By Kim McDarison

A Southeastern Wisconsin Regional Planning Commission (SEWRPC) housing study conducted in 2020 was revisited Tuesday, Dec. 20, during the Whitewater Common Council meeting. 

The report, titled: “City of Whitewater TID (Tax Incremental Financing District) Extension Report: 2020,” was introduced by Neighborhood Services Director Chis Bennett and City Manager John Weidl.

Earlier in December, Weidl reminded council members that, through use of the state’s TID extension program, some $1.9 million will be made available to help alleviate issues surrounding a shortage of affordable housing within the city.  

Information presented within the Dec. 20 meeting packet indicated that the SEWRPC “report sat dormant until John Weidl discovered the document among papers at his desk when he took over the city manager position. Weidl and Bennett worked with (SEWRPC interim Executive Director Ben) McKay to finish the report.” 

The report was developed after the city approached SEWRPC in 2020 requesting assistance to determine how TID extensions could be used to support affordable housing within the city. 

Addressing council from the podium, McKay offered a brief summary of the report and the process undertaken in 2020 to produce its findings. 

What’s in the report? 

According to the report, its purpose was to assist city officials “to discuss how TID extensions could be used to support affordable housing.” 

The report includes information about tax incremental financing (TIF) legislation and housing needs identified by the city’s “housing affordability report,” and the city’s comprehensive plan. 

TIF, TID, history and uses 

Offering some history, the report noted that the state of Wisconsin adopted legislation supporting TIF in 1975 for the purpose of providing a method to communities to promote tax base expansion. 

The report states: “TIF is aimed at eliminating blight, rehabilitating declining property values, and promoting industrial and mixed-use development. TIF is intended to spur development that would not otherwise occur by using increased property taxes from new real estate development to finance the cost of development.” 

When the TID is formed, taxes collected against the property within the district are frozen, with that value called a “base.” Any increment generated above the base value is used to fund development projects within the TID. 

While active, taxing jurisdictions that gain revenue from the property within the TID do not gain benefit in revenue above the base value until unit project costs are recovered and the TID is retired, at which point the increase in  property value, the increment, is added back to the base and the taxing jurisdictions share the revenue from the increased property value, the report stated. 

Additionally, the report noted that in 2009, TIF legislation was amended to allow municipalities to extend the life of a TID by one year after paying off the TID’s project costs. 

“In that year, 75 percent of any tax revenue received from the value increment must be used to benefit affordable housing in the municipality and the remainder be used to improve the municipality’s housing stock. 

“Whitewater (in 2020) has five active TIDs with base years ranging from 1990 to 2007.” 

Additionally, the report identified two land use inventories: the first was regionally based and completed by SEWRPC in 2015, a second was conducted by Whitewater in 2016 as part of a 10-year update to the city’s comprehensive plan. 

Land uses within the city 

The report used data from the city’s inventory, pointing to various land uses, as identified in the comprehensive plan. 

As stated in the report, city development comprises about 13% of the city’s total land and about 23% of developed land within the city. 

The city has an average gross density of about three homes per acre. 

Excluding dormitories, a combined total of about 11% of the city’s land is developed into two-family, townhouse, multifamily and mobile home residential property, with an average gross density of between 8 and 13 dwelling units per acre. 

The report notes that some 8% of the city’s developed land is used commercially, a category which includes retail businesses and services, utilizing 14 acres within the Central Business District and 267 acres in other areas of the city. 

Another 5% is identified as industrial and manufacturing development, found within the Business/Industrial Park on the city’s northeast side. 

Within a category of “other development,” the report identifies churches, schools, and municipal facilities as occupying 5% or 265 acres within the city, and attributes 397 acres to the University of Wisconsin-Whitewater campus. 

As of 2016, the report states that 41% of land within the city is used for agriculture and was undeveloped. Of the 41%, some 47% was unable to be developed because it is in a floodplain, is a wetland or has steep slopes. 

An inventory of housing stock was compiled using 2013-2017 American Community Survey data from the U.S. Census Bureau. 

Vacancy rates 

The report identified the existing number — 5,145 total housing units in the city — as “a necessary baseline inventory item in determining existing housing demand and forecasting future housing demand in the city.” Some 30% of those units are owner-occupied and about 60% are renter-occupied. Another 10% are vacant, according to the report. 

The report citied Whitewater as having a “higher renter-occupancy rate” than Walworth and Jefferson counties, the region and the state. It identified the student population living in the city as a likely reason for the statistic. 

While the report notes a minimal loss of housing units within its data collection period, it also cites building permit data compiled annually by the Wisconsin Department of Administration, which, it states, indicates “a net gain in housing units every year during this time span.” 

Regarding vacancy rates, according to standards set by the U.S. Department of Housing and Urban Development, the report states that the department recommends that an area have a minimum overall vacancy rate of 3% to ensure adequate housing choices, further noting that a recommended vacancy rate for homeowner housing is between 1 and 2%, and for rental housing, between 4 and 6%. 

In Whitewater, at the time of the study, the overall vacancy rate was 10%, which, the report stated, was higher than rates in Walworth and Jefferson counties, and the region and state. The report pointed to seasonal and “other categories” of housing, which, it noted, added to the high overall rate. 

Cost of housing 

Looking at costs associated with housing, the report noted that the median value of an owner-occupied house in Whitewater was $164,000, which, it stated, was lower than the median value in Walworth and Jefferson counties, the region and the state. The city was identified as having a high percentage of owner-occupied homes falling within a range of between $100,000 and $200,000. 

Looking at housing costs from the perspective of monthly expenditures, the report noted that the median mortgage payment in the city is $1,479, which is lower than payments made in Jefferson and Walworth counties, the region and the state. 

The city has a high percentage of homeowners making monthly mortgage payments between $1,000 and $1,500, which, according to the report, “may indicate that moderate cost single-family housing is in demand.” 

The report identifies $722 as a monthly cost for renters, with the city having “about double the percentage of renters paying less than $500 (per) month,” which it attributes to a large student population. 

Under structure type, the report identifies multifamily housing, such as apartment buildings, as the most affordable in market-rate housing trends. 

Within the city, about 36% of the housing units are single-family homes while 46% are found in multifamily buildings. Another 17% are found in duplexes. 

Looking at the number of bedrooms within housing units within the city, the report notes that 37% have two, 26% have three, and 16% have one. 

Relative to the age of existing housing stock, the report notes that about 56% was build after 1970. Another 22% was build between 1950 and 1970, and 22% were built before 1950. 

Jobs and housing 

The report cited workforce development — specifically, the creation of more jobs — as a goal of the city. 

It stated: “Providing an adequate amount of workforce housing is a key consideration in meeting existing and forecast housing demand in the city.”

The report identifies the Low Income Housing Tax Credit (LIHTC) program as a primary source of government assistance for new subsidized housing units. It defines the program as one which offers incentives for developers to construct or rehabilitate affordable rental housing for low- and moderate-income households. 

Developments operating through the program “typically reserve a number of units for households with incomes of about 60% of the county median income,” the report noted, adding that, as of 2020, there were three LIHTC developments in the city. 

“The affordability requirements have lapsed on two developments and the third includes 40 affordable family housing units,” the report continued. 

The report noted that a use of funds from the TID extensions in other Wisconsin communities has provided gap financing for LIHTC developments. 

City demographics 

Using statistics developed between 2013 and 2017, and information found within the city’s comprehensive plan, which, according to the report, relies on data developed between 2010 and 2014, the report offers details defining the city’s demographic characteristics. 

According to the report, the city, which was incorporated in 1885, has a population of 14,762. Between 1950 and 1970, the report identifies a period when the city “grew rapidly,” followed by a “small decline,” between 1970 and 1980. There has been steady growth ever since. The report stated that Whitewater’s growth patterns are similar to those of Walworth and Jefferson counties, but, it added, between 1950 and 1970, Walworth County crew more rapidly. Since 1970, the region and state have shown growth at a “modest” rate, with the state growing “at a faster pace” than the region. 

Citing the city’s land use provisions, which, the report notes, provides “significant opportunities for residential development,” and a “forecast” for “economic growth in the city,” the report states that there will be a “likely result in significant population growth in the coming decades.” 

Looking at age distribution among the city’s residents, the report noted that 59% fall within the ages of 15 and 24, citing the University of Wisconsin-Whitewater as a contributor in creating the statistic. Of the city’s student population, according to census data developed in 2010, some 3,400 students live in the university’s dormitories. Others reside in off-campus units. 

According to the report, which defines the city’s population of residents who are 65 and older as “small,” it “could grow” over time. The report offers growth projections, predicting that the population segment could grow from 12% to 21% within the region by 2050. The report suggests that multifamily housing, which offers less upkeep, may become beneficial to residents within the aging population segment. 

Additionally, according to the report, federal and state fair housing laws require most multifamily housing units build after the early 1990s to include basic accessibility features for people with disabilities. 

“The low vacancy rate for single-family housing suggest that there may already be a greater demand than supply for modest single-family housing in the city,” the report states. 

Looking at ethnicity and race, about 82% of the city’s population is non-Hispanic white. Eighteen percent is described as “the minority share of the city’s population,” with the report further noting that Walworth and Jefferson counties each have a lower share of minority population than the city. 

The study reports that there are 4,609 households in Whitewater, and that the city’s average household size has “generally been declining since the 1970s,” which, the study notes, mirrors trends within the region, state and nation. The report states that the average household size within the city is 2.36 people. The household size is smaller for renter-occupied housing, at 2.18 people, and larger for owner-occupied housing, at 2.72 people. Some 60% of households within the city are defined as “non-family,” which, the report attributes to the presence of UW-Whitewater. 

There are some 100 nursing home residents and about 50 people residing in community-based residential facilities or adult homes in the city. 

Employment and city residents

The report points to “historically low unemployment rates seen across the region, state and nation within the last few years,” noting that information presented within the earlier data collected places the state’s unemployment rate at 8.6%, which was slightly lower than the unemployment rate of 9.1% reported in 2000, which was included within the city’s comprehensive plan. 

Some 66% of the city’s working-aged residents is participating in the labor force, the report noted, as compared to Walworth County, with 68%; Jefferson County, with 69%, and the region and state, each with 67%. 

The report next draws attention to the types of employment found within the city, citing as among its most prevalent: sales and office work; production, transportation and material moving, and education, legal, community service, arts and media. The aforementioned occupations tend to have “moderate” wages, according to the report. 

Additionally, the report notes, there is a “significant number” of workers in the food preparation and serving sector, which the report describes as “low wage.” The report suggests that for those workers, affordable housing “may be a concern,” and that “many of these residents may be UW-Whitewater students.” 

The report cites household income as a determining factor in demand for housing, noting that Whitewater’s median annual household income is $31,827, which, it stated, is “significantly lower than the median income in Walworth County, reported at $58,401; Jefferson County, reported at $59,215; the region, reported at $57,926, and the state, reported at $56,759. 

The low median income in Whitewater is “very likely skewed by college student households,” the report noted. 

According to the report, 62% of households within the city have annual incomes below $45,000. The report cites a “cost of housing development analysis completed for (a) regional housing plan adopted by SEWRPC in 2013, which concluded that households with incomes below $45,000 “could benefit from multifamily housing.” 

Still, the report noted, Whitewater “has a relatively high multifamily vacancy rate.” 

Some 933 households in the city have incomes ranging between $45,000 and $75,000. The regional housing plan found that modest single-family homes on lots of 10,000 square feet or less could benefit those families. 

Within the city, the study noted, some 4,000 people are experiencing poverty. The report suggested that the number was “skewed by UW-Whitewater students living off campus.” 

Looking at “cost burden,” the report noted that a household is considered cost burdened when the monthly housing cost exceeds 30% of the gross household income. About 25% of the city’s households fall within the category, which, the report stated, is lower when compared to Walworth County households and higher when compared to Jefferson County, the region and the state. 

“A number of Whitewater’s low-income households may benefit from housing assistance programs,” the report stated, defining eligible low-income households as those with incomes of 80% less than the median income within a particular county. 

Future housing needs

Looking at Whitewater’s anticipated future housing needs, based on population and household projections, the report found that a significant amount of land used for agriculture or that is otherwise vacant is available for potential development, as well as opportunities within the city for redevelopment. 

The study cites a projected population for the city by 2040 of 17,958, which would result in the addition of 1,356 households. 

“This means there could be a demand for almost 1,400 more housing units in the city by 2040 if a 3% vacancy rate is included,” the report concluded. 

Also among its conclusions, the report noted: “there is a significant amount of commercial and industrial development in the city, which may create a demand for workforce housing in the city.” 

In addition, the report notes that LIHTC development “could be a source of future workforce housing in the city.” 

TID extension recommendations

The report outlined the steps required by state statute to make use of the housing TID extension, which include: adopting a resolution to extend the life of the TID up to 12 months, and including specifications regarding how the municipality intends to improve its housing stock, and sending a copy of the resolution to be filed with the Wisconsin Department of Revenue as notification to the department that it must continue to allocate tax increments to the district. 

The study noted that state law does not specify how the funds must be used in support of affordable housing, and allows funds to be used anywhere within the municipality. The report cited the following uses as examples: funding a new or existing housing trust fund; funding a new or existing down payment assistance program for low-income households; providing gap financing, using vehicles such as low interest or no interest loans, for affordable housing development, including gap financing for Low Income Housing Tax Credit projects; funding new or existing rehabilitation programs for low-income households or for landlords who own low-income properties; funding permanent supportive housing for families experiences homelessness, and using funds as matches for state or federal affordable housing grant programs. 

Between 2010 and 2019, the TID extension was used to support affordable housing 52 times in Wisconsin. 

The report cited examples of the extension used in Milwaukee, Racine, Wauwatosa, Madison, Fitchburg, Monona, La Crosse and Appleton. 

In Whitewater, the report suggested the following TID extension uses:

• Existing housing programs: The report stated that “a number of city, state and federal housing programs that provide assistance to home owners and renters are identified in the city’s comprehensive plan. 

• CDA housing loan: The report points to a program available through the city’s CDA which provides low- and moderate-income homeowners and landlords with loans to make repairs and improvements to residential properties. The loans, the report stated, are offered with zero percent interest to those who qualify. 

• State and federal programs: Funds could be used to support a local match when required to participate in state and federal programs for low- and moderate-income residents in need of housing assistance. 

• Land use element: A number of the residential development-related programs presented under the Land Use Element of the Comprehensive Plan could be supported through a TID extension program.

• Single-family residential program: The report points to the city’s ability to “consider retooling” the CDA Housing Loan Program, to focus on increasing rehabilitation and owner-occupancy in single-family residential and city neighborhoods to “broaden the pool of people eligible for the program.” 

• Central neighborhood: The report points to programs which “recommend that the city work with developers and landlords to identify ways the city can help facilitate housing conversations, housing upgrades, and the development of new housing to meet the needs of students and renters.” 

• Higher density residential: The report cites a program which “recommends that the city promote continued reinvestment in mobile home properties, including efforts to bring existing homes up to modern standards, replace existing homes with more modern manufactured homes, and provide and enhance onsite amenities.” 

• Family/young professional housing: The recommendation suggests that monies could be used to support affordable, modest singly-family housing within the city, suggesting such homes could be built on smaller lots of 10,000 square feet or less. 

• Student housing: The report states: “While additional off-campus housing for students may not be a critical need, improving the quality of existing off-campus student housing may be a critical need.” 

• Aging population: Funds could be used to benefit the city’s lower-income aging population by supporting accessibility modifications as well as gap financing for senior LIHTC developments. 

• Housing trust fund: The report notes that such funds are established to “provide a predictable, stable source of revenue reserved solely for addressing affordable housing needs.” 

• Additional housing support: The report states: “In addition to the 75% of a TID extension increment that must be used to benefit affordable housing in the city, TIF legislation would allow the remaining 25% to be used to benefit the city’s housing more generally. This could allow the city to use TID extension funding to support a number of polices, programs, and neighborhood strategies identified in the comprehensive plan, as well as other neighborhood plans.” 

2021 Jefferson County study finds housing shortage 

As earlier reported by Fort Atkinson Online, A 91-page study analyzing the condition of housing inventory throughout Jefferson County was released in February of last year. 

The study, which was commissioned by Jefferson County and conducted by the Fiscal and Economic Research Center (FERC) — an analytical branch operating from within the University of Wisconsin-Whitewater, and led by principal researcher Russell Kashian — looked at housing conditions across the county and within its municipalities, including Fort Atkinson and Whitewater.

Among its findings, the study concluded that the Jefferson County housing market “shows signs” of a shortage, with significant shortages within the area of “affordable housing.” 

A link to a story about the study conducted by FERC is here: https://fortatkinsononline.com/2021-jefferson-county-study-finds-housing-shortage-in-county-and-fort/. 

The full “City of Whitewater TID Extension Report: 2020” can be found within the Whitewater Common Council packet of Dec. 20. A link is here: https://whitewater-wi.gov/AgendaCenter/ViewFile/Agenda/_12202022-1626. The 45-page report begins on page 89 of the packet.