The Wisconsin Housing and Economic Development Authority (WHEDA) announced May 16 housing developers in Madison will receive millions of dollars in state and federal tax credits for more availability of new affordable rentals in Madison.
WHEDA works to expand the availability of affordable housing in Wisconsin since 1972 by implementing low-cost financing programs through working with developers, lenders, nonprofits and local governments. They have supplied more than 87,300 affordable rentals to Wisconsin residents and assisted around 138,300 families in purchasing homes around the state.
The low-income housing tax credits being gifted to developers total nearly $115 million, Community Development Division Director Jim O’Keefe told The Daily Cardinal. These credits are divided among five affordable housing projects and will be paid out over 10 years.
Companies wanting to build affordable housing are rewarded with credits, according to O’Keefe. A majority of these companies have little use for federal income tax credits, O’Keefe said, because they don’t owe a large amount in taxes, so they sell their credits to large banks or other institutional investors that do have large tax liabilities.
On average, banks pay $0.95 for tax credits, and $10 million of tax credits fetches $9.5 million in cash for the developer. The developer then uses the $9.5 million to build their project.
Two of these affordable housing projects will be near the University of Wisconsin-Madison campus — one at 29 S. Mills Street, the other at the Triangle between Regent and West Washington Avenue. These projects will take about two years to complete and will supply 457 new apartments, 435 of which will be affordable, O’Keefe said.
Affordable housing means the units will be designated for persons with household incomes not more than 60% of the County Median Income, which is about $53,000 for a one-person household and $68,000 for a three-person household, according to O’Keefe.
The tax credits will not benefit students, as student housing is generally unavailable for tax credits, according to O’Keefe. But he said the projects will benefit students by freeing up other apartments for students to rent.
“[Although] students will generally not live in the apartments being built with these tax credits, the projects will increase the total housing supply in Madison, which should open up other apartments for students,” O’Keefe said.
Since WHEDA’s efforts started in Madison, nearly 2,800 units of rental housing and about 2,220 of those units have been built to meet the affordability standard, according to O’Keefe.
