New homes under construction. (Getty Images)
This summer, Wisconsin lawmakers created several programs aimed at making a dent in the state’s shortage of affordable housing. As those programs are rolled out by the Wisconsin Housing and Economic Development Authority (WHEDA), they face their first hurdle — the slow and politically thorny process of municipal zoning updates.
The programs, signed into law in June by Gov. Tony Evers, will provide low-interest loans to developers to, among other things, refurbish housing units above Main Street retail stores, convert vacant office buildings into housing and cover the costs of extending public infrastructure to new developments.
Passed with bipartisan support, the bills aim to expand the amount of affordable and workforce housing in the state to ease the burden that increasing rents and a shortage of homes on the market have placed on Wisconsinites. Estimates put the number of new housing units Wisconsin needs to build to keep up with current demand at 140,000.
“Access to safe, reliable, and affordable housing statewide is an absolutely critical part of addressing Wisconsin’s long-standing workforce challenges,” Evers said in a statement after signing the bills. “But even beyond that, making sure we have safe, reliable, affordable housing statewide is about more than ensuring folks have a roof over their head at night. Housing ensures our kids have the stability to bring their best, full selves to the classroom, that hardworking folks can live in the communities they work in, which is important for the long-term strength of our economy, that individuals working to overcome substance use disorder have a safe place to focus on recovery, and that folks reentering our communities can do so safely.”
As WHEDA has begun to administer the programs and create the rules for developers to apply, one of the requirements is that the local government where the project will happen must have updated its zoning code to “increase development density, expedite approvals, reduce impact fees, or reduce parking, building, or other development costs” since Jan. 1. The agency has yet to specify what exactly will be required of the municipalities.
Several organizations, including WHEDA and the League of Wisconsin Municipalities, don’t know how many, if any, communities have updated their zoning codes since the beginning of the year, but Altoona, Eau Claire and Sun Prairie are all in the middle of major zoning rewrites.
Located in two of the fastest growing regions in the state, planning officials in these communities say they’re interested in the prospect of qualifying for the loans, but remain unclear on what that will entail. In the meantime they’re moving through their zoning processes without paying too much attention to the WHEDA loans or their eligibility requirements.
“I guess the verdict’s still out,” Eau Claire Planning Manager Ned Noel says. “It looks like they’re starting to get the standards in place and such. It still confuses me how much the community would have to do to be eligible. How is WHEDA going to score it? I am concerned with the additional government red tape it creates for the city … All that administrative burden, who’s going to enforce this stuff if they do it wrong? There’s still questions on what WHEDA and the legislators meant by this … I guess I’m cautiously optimistic on it.”
Ben Rohr, an associate at urban planning firm Vandewalle, says communities are still unclear about what they need to do, though there may be some flexibility from the agency.
“Everyone is in the dark on what the requirements will actually be in relationship to the zoning updates, but I’ve gotten the sense that potentially you’ll be eligible if you’re just working on code updates and they aren’t yet adopted,” Rohr says.
A spokesperson for WHEDA, said in an email to the Wisconsin Examiner that questions about zoning decisions are “best left to those that are closer to that activity,” yet didn’t answer how the agency would be working to assist communities currently in the middle of their zoning updates so they don’t miss out on the chance to qualify for the loan programs while they have the chance.
Eau Claire hasn’t updated its codes since 1990, constraining how many new homes can be built. A regional housing study of Altoona, the city of Eau Claire and Eau Claire County found that a lack of available single family homes is crunching the local housing market.
“Most current and aspiring owners in Eau Claire County face a challenging set of conditions at the time of this report in 2023. Current owners who hope to buy a new home, either larger for growing space needs or smaller for downsizing purposes, face high construction costs to build new, extremely low inventory of existing homes, and higher mortgage rates than they currently are paying,” the report states. “First-time buyers face all of the same challenges, but have the added disadvantage of no existing home equity to bring to a purchase.”
Through its zoning update, Noel says the city is considering making changes that would accomplish the WHEDA aim of increasing density by allowing accessory dwelling units (ADUs) — small housing units in basements or above garages that can be rented out — or reducing minimum lot sizes.
“I think the best term is zoning for what’s on the ground,” he says. “If you look at what’s on the ground in some of these older neighborhoods.”
He adds that some of those neighborhoods have a good mix of different types of housing, including the “missing middle” of housing types such as duplexes, row houses and townhomes that add density to neighborhoods but have become harder to build under modern zoning schemes.
“How do you keep these communities desirable while allowing ADUs, extra density in the right spots but still kind of matches with what you see on the ground today?”
At an event hosted by the Wisconsin affordable housing advocacy group WISCAP in September, Eau Claire City Council member Katie Felton said that the changes being considered would actually align the allowed density in the city with some of its oldest and most loved neighborhoods.
“It’s yet to be seen, but the zoning overhaul that we’re going through currently could have the biggest impact yet,” she said. “Some of our most beloved neighborhoods are the most dense. They’re also the most income mixed. These beloved neighborhoods, they’re dense, they’re mixed income, they’re old and so they were built before our current zoning code was instituted. So in a lot of ways, these neighborhoods that people love and are such healthy neighborhoods, are actually illegal to build now because of setback requirements, parking requirements or lot size requirements. This is to say on a very basic level, we’re looking at changes to zoning that would encourage density in a way people in Eau Claire are already familiar with.”
In nearby Altoona, planning director Taylor Greenwell says his city’s zoning rewrite is in such early stages that the prospect of the WHEDA loans hasn’t even come up yet — though he anticipates they will eventually.
So far, Altoona has just begun to gather community input on what people want out of the new zoning code. He says the city is largely doing well on the amount of rental housing stock so it needs to make it easier to add density with more single-family homes — a prospect that has proven difficult with the current codes, which were written in the 1970s.
“The ’70s were not great in terms of being inclusionary, to say the least,” Greenwell says.
Greenwell says the city is so early in the process of the rewrite that officials haven’t even begun to look at what would be needed to meet the requirements of the WHEDA loans, but that anything to add to the city’s housing tool box is welcome.
“That’s something we definitely want to look into, any possible funding option is great and something to consider,” he says. “There’s no magic, single solution to address the housing shortage, you want to have a wide tool box and you want to throw a lot of tools at the problem to address it to provide more choice and flexibility. WHEDA’s program options could be part of the tool box, but it hasn’t come up yet. I’m sure it will come up and frankly the city will look into it regardless.”
Josh Clements, planning director for Sun Prairie, says the city is so early in its zoning update process that it only just signed a contract with the consulting firm working on the project, but that city officials are very interested in the opportunity presented by the WHEDA loans and are looking at some small changes that could be made before the update is finalized in an estimated 18 to 24 months.
“We don’t want to wait that long for eligibility for the WHEDA programs,” Clements says. “We’re looking at what we could do in the short term to satisfy the intent of the new programs while also being strategic in terms of where we may be in a few years. We’re looking at what we can do tactically to be eligible as soon as those programs are created. We’ve been in touch with WHEDA but they’ve been careful, they’re trying to hedge and say there is something you’ll need to do, but we can’t tell you what it is at this point. We think we’re going to be fine, and those smaller, tactical changes can be meaningful, if small, to produce more affordable housing.”
He also says he thinks the timing of the new programs and the municipal requirements will be harder on communities that recently completed zoning updates than communities in the process of updating codes now. He pointed to Pleasant Prairie, which updated its codes in the last few years.
“It might be more difficult if you’re a community like Pleasant Prairie; you hopefully got what you wanted done and now have to make another change,” he says. “They’re going to be in a tougher position because they’ll be tinkering in a brand new code.”
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