortium (MCHC), and funds are directed through a site’s overall development potential. However, in some cases Milwaukee County as the lead entity. MCHC receives funds regulations could be better aligned to allow for greater housing of approximately $1.2 million annually for use in suburban choice. For example, the City’s C2 zoning allows unlimited Milwaukee County, Wauwatosa and West Allis. MCHC building height but imposes fairly strict limits on density. administers First-Time Homebuyers, Rental Assistance (including Revising regulations such as this may allow development of Section 8 vouchers), and Home Repair Programs. HOME funds greater intensity on existing parcels without necessitating use supported the construction of 11 affordable senior units at of a PUD overlay. In other cases, Wauwatosa may consider Cedar Glen in Wauwatosa. flexibility regarding these requirements for all developments which include affordable units or aid the City in achieving other REGULATORY TOOLS housing-related goals, as some other communities have done. Any flexibility or relief provided through the zoning ordinance Regulatory tools, such as zoning and design standards, are would need to be part of an overall policy available to projects also a key component of the City’s toolkitDRAFT for addressing meeting policy criteria and would not be provided on a case- housing issues. by-case basis.
Land Use Zoning CITY-ADMINISTERED HOUSING FUNDS
Wauwatosa has and enforces a zoning ordinance, and uses The City has options to more effectively coordinate available this authority to regulate land use and development through resources to address unmet housing needs, but many of zoning, impacting housing type, tenure and affordability. The these efforts will ultimately require a source of capital. A key City could consider adjusting its zoning ordinance to allow the implementation tool is the creation of one or more dedicated, creation of different housing typologies and a greater mix of city-administered housing funds. While the City could develop residential and nonresidential land uses. a single fund capitalized with all of its available funding sources devoted to housing, that fund would be limited by The zoning ordinance includes a PUD zoning classification, the programmatic requirements of the most restricted funding which allows for development that would not otherwise source. Segregating funding sources into separate funds be permitted or which would be difficult to produce under according to the programmatic requirements of each funding existing zoning regulations. Two of the objectives of the PUD source may allow for greater flexibility. A two fund structure
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that may be appropriate for Wauwatosa is outlined below. others. Potential capital sources for dedicated housing funds are presented in the table below. • Affordable Housing Fund (AHF). A fund established solely for the purpose of funding affordable housing projects. Frequently, AHFs and GHFs are initially supported by general Funds could be used to provide low-interest loans or municipal revenue, bond proceeds and/or outside grants grants to developers, provide down-payment assistance, from public or private sources, generally with the goal that or support other programs that improve affordability for the funds will become self-sustaining over time. Though LMI households. An AHF would likely be capitalized with larger in population, the Cities of Madison, Milwaukee funds that have affordability requirements and would and Minneapolis all use general revenue funds as one of therefore likely be required to meet the requirements of the the primary funding sources for their municipal affordable most stringent funding source in its funding mix. housing funds. Supporting these funds with City revenues allows maximum flexibility when deploying the funds. Funds • General Housing Fund (GHF). A fund established to generated by extending expiring TIDs for an additional year improve the condition of the overall housing stock. Funds provide a source of funding as 75% of such funds must be used could be used to address code violations/deferred for affordable housing, with the remaining 25% eligible for maintenance, assemble land for residential projects, or to more general housing programming, corresponding to uses of support other programs that more generally improve the the AHF and GHF respectively. overall housing stock. A GHF should be capitalized with funds that do not come with affordability requirements to Operationalizing these funds is described in more detail on preserve its flexibility. Keeping the GHF free from funding page 8 (AHF) and pages 11-12 (GHF). sources which include their own spending guidelines would allow Common Council to set the terms on how DEDICATED HOUSING DEPARTMENT OR STAFF GHF dollars are used. In addition to available financial and regulatory tools, a Both funds could be used to leverage and demonstrate local dedicated housing department or staff would also advance the support for projects seeking other funding sources, including City’s housing goals. Currently, housing issues are managed private equity and debt, TIF, LIHTC, CDBG,DRAFT HOME, and by the Development Department where staff work on housing Source of Capital Funding AHF GHF TIF, including collections from the extra year of increment collection X X 75% of final year funds 25% of final year funds Federal entitlement funds (CDBG, HOME) X Fees paid by developers, such as an inclusionary housing fee (see pages 6-7) X X [1] Private grants/donations [1] X X Repayments from other loan programs or other program income [1] X X Interest accrued from government accounts X X City general funds (e.g., real estate taxes) X X [1] May be used for GHF provided that program requirements do not stipulate that the identified capital source must be used for affordable housing purposes.
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issues part-time in addition to fulfilling a variety of other duties. project equity, thereby reducing project debt and allowing Significant staff time is required to implement and operate lower rents without impacting overall financial feasibility. programs that are complex and require cooperation with multiple stakeholder groups (e.g., government agencies, In addition to administering the state’s LIHTC allocation, affordable housing and market rate developers, seniors, WHEDA also operates several lending programs. WHEDA populations with special needs, etc.). Dedicated housing staff lends directly to affordable housing developers for a variety would have the time to devote to developing and operating of eligible uses including acquisition, new construction, programs, enhancing technical expertise and enriching rehabilitation, preservation of affordable housing, and relationships with stakeholder groups. accessibility improvements, among others. These products are generally designed to provide terms that are unavailable on the Peer communities analyzed by SB Friedman often have private market, increasing the financial feasibility of affordable specialized housing staff with expertise in: housing development. Features of WHEDA loans that are more favorable than private market loans include below-market • CDBG and HOME programming and requirements; interest rates, longer terms, or ease of combination with other • Conducting outreach to developers; WHEDA tax credit and financing tools for example. Commercial • Conducting outreach to media; lending programs are available on a rolling basis throughout • Construction management; the year. To access these loan products, projects must meet the • Local inclusionary housing policies; eligibility requirements of the program; they do not compete • Local market conditions; with other projects, as for LIHTC allocation. Generally, projects • Operating affordable housing funds; obtaining commercial loans through WHEDA include a mix of • Operating revolving loan funds; and affordable and market rate units. • Reverse mortgages. WHEDA’s personal lending products make mortgage credit STRENGTHENED RELATIONSHIP WITH WHEDA available to single-family homebuyers and homeowners as well. These lending programs are administered through private One component of WHEDA’s mission is to provide affordable banks and serviced by WHEDA. There is no volume cap on housing in Wisconsin, which it achieves through partnerships single-family lending products and borrowers must meet with local governments and affordable housingDRAFT stakeholders. requirements and work with a WHEDA-approved lender. Among its programs, WHEDA administers Wisconsin’s Low- Income Housing Tax Credit (LIHTC) allocation, conducts While WHEDA indicated that they most commonly work commercial lending with its own lending products, and makes with developers, they work directly with municipalities as personal mortgage loans through partner lending institutions. well. Affordable housing staff from other cities in Wisconsin indicated that WHEDA can play a role in implementing LIHTCs were created in the Federal tax code and are intended to affordable housing strategies. WHEDA was involved in La draw private equity into the development of housing affordable Crosse’s RFP process targeting affordable housing developers. to LMI populations, including individuals and families, the In Madison, RFP requirements were crafted as an addendum elderly, persons with disabilities, and the chronically homeless. to WHEDA’s QAP guidelines. To the extent the City can further Each state is awarded an allocation of tax credits by formula. develop relationships with WHEDA, it may be able to enhance WHEDA awards its annual LIHTC allocation on a competitive local access to WHEDA resources. For instance, WHEDA basis once a year according to criteria laid out in the state’s has indicated they are willing to review proposed municipal Qualified Allocation Plan (QAP). Typically the deadline to programs and provide feedback on how such a program apply for LIHTC awards is in early December with awards in could enhance the scoring of a LIHTC project, increasing the February/March. Developers use LIHTC allocations to raise opportunity for local projects to receive a LIHTC allocation.
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3. Housing Implementing the policies and programs outlined above would Action Plan: require significant changes to existing City housing policies, procedures and staffing. Key considerations are outlined Administrative & below. Implementation ADMINISTRATIVE CONSIDERATIONS • Adopt a City Housing Policy. Prior to significant changes to the City’s housing programming, staff should draft and Considerations Common Council adopt a housing policy for the City. This adopted policy would guide City staff and Council as new and existing programs are implemented by clearly identifying City housing priorities, the intentions behind City housing programs and desired outcomes. Solicit feedback during the drafting, approval and adoption process from stakeholder groups and City residents.
• Expand housing-dedicated staffing.Proactively addressing the City’s housing issues and implementing new housing policies will likely require the addition of City staff dedicated solely to housing. Currently, implementation of housing issues are handled by Development Department staff who also focus on economic development, planning and other areas. All three case study communities have specific staff dedicated to housing. The City of La Crosse, which is comparable to Wauwatosa in both population and annual federal entitlement allocation, maintains two DRAFTfull-time housing specialists and three staff members who work on housing issues as needed. These staff members have specialized skills required to implement La Crosse’s programs (e.g., construction management, affordable housing finance expertise). If Wauwatosa expands housing staff, the City should align staff capabilities with the housing priorities and strategies being pursued.
• Define internal goals and track outcomes. As housing programs are created, it is important to define goals with measurable results against which outcomes may be compared to ensure programs are achieving intended impacts. For instance, a reverse mortgage program intended to limit the burden of property taxes on fixed- income seniors could track numbers of households assisted, dollars committed, assistance per household,
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average household income of households assisted, or groups on market conditions, specifically occupancy, some other metric to quantify program performance. rents, land availability, financing, and other issues driving In doing so, performance can be analyzed to evaluate development decisions. This provides the City with an whether the program is functioning effectively. If not, the opportunity to learn about current development conditions program can be reformulated. as well as to communicate City housing priorities.
• Define one mechanism for applying for City funds. As • Inform residents and publicize achievements. Informing the City implements new housing programs, it is important residents and stakeholders regarding City programs, to minimize the application process and administrative including how funds are being spent in the community burden to the applicant by providing a single application and the resulting achievements and public benefits can for all City programs. maintain and enhance community support for housing programs and funding allocations. This can occur • Align City programs with Milwaukee County HOME through local media but may require specific outreach to Consortium, the Wisconsin Housing and Economic stakeholder groups. For example, La Crosse publicizes Development Authority (WHEDA), and/other relevant grand openings and coordinates with the media to tell program requirements. Ensure that projects receiving individual stories of the people benefiting from their any City funding are best positioned to leverage non-City housing programs. La Crosse also produces press releases resources by aligning application timing such that City with program updates and works with LIHTC development funds are awarded prior to deadlines for other sources. partners to publicize developments. To the extent City priorities align with those of other public entities (e.g., WHEDA), consider including those • Proactively deploy available funds through RFPs. organizations’ priorities into City requirements as a way Currently, the City awards financial assistance as projects to leverage City resources by investing in projects well- are proposed by developers. Going forward, a more positioned to receive funding from those public entities. proactive approach is needed to identify priority project types (e.g., affordable, senior, supportive), unit types • Continue to monitor local housing market. Ongoing (e.g., apartment rental, for-sale attached single family, monitoring of the housing market is important to understand condominium) and even locations (e.g., located in service- housing opportunities and challenges.DRAFT This process was rich areas or CDA-identified priority redevelopment sites) started in 2016 with completion of the Housing Study; that support City-identified goals and where City resources however, it is important to continue to monitor market are available to support development. conditions, assess the impact of existing housing programs, and explore areas which may need greater policy focus. Immediate Actions Steps Special emphasis should be placed on monitoring changes to the housing stock, including new development, • City staff prepare and Common Council adopt a City supply and demand trends (including vacancy), changing housing policy. demographics, housing prices and the local employment • Reallocate funding for housing specialist staff within the market. As part of this process, solicit feedback from Development Department. residents, building owners, developers and other key • Identify desired skill set and solicit applicants for housing stakeholders on Wauwatosa’s housing needs. Identify a specialist staff. regular schedule for updating the Housing Study (e.g., • Educate the public regarding benefits of existing housing every 5 years for a comprehensive update, with annual programs, community housing needs, and any new City market surveys between updates). Annually survey active policies/efforts. multifamily developers, building managers and housing • Develop single point applications for City housing
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assistance to be used as new programs are developed. Immediate Action Steps • Identify timing and requirements of complementary funding programs controlled by other public entities and • Following adoption of overall housing policy, focus align City funding award deadlines and requirements with City staff efforts on one achievable project to address those sources. a community need, generate positive publicity and • As changes in existing programs or funding sources are demonstrate the value of City housing programs. contemplated and implemented, provide transparent information to residents and stakeholders through greater outreach efforts and the local media as well as opportunity for community feedback. • Monitor and report on local housing market conditions, housing program performance and emerging housing issues. Provide opportunity for residents and stakeholder groups to provide feedback on community housing opportunities and concerns. Survey developers active in Wauwatosa and surrounding communities on perceived market challenges and opportunities. Establish a regular schedule for updates.
Next Steps
• As housing programs are rolled out with defined programmatic goals, conduct regular monitoring of performance. • Publicize community achievements and benefits to residents and stakeholders. • Conduct any RFP and developer solicitation process in a proactive, transparent manner designedDRAFT to achieve community-identified goals.
IMPLEMENTATION CONSIDERATIONS
• Importance of a single high-quality project. Multiple housing practitioners emphasized the impact a high- quality project that addresses relevant community needs can have in changing the narrative surrounding housing programs. Once the City has defined and adopted an overall housing policy, staff should pursue one or just a few high-impact projects that address an identified community priority, will demonstrate tangible results and thereby generate positive momentum toward achieving further housing goals.
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4. Housing Action Plan: LIST OF APPENDICES Appendix A: Limitations of Our Engagement Appendix B: List of Interviews, References & Sources Appendices Appendix C: HUD Income Limits Appendix D: Existing TIDs in Wauwatosa & Additional Appendix E: Case Studies • Exhibit E.1: CDBG Best Practices Information • Exhibit E.2: Case Study Communities • Exhibit E.3: Madison, Wisconsin • Exhibit E.4: La Crosse, Wisconsin • Exhibit E.5: La Crosse Goals Matrix from 2015 CAPER • Exhibit E.6: St. Louis Park, Minnesota Appendix F: Employer Assisted Housing • Exhibit F.1: Rochester Area First Homes Program • Exhibit F.2: REACH Illinois Appendix G: Accessory Dwelling Units • Exhibit G.1: Proposed Zoning Ordinance Text Amendment to Allow Accessory Dwelling Units Appendix H: Inclusionary Housing • Exhibit H.1: Case Study Communities • Exhibit H.2: Edina, Minnesota, IH Policy Summary • Exhibit H.3: St. Charles, Illinois, IH Policy Summary • Exhibit H.4: Typical Affordable Housing Plan Components DRAFT• Exhibit H.5: Impacts of Hypothetical Policy on Development • Exhibit H.6: Edina, Minnesota, Full IH Policy Text • Exhibit H.7: St. Charles, Illinois, Full IH Policy Text • Exhibit H.8: St. Louis Park, Minnesota, Full IH Policy Text Appendix I: Additional Documentation • Exhibit I.1: Madison, Wisconsin, 2016 Biennial Housing Report
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Appendix A: Limitations of Our Engagement
Our analysis and deliverable is based on analyses, assumptions and other information developed from research of the market, knowledge of the industry and meetings during which we were provided certain information. The sources of information and bases of the recommendations are stated in the deliverable. Some assumptions inevitably will not materialize, and unanticipated events and circumstances may occur; therefore, actual results achieved will necessarily vary from those described in our deliverable, and the variations may be material.
The terms of this engagement are such that we have no obligation to revise analyses, the deliverable or other documents to reflect events or conditions which occur subsequent to the date of the deliverable. These events or conditions include, without limitation, economic growth trends, governmental actions, additional competitive developments and other market factors. However, we will be available to discuss the necessity for revision in view of changes in the economic or market factors affecting the recommendations.
Our deliverable is intended solely for your information and that of the City Council and should not be relied upon by any other person, firm or corporation, or for any other purposes. Neither the deliverable nor its contents, nor any reference to our firm, may be included or quoted in any offering circular or registration statement, appraisal, sales brochure, prospectus, loan or other agreement or document intended for use in obtaining funds from individual investors without our prior written consent.
We acknowledge that upon submission to the City the documents may become public documents within the meaning of the Freedom of Information Act. Nothing in these limitations is intended to block the disclosure of the documents under such Act.
Appendix B: List of Interviews, References & Sources
Interviewees: • Chris Corley, Corley Real Estate • Alan Kesner, City of Wauwatosa, • Linette Rhodes, City of Madison, • David Ginger, WHEDA Wisconsin Wisconsin • Caroline Gregerson, City of La • Michael Martin, HUD • Matt Wachter, City of Madison, Crosse, Wisconsin • Marney Olson, City of St. Louis Wisconsin Park, Minnesota • Maria Watts, WHEDA References: • Ball, M. S. Aging in Place: A Toolkit for Local Governments. (http://www.aarp.org/content/dam/aarp/livable- communities/plan/planning/aging-in-place-a-toolkit-for-local-governments-aarp.pdf) • American Planning Association. (2006). APA Policy Guide on Housing. (https://www.planning.org/policy/guides/ adopted/housing.htm) • American Planning Association. (2014). Aging in Community Policy Guide. (https://planning-org-uploaded-media. s3.amazonaws.com/legacy_resources/policy/guides/pdf/agingincommunity.pdf) • Jakabovics, A., Ross, L. M., Simpson, DRAFTM., Spotts, M. (2014). Bending the Cost Curve: Solutions to Expand the Supply of Affordable Rentals. (http://uli.org/wp-content/uploads/ULI-Documents/BendingCostCurve-Solutions_2014_web.pdf) • Policy Link. (2001). Equitable Development Toolkit: Housing Trust Funds. (http://www.policylink.org/sites/default/files/ housing-trust-funds_0). • Shear, W. (2012). HUD Has Identified Performance Measures for Its Block Grant Programs, but Information on Impact Is Limited. (http://www.gao.gov/assets/600/590845.pdf)
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Sources: • American Planning Association • First Homes • Northwest Michigan Council of • Chicago Tribune • The Gazette (Iowa City, Iowa) Governments • City of Edina, Minnesota • Greater Minnesota Housing Fund • Novogradac • City of Evanston, Illinois • Illinois Housing Development • PolicyLink • City of Highland Park, IL Authority • Project Home • City of Iowa City, Iowa • Independent Living, Inc. • REACH Illinois • City of Lake Forest, Illinois • Iowa City Press‐Citizen • SB Friedman • City of Madison, Wisconsin • Kane County Chronicle • Southeastern Wisconsin Regional • City of St. Charles, Illinois • Metro Cities Planning Commission • City of St. Louis Park, Minnesota • Metropolitan Planning Council • State of Wisconsin • City of Traverse City, Michigan • Milwaukee County, Wisconsin • StarTribune (Minneapolis, • City of Wauwatosa, Wisconsin • Minnesota Housing Finance Agency Minnesota) • Department of Housing and Urban • Movin’ Out • Sun Current (Edina, Minnesota) Development • National Community Development • Urban Institute • Community First Association • Urban Land Institute • Corporation for Supportive Housing • National Housing Conference • Wisconsin Legislative Fiscal Bureau • Dane County, Wisconsin • National Low-Income Housing • Freddie Mac Coalition
Appendix C: HUD Income Limits Appendix C: HUD Income Limits The following table outlines income limits as defined by HUD by family size as a share of area median income (AMI) for the The following table outlines income limits as defined by HUD by family size for the Milwaukee-Waukesha- Milwaukee-Waukesha-WestWest Allis, Wisconsin MSA for fiscal year Allis, 2017. Wisconsin, MSA for fiscal year 2017.
Table B.1: HUD Income Limits Table C.1: HUD Income Limits
Source: HUD U.S. Department of Housing and UrbanDRAFT Development
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Appendix D: Existing TIDs in Wauwatosa and Projected Final Year AppendixRevenues D: Existing TIDs in Wauwatosa and Projected Final Year Revenues
Table D .1:D.1: Wauwatosa Wauwatosa TID Summary TID Summary
[1][1] TID TID plan plan permits permits affordable affordable housing extension.housing extension. Source:Source: City City of Wauwatosa of Wauwatosa,, TID Feasibility TID Feasibility Studies and AmendmentsStudies and, SB Amendments; Friedman SB Friedman
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Appendix E: Case Studies
AppendixEXHIBIT E. 1:E: CDBGCase StudiesBEST PRACTICES
EXHIBITThe following E.1: areCDBG two BESTprojects PRACTICES cited as best practices by HUD for the use of CDBG:
The following• Sherwood are two Village projects Senior cited Apartment as bests practices (Salinas, California).by HUD for A the local use non of- profitCDBG: used $2.5 million in CDBG and HOME funds, along with $15.9 million in LIHTCs as part of a $22 million project to • Sherwoodconvert threeVillage obsolete Senior motel Apartments buildings (Salinas, into 124 unitsCalifornia). of housing A local for low non-profit-income seniors. used $2.5The nonmillion- in CDBG and HOME funds, alongprofit’s with history$15.9 millionand close in LIHTCs working as relationshippart of a $22 with million the Cityproject of toSalinas convert was three cited obsolete as a key motel buildings into 124 units of component to the successful outcome over the two-year development period. housing for low-income seniors. The non-profit’s history and close working relationship with the City of Salinas was cited as a
key component to the successful outcome over the two-year development period. • Thomas H. Wynn, Sr. Memorial Veterans Manor (Milwaukee, WI). Veterans Manor provides 52 permanently supportive housing units for low-income veterans. In addition to $6.8 million in • ThomasLIHTC H. funds, Wynn, the Sr. project Memorial received Veterans about Manor$969,000 (Milwaukee, in CDBG funds Wisconsin). from both Veteransthe City of Manor Milwaukee provides 52 permanently supportive housingand Milwaukee units for low-income County. On- siteveterans. services In are addition provided to by$6.8 the millionU.S. Departm in LIHTCent offunds, Veterans the projectAffairs received about $969,000 in CDBGor Center funds forfrom Veterans both the Issues, City of a longtimeMilwaukee supportive and Milwaukee housing provider. County. On-site services are provided by the U.S. Department of Veterans Affairs or Center for Veterans Issues, a longtime supportive housing provider. EXHIBIT E.2: CASE STUDY COMMUNITIES EXHIBIT E.2: CASE STUDY COMMUNITIES SB Friedman conducted research into housing practices of several peer communities across the Midwest, SBand Friedman selected threeconducted communities research based into on housing conversations practices with of the several City as peer being communities particularly relevantacross the to Midwest, and selected three communitiesWauwatosa: basedMadison, on WI;conversations La Crosse, withWI; andthe CitySt. Louis as being Park, particularlyMN. A brief relevant demographic to Wauwatosa: description Madison, of WI; La Crosse, WI; and Wauwatosa and each case study community is presented below, followed by more detailed profiles of St. Louis Park, MN. A brief demographic description of Wauwatosa and each case study community is presented below, followed each case study community. by more detailed profiles of each case study community. Table E.1: Characteristics of Case Study Communities Table E.2.1: Characteristics of Case Study Communities
DRAFT Source: Longitudinal Employer-Household Dynamics (LEHD) OnTheMap; U.S. Census Bureau, Source: U.S. Census Bureau, 2011-2015 American Community Survey 5-Year Estimates; LEHD OnTheMap 2011-2015 American Community Survey 5-Year Estimates
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EXHIBIT E.3: MADISON, WISCONSIN
Madison was selected as a case study community because of its proactive approach to addressing local housing issues and its robust local housing program. The City also implemented an inclusionary housing policy. However, that program has since ended.
Note: All references to the “City” in Exhibit E.3 refer to the City of Madison.
Primary housing challenges, as identified in the City of Madison 2016 Biennial Housing Report:
• Consistently strong demand for housing; • Rising housing prices with low vacancy rates; • Rental construction focused on high-income households; • Declining federal affordable and low-income housing assistance; • High construction and land costs limit low-income housing development, unless subsidies are provided; and • Homeownership inaccessible to low-income and first-time homebuyers due to tight lending and an overhang of student debt.
Strategies to address these issues, as recommended by the City’s Housing Strategy Committee:
• Increase the variety of housing types available at different income levels in amenity-rich neighborhoods; • Improve existing housing stock quality and increase availability of amenities in “lagging” neighborhoods; and • Expand the types of housing available to fill gaps left by the private market.
These strategies are intended to be implemented by increasing efficiency of existing City programs; leveraging existing resources to the greatest extent possible with City, State and federal resources; proactively soliciting developers to partner with to address housing priorities; and operationalizing Madison’s new AHF to address the City’s top housing priorities.
The City of Madison 2016 Biennial Housing Report’s Executive Summary is available in Appendix I. Key strategies currently (or previously) utilized in Madison that could be implemented in Wauwatosa are outlined below.
• Inclusionary housing. A mandatory inclusionary housing policy was implemented in 2006. The policy sunset in January 2009 after being challenged in court. Ultimately, the Wisconsin Court of Appeals ruled that Madison’s inclusionary housing policy was a form of rent control which is not allowed by state statute. The City has since pursued purely incentive-based policies which incent, but do not require developers to include affordable housing in market-rate projects.
• Housing Rehabilitation Services and Home Modification programs. Madison uses CDBG funds to support multiple housing rehabilitation or accessibility programs, two of which are the Housing Rehabilitation Services program and the Home Modification program. The Housing Rehabilitation Services program provides deferred and installment loans (depending on income) to households for owner-occupied housingDRAFT upgrades. The Home Modification program, administered through a local non-profit organization, provides grants for accessibility improvements for low-income elderly households or households with disabilities.
• Home-buyer assistance. The City originates second mortgages for eligible homebuyers acquiring and rehabilitating eligible, owner-occupied, one-to-eight-unit properties. Assistance is provided from HOME funds as either an installment loan or a deferred loan depending on borrower income. Loan size is limited to 30% of total development cost (purchase price, cost of rehabilitation, and closing costs) or to a dollar amount based on the size of property ($40,000 for a single-family home and up to $110,000 for an eight-unit building). In addition to this program, the City also maintains other home-buyer assistance programs (e.g. to assist first-time home-buyer with down payment and closing costs) funded by state sources (Housing Cost Reduction Initiative), local funds (including CDBG), and, in some cases, TIF.
• CDBG and HOME. Due to the compliance associated with HOME funds, Madison has generally invested its HOME funds into just a few projects. CDBG funds, which have less onerous compliance requirements, can more easily be deployed to smaller projects (e.g., non-profit-driven rehabilitation of 4-, 8-, or 16-unit buildings rather than large-scale rehabilitation or new construction projects).
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• Affordable Housing Fund. Madison provides assistance to affordable housing developers through its AHF, which is funded by funds generated through TIF affordable housing extension years, fees and approximately $4.5 million in City funds annually. Funds are provided as an incentive to developers (mainly of LIHTC projects). Madison’s AHF is intended to be used for a variety of housing programs but, due to market conditions, has been primarily utilized for the construction of new affordable and supportive housing units. Madison has structured its AHF awards process (as well as that for other forms of public assistance) to align with the LIHTC funding cycle. The City has a goal of 1,000 units created over a five-year period and is currently on track, having approved funding for 600 units in the last three years.
• RFP for affordable housing. Madison City staff emphasized the use of the RFP process (to distribute AHF funds) as a proactive way to encourage projects that meet City priorities (e.g., projects located in high opportunity areas with access to amenities like transit, parks, schools, and retail with fewer affordable housing opportunities). Furthermore, the City aligns the RFP’s priorities and schedule with WHEDA’s LIHTC awards priorities (QAP) and simply layers City priorities on top of that structure. Projects that score well for City programs would therefore be well-positioned to receive LIHTC allocation from WHEDA. This process is revised annually in response to market needs and as WHEDA releases its updated QAP. City staff indicated they may use a similar process to target the creation of senior units in the future.
• “Quarterbacking” the process. While the City may not have the resources to contribute financially in all scenarios, it serves as a point of contact for a variety of funding partners. City staff described this in the context of a project intended to move homeless individuals into permanent supportive housing. While the City was participating financially and contributing land, these were only two of seven sources of public assistance. However, the City was also able to contribute non-financially by recruiting the developer through the RFP process and as a leader/champion to see the project through.
• Reverse mortgage program. Madison operates a reverse mortgage program that allows eligible homeowners to access home equity to pay their real estate taxes. The loan is structured as a deferred payment loan with an interest rate set at the City’s borrowing rate plus 1% repaid at sale, transfer of ownership, or when it is no longer the borrower’s place of residence. At closing, the borrower must sign a land use restriction stating the property will remain owner-occupied. In practice, this can be difficult to enforce if a property stays within a family after an eligible borrower is no longer living in the home. Borrowers reapply each year with additional borrowed amounts added to existing principal and refinanced. The program has been in place for 20 years and for the first 10 years was funded from the City’s operating budget; however, in the last 10 years the program has become self-sustaining. The City opted to fund it locally (i.e. versus mixing in CDBG) to ease the compliance load. In its 20 years, the City has only had to write off one loan of this type.
A similar program is available for households to pay for special assessments and the City is considering expanding the program to allow seniors to pay City utilities using this structure (which would likely require additional City funds to implement). The City originates 20 to 25 property tax assistance loans per year as well as one to two special assessment loans. Staffing is mainly seasonal around periods when taxes are due. While the program is not advertised, outreach is conducted to the Senior Commission and senior centers and no one is turned away for lack of funds. City staff use the intake process for this program to identify issues homeowners may haveDRAFT with their homes and refer them to other City programs as appropriate. According to City staff, many of the beneficiaries take advantage of this program year after year and have expressed the importance it has played in allowing them to remain in their homes.
EXHIBIT E.4: LA CROSSE, WISCONSIN
La Crosse was identified as a potential case study community because of its effectiveness in applying CDBG and HOME funds to local housing programs. La Crosse is also comparable in population and federal entitlement allocation to Wauwatosa.
Note: All references to the “City” in Exhibit E.4 refer to the City of La Crosse, Wisconsin.
La Crosse’s City housing staff described their housing policy as comprising three main programs: multifamily development, housing replacement and housing rehabilitation. La Crosse’s staffing, outreach/education efforts and practices in setting housing goals may also be relevant to crafting an implementable affordable housing policy in Wauwatosa. These elements are described in greater detail below.
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• Multifamily development loans. La Crosse combines CDBG in a revolving loan fund with HOME funds to attract LIHTC affordable housing developers. Through an RFP process, the City offers $500,000 in CDBG funds as an interest-only loan. Contribution of City-owned land has also occurred. The process has successfully attracted three affordable housing projects to La Crosse in recent years. Prior to implementing the program, the City had not seen any new LIHTC development for multiple years.
• Housing replacement program. La Crosse also uses CDBG funds, in combination with HOME and TIF funds, to operate a program through which deteriorating housing is selectively acquired, demolished, and then replaced with new single-family housing for LMI households. CDBG funds are used for acquisition and demolition, with HOME or TIF funds used for construction. A partnership with the local technical college provides an opportunity to reduce construction costs while providing on-the-job training.
• Housing rehabilitation program. La Crosse funds a housing rehabilitation program with its CDBG allocation that offers 1% deferred loans of up to $25,000 to eligible homeowners to repair major building systems. Borrowers work with City staff to evaluate their home needs, bid the work, and manage the renovation. The program is also available to rental properties. The City opted for a deferred loan structure repaid only when the property is sold, transfers ownership, or is no longer the borrower’s place of residence, which lessens administrative burdens. With tepid interest initially, City staff conducted outreach and improved the loan terms – the program now originates 15 to 20 loans per year and has a waiting list. While not explicitly targeting seniors, City staff cited this program as a tool which helps residents to age in place.
• Dedicated housing staff. La Crosse has a staff of two full-time housing specialists as well as three other staff members who work on housing as needed. Personnel decisions have been important to implementing the City’s affordable housing strategy in two primary ways. First, the City emphasizes in-house management of its housing programs which has required strategic hiring to ensure needed skills are represented (e.g., staff with a background in housing construction are required for the City’s housing rehabilitation program). Second, staff emphasized the proactive nature of the work they undertake. For instance, solicitation of affordable housing developers as part of their RFP process, conducting outreach to attract borrowers for housing rehab loans, consistently publicizing program achievements/benefits, and proactively certifying local communities as neighborhood revitalization strategy areas (NRSA) to achieve greater flexibility in the use of CDBG funds.
• Publicize achievements, media outreach and popular support. La Crosse maintains a proactive relationship with local media as a tool to educate the public of program benefits. For example, the City publicizes grand openings of major projects, but also conducts follow-up outreach to connect local media with individuals benefiting from the program, publicizing personal stories to animate the impact of the City’s housing programs. Education helps to defuse public opposition to affordable housing projects. Educating the public regarding the quality of the product and populations served has defused some resistance and helped to build support. Similarly, La Crosse has found that affordable housing developers are good partners in education/publicity.
La Crosse identifies projects to be funded through its CDBG committee which includes the mayor, council members, and members of the public. This process for targeting projects, in which local elected officials play a crucial part, was identified as one way to ensure some level of political supportDRAFT for projects.
• Housing goal-setting. La Crosse uses the five-year planning process required by HUD as an opportunity to define goals for its housing programs. As part of the process, the City receives substantial public input and reviews available housing data. Goals are revisited annually and staff hold themselves accountable for achieving identified goals. The City also sets goals specific to CDBG spending, targeting certain percentages to different priorities (e.g., housing, economic development, public services). (See Exhibit E.5)
PAGE 40 Assess how the jurisdiction’s use of funds, particularly CDBG, addresses the priorities andCITY OF specific WAUWATOSA o jecti es identified in the plan, i in special attention to the hi hest priority acti ities identified HOUSING POLICY & ACTION PLAN
This chart details the City's priorities for funds.
EXHIBIT E.5: LA CROSSE GOALS MATRIX FROM 2015 CAPER