Wyman Winston
Executive director, Wisconsin Housing and Economic Development Authority
What’s the biggest change you’ve made to the 2015 qualified allocation plan (QAP), and why?
Major changes include: (a) modification to the Supportive Housing Set-Aside to support projects addressing homelessness to support the Wisconsin Plan to End Homelessness; (b) allow projects in cities with up to 20,000 residents to apply in the Rural Set-Aside (had been limited to 10,000), which makes our LIHTC program more consistent with Rural Development programs; and (c) allow applicants to receive points in the High Need Scoring category if they were selected in a competitive municipally issued RFP, which will help those cities who are making efforts to solve a particularly important housing and job siting problems in their community.
What trends are you seeing in your 9% and/or 4% credit low-income housing tax credit (LIHTC) programs?
A recent increase in the Wisconsin Historic Tax Credit rate from 10% to 20% led to a dramatic increase in the number of historic rehabilitation projects submitted in 2015. Additionally, an increase in scoring options in WHEDA’s Credit Usage scoring category (which awards more points for smaller per-unit LIHTC requests) led applicants to find as many funding sources as possible for their property—therefore, reducing the amount of LIHTCs necessary to complete the property. Pricing in metropolitan areas of our state continues to be strong.
What strategies are you implementing to preserve existing affordable housing?
For many years, WHEDA has set aside a significant portion of its 9% LIHTC for the preservation of federally assisted housing. Currently, that set-aside is 20%. When possible, we combine existing WHEDA below market-rate funding sources with tax-exempt bonds to encourage the use of the 4% LIHTC program for housing preservation. Future National Housing Trust Fund resources may be good tools to support 4% LIHTC preservation transactions.
What is your agency doing to address cost containment?
In 2013, WHEDA implemented a maximum cost limit model for all LIHTC applicants—the model contains detail variables measuring project size/type, geographic location, and construction type, and is based on actual LIHTC construction data, across key construction divisions, that WHEDA has collected over the past decade. Like most states, the Wisconsin LIHTC program is quite competitive—one of our largest point categories (Credit Usage) awards more points for smaller LIHTC requests. The necessity of scoring points in this category has required developers to keep development budgets at a reasonable level. It allows WHEDA to precisely to know what building components that have higher than comparable cost.
What advice do you have for developers applying for LIHTCs and/or other financing in your state? What’s a common mistake developers make when applying for funding?
With ongoing, strong demand for LIHTCs, securing every possible point is very important—one point is often the difference between an LIHTC award and a position on our ‘on-hold application’ list. The first piece of advice is a straightforward one: Carefully read the application requirements. In every LIHTC cycle, we have to reduce scores for a few applications in which the required supporting materials were missing or incomplete. Second, while the multifamily market is strong in Wisconsin, we have some pockets of the state that are especially price sensitive, so we encourage developers to look closely at current rent levels. And be sure that the proposed rents in your application are below those found in the market. Finally, for those developers who are new to Wisconsin, spend the time necessary to accurately document similar development successes in other states. Our ability to evaluate new developers in our state is certainly enhanced when we have a list of similar properties, along with contact information for the appropriate HFA.
