At the start of 2011, I returned to the great state of Wisconsin because of its people, their collective expertise, strong work ethic and ability to meet challenges head-on. For me, WHEDA was the place to be. WHEDA has worked for nearly 40 years to finance housing for lower income Wisconsin citizens and help them achieve fulfilled dreams.
Like the housing industry and Wisconsin’s economy, WHEDA was at a crossroads in 2011. Home ownership becomes meaningless and virtually unattainable without a good-paying job. So I enthusiastically accepted Governor Walker’s call to help in his goal of creating 250,000 private sector jobs by 2015.
The first step we must take is to reduce joblessness and increase household wealth across Wisconsin. How do we plan to do it? At WHEDA, we expanded the “ED” in our mission by leveraging our economic development programs with our housing finance knowledge. The beauty is that WHEDA maintained its long-standing housing commitment and strengthened its economic development mission to support Governor Walker’s goal. In addition, WHEDA works closely with our sister agency, the new Wisconsin Economic Development Corporation to further a team approach to business expansion and job creations.
We developed a bold strategic plan to deploy all of our products to create or retain 12,500 Wisconsin jobs. Important components of the plan include expanding economic development, strengthening multifamily housing resources and capabilities, reestablishing home ownership lending programs and strengthening Authority finances and operations.
In August 2011, the WHEDA Board approved the 2012 Dividends for Wisconsin plan that provides a stronger focus on allocating general reserves to job creation and economic development. The plan evolved following a series of public hearings around the state where the message was loud and clear: utilize our reserves to stimulate economic growth and financially support WHEDA’s current housing programs.
As a result, WHEDA will devote $12 million from Dividends to job creation and economic development.
The second priority of the plan is affordable single family and multifamily housing. In all, over $14 million in general reserves will be available for all housing and economic development purposes. The third priority is housing for persons in crisis. WHEDA will provide $500,000 to local organizations serving our most vulnerable citizens. We believe that’s our housing investments are a significant contribution to aiding Wisconsin’s economic and community recovery.
Economic development, the ED in WHEDA has always been a key component of our mission, and 2011 was no exception.
Back in April, Governor Walker and I made stops in Oshkosh and Milwaukee where the Governor awarded $17.1 million in Affordable Housing Tax Credits to fund affordable housing project developments all across the state of Wisconsin. Those credits that WHEDA distributes will create approximately 1,200 construction jobs, will move forward 29 developments that will create 1,400 units of affordable rental housing. This year’s Affordable Housing Tax Credits will generate an estimated $250 million in economic activity for Wisconsin.
Our application to the US Department of the Treasury for a State Small Business Credit Initiative (SSBCI) allocation totaling $22.4 million was accepted. WHEDA expects to leverage the funds 10:1 for a total of $224 million. The funding is expected to create or retain 11,625 jobs. That is phenomenal news for our entire state.
When you look at all of WHEDA’s economic development tools including New Markets Tax Credits, small business programs, the Neighborhood Revitalization Guarantee program, the Contractor’s Loan Guarantee program, all of our agricultural programs and add it all up, WHEDA’s historic commitment to economic development in Wisconsin is significant. To date, since WHEDA’s inception, WHEDA has provided $828.7 million in economic development lending.
Despite our historic success, this isn’t the WHEDA of 10, 20 or 40 years ago. The affordable housing tools to which we were accustomed have been affected significantly by the “Great Recession”, the housing market crisis, regulatory reforms and the market’s continued aversion to credit risk.
To be clear: The affordable housing loan market was not the cause of the housing market crisis. WHEDA’s portfolio of loans is experiencing a default rate of about 3.2 percent, well below the Wisconsin average for prime conventional mortgages. Even so, because investors and guarantors have tightened qualifying criteria, we cannot offer the same loan terms and credit parameters as we have in the past.
We can, we must and we will work to turn matters around. WHEDA has set critical priorities to create more jobs, focus on strengthening the economy and develop new sources of mortgage capital.
I’ve told audiences that I love my job because it’s like doing God’s work with a balance sheet. WHEDA and its partners will strive throughout 2012 to expand both employment and affordable housing options for Wisconsin families. WHEDA employees and I are committed to this goal.
Wyman Winston is executive director of the Wisconsin Housing and Economic Development Authority (WHEDA).