Analyses conducted as part of the housing plan indicate that households with incomes less than 50 percent of the Region median income (less than about $27,000 per year) will likely require public housing or a housing subsidy to be able to afford decent housing at a cost below 30 percent of their monthly income. There are currently about 46,000 public housing units and housing vouchers in the Region, compared to about 187,000 households with incomes less than 50 percent of the Region’s median income. About 24 percent of households in the Region are in this very-low income category.
Very-low income households that are unable to obtain a voucher or a subsidized housing unit often must pay a disproportionate share of their income for housing, which limits their ability to afford food, child care, health care, and other necessities. The shortage of housing that is affordable to lower-income households also creates a market for dilapidated and sub-standard housing, since poor quality housing is often the only housing option very-low income households can afford. The housing plan recommends additional housing vouchers and housing constructed with funding from government agencies, tax-credit housing, and/or housing provided by faith-based and other private organizations to help provide decent housing that would be affordable to very-low income households.
Inventory and Analysis of Subsidized and Tax Credit Housing
Chapter X, Subsidized and Tax Credit Housing, of the regional housing plan documents the need for subsidized housing in the Region. The Chapter includes a regional inventory of the current supply of various types of subsidized housing and identifies areas of the Region that may be underserved by existing subsidized housing. The Chapter also includes information regarding historical decisions relative to the type, amount, and location of subsidized housing in the Region and identifies challenges to meeting the demand for subsidized and tax credit housing units and emergency shelter facilities for homeless individuals and families.
Subsidized housing is provided through government assistance in the form of voucher-based assistance, where the subsidy is attached to the household receiving assistance, and project-based assistance, where the subsidy is attached to a housing unit. The Low-Income Housing Tax Credit (LIHTC) program is also used to provide affordable housing for low- and moderate-income households.
The U.S. Department of Housing and Urban Development (HUD) Section 8 Voucher Program provides affordable housing choices for low-income families by providing rental assistance that allows families to reside in privately-owned rental units. Typically, a public housing authority (PHA) administers the voucher program with annual funding from HUD. The PHA generally pays the landlord the difference between 30 percent of a family’s gross monthly household income and the PHA-determined payment standard, about 80 to 100 percent of the HUD-determined Fair Market Rent (FMR). Households may use a voucher at any location within an administration area where the landlord is willing to participate in the program and the housing unit meets program requirements.
Project-based housing assistance includes public housing and other forms of government assisted housing that are intended to provide affordable housing for families, the elderly, persons with disabilities, and homeless persons. In addition to public housing managed by PHAs, privately owned multi-family housing developments have received government assistance through programs that require units to be reserved for lower-income families or individuals.
The LIHTC program is an indirect Federal subsidy that is used to provide an incentive for developers to construct or rehabilitate affordable rental housing for low- and moderate-income households. Tax credits are awarded to developers of qualified projects. The tax credits can be sold to investors to raise capital for their projects, which reduces the debt the developer would otherwise have to borrow. A tax credit property can offer more affordable rents because the debt is lower. At least 40 percent of the housing units must be occupied by households whose incomes are at or below 60 percent of the county median income, or at least 20 percent of the units must be occupied by households whose incomes are at or below 50 percent of the county median income. While only a portion of the units are required to meet affordability requirements, it is common for most or all of the units in LIHTC developments in Wisconsin to be affordable. The LIHTC program has become the primary source of government assistance for new subsidized housing units.
Maps 114, 115 and 115(inset), 116 and 116(inset), and 117 show the locations of subsidized and tax credit housing units in the Region. Although subsidized housing has become more widely distributed across the Region over time, it is still disproportionately concentrated in Milwaukee County, particularly in the City of Milwaukee. Tables 169 through 176 in Chapter X provide summaries of government-assisted housing developments in the Region. Supplementary information is provided below:
Need for and Challenges Facing Subsidized and Tax Credit Housing
A lack of vacant housing units and long waiting lists for subsidized housing vouchers and units demonstrate that there is a high demand for government assisted housing throughout the region; however, this data alone does not necessarily reflect the extent to which there is a need for government assisted housing. Data compiled in Chapter VII, Demographic and Economic Characteristics, and Chapter IV, Existing Housing, show that many households in the Region have a high housing cost burden of 30 percent or more, and in some cases 50 percent or more, of their monthly income. About 36 percent of the Region’s households, including homeowner and renter households, have a high housing cost burden. That percentage increases to 47 percent for renters only and is higher in areas where household incomes are among the lowest in the Region. These areas also have a comparatively high percentage of multi-family housing units, which are generally less costly than single-family housing. These conditions suggest that it is not likely that market rate multi-family housing alone can alleviate housing problems in areas of the Region with the highest concentrations of low-income households.
While there is a significant need, the cost associated with providing housing assistance may make it difficult to increase or even maintain the number of households receiving government assistance. Many government assistance housing programs rely on the Federal budget for funding. In recent years, the Section 8 Housing Choice Voucher program has not received sufficient funding to meet the increasing nationwide demand. Project-based subsidized housing also faces funding challenges, as well as challenges that are unique to programs with physical assets, such as aging complexes in need of repair and expiring program contracts. Many of the Region’s project-based subsidized housing units are aging to the point where owners can either “opt-out” of their contracts or the units are in need of revitalization.
Recent Federal initiatives have recognized the need to simplify subsidized housing programs to streamline program administration, reduce costs, and increase the portability of the Section 8 Housing Choice Vouchers between public housing authority jurisdictions in an effort to maintain and expand the number of households receiving government assistance. The regional housing plan recommends that administrators of housing vouchers in the Region (primarily public housing authorities and WHEDA) work together to establish a regional housing voucher program, provided HUD removes current financial disincentives for regional voucher administration. The plan also recommends that Federal funding for housing vouchers be maintained.
With regard to the LIHTC program, the plan recommends that WHEDA consider modifying the criteria for awarding tax credits to address the need for housing for households with incomes less than 30 percent of the county median income, and also to target new LIHTC housing in areas with a lack of affordable housing and a job/housing imbalance. The plan also recommends that communities with job centers seek the development of LIHTC housing to provide housing for lower-wage workers holding jobs in the community.
The housing plan also recommends the establishment of a regional housing trust fund to help finance the development of affordable housing. The recommended regional fund would be based on existing housing trust funds in the City of Milwaukee and Milwaukee County. Additional information is available here.