A committee created to further goals recommended by the Waunakee Housing Task Force learned more about using Tax Incremental Finance Districts to fund affordable housing opportunities.

At their May 19 meeting, the Community Development Authority heard from Todd Taves of the financial consulting firm, Ehlers. Ehlers has assisted in setting up all of Waunakee’s Tax Incremental Finance Districts, or TIDs.

Taves explained that a provision in the Wisconsin statutes since 2009 allows municipalities to extend a TID that is about to close for one year with the new tax revenue set aside for an affordable housing fund. When a TID has either reached the statutory end of its life or is able to repay all of its borrowing, it can be retired. The tax revenues then go to the various taxing jurisdictions rather than to repay borrowing on the project.

The village can adopt a resolution that indicates it will extend the TID’s life for one year with a provision explaining how the revenue will be used to improve the housing stock and forward that to the Department of Revenue. The statute requires 75 percent of the money be used for affordable housing programs. The remaining 25 percent can be used to improve housing.

Taves explained that until recently, the provision was used infrequently. That’s because affordable housing has become a more pressing issue lately and because fewer municipalities had TIDs soon to retire.

More changes to the TID extension could be on the horizon, Taves said. Legislation that would have increased the allowable extension from one to three years passed in the Assembly and went to the Senate, but the bill died after the COVID-19 crisis cancelled the session.

Taves shared information on Waunakee’s TIDs, noting that over the next 20 years, $3.7 million could be available, according to current projections. Those projections also showed that $106,000 could be available from TIDs closing between now and 2023.

Ehlers had a seminar in February to discuss how programs are used in three Wisconsin municipalities. Oshkosh has a program where funds are used for zero-interest home renovation and rehab loans, along with grants for new affordable housing. The stipulation is that the homeowners spend no more than 30 percent of their income on housing.

The City of Madison put revenue into an affordable housing initiative fund, Taves added, adding the statute is so simple, it requires only that 75 percent of the revenue be set aside for such housing.

“The city has the flexibility to decide how it wants to use it,” he said.

Committee member Jeff Tews asked whether the fund can be used in areas outside of TIF districts.

Taves explained the statutes have no restrictions on where the funds are spent.

The extended TID captures all revenue that would have gone to the various taxing jurisdictions – the village, school district, technical college and county – for one year after the TID is closed.

Village Administrator Todd Schmidt noted that unlike a TID’s creation, which requires approval from a Joint Review Board comprising representatives of each taxing jurisdiction, the extension does not need a Joint Review Board’s approval. He asked if Taves had seen “bristling occur” on the part of other taxing jurisdictions when extensions are pursued in other communities.

“The Joint Review Board doesn’t have a kick at the can on the decision,” Schmidt said, noting their revenue will be delayed.

Taves said in Oshkosh and other places, the extensions have generally been supported by the Joint Review Boards “because they recognize the benefits that providing affordable housing has across all the taxing jurisdictions.”

Committee member Kristin Runge noted that Oshkosh’s program is geared mostly toward making home ownership more affordable. She asked if municipalities can take control over land to ensure it is used for affordable housing.

Taves said in Madison, the funds go toward the creation of affordable housing projects.

Village staff said they would explore ways other municipalities use TIDs for affordable housing funds and share those with the committee as it decides whether to recommend a policy change to the board. The Community Development Authority can only recommend policy changes for the village board to consider.

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