Guest Column from WEDA Corporate Member Vierbicher: Housing Strategies

By Melissa Hunt, CEcD, EDFP, Municipal Services Manager, Mark Steward, AICP, Senior Community Development Consultant, and Katherine Westaby, AICP, Community Development Consultant, Vierbicher

We’ve all heard stories or felt the impact of the housing crisis. Employers desperately need employees, but their new hires cannot find housing. The local school district just hired five new teachers for the upcoming school year, but they cannot find housing. Worse yet, do you need a place for your family to live? On top of that we have rising rates and building supplies are expensive and not readily available.

The demand for housing far exceeds the supply in many communities across Wisconsin. As a result, local officials are pressured to not only create new housing but create affordable housing. As a result, many successful best practices have emerged to help navigate the housing crisis.

Successful Housing Strategies

New challenges require new ideas. Communities need to be flexible and open to different approaches.  In our experience, best practices include:

  • Ordinance Amendments: Modify design standards to reduce development costs. Update zoning standards to accommodate higher density or newer housing products such as zero lot line housing.
  • Local Housing Strategies: Each community is unique, and so are the obstacles to developing new housing. Topics to consider include land availability, developer recruitment, community-led projects, transitioning single-family housing stock from seniors to young families, mixed-use development, and more.
  • Tax Incremental Financing (TIF): Using TIF to create newly platted residential development and affordable multi-family housing.
  • Public Funding Programs: Explore available public funding opportunities to create affordable housing including WHEDA low-income housing tax credits and loans, USDA Rural Development loans and loan guarantees, HUD HOME, and CDBG programs.

Put it all Together

Best practices include:

Design Guidelines: Infrastructure represents a considerable cost for new residential development. While local design guidelines need to ensure the infrastructure is adequately designed and constructed, there are modifications to standard guidelines that can reduce costs. For example, many communities have found that narrower streets not only reduce cost but arguably improve safety due to calming traffic.  Reducing the street width from forty feet to thirty-two feet can reduce infrastructure costs by 15 percent.

Higher Density Housing: Increasing the density of new residential development can significantly reduce the development costs per unit. Residential development costs include land acquisition, entitlements and fees, professional services, infrastructure, marketing, and carrying costs.  Many of these costs are fixed, so the cost per unit decreases if they can be spread over more housing units. For example, single-family lots that are 60 feet wide have roughly a 40% lower development cost per unit versus 100-foot-wide lots. Due to market constraints, many communities have already experienced higher density development and have updated their local zoning ordinances to meet that need.

Zero Lot Line Housing: Zero lot line zoning is quickly gaining in popularity across the state. This zoning allows owner-occupied units to have common walls between the units. Zero lot line zoning benefits include less administrative cost versus condominiums and a significant reduction in development costs versus conventional single-family housing. For example, a two-unit owner-occupied building can result in a 40 to 50 percent reduction in development costs versus conventional single-family housing.  As a result, developers using zero lot line housing are finding significant interest from first-time home buyers, empty nesters, and seniors.

Senior to Workforce Housing Transition: An emerging strategy to address the demand for workforce housing is to transition existing housing stock occupied by senior citizens to workforce housing. Supplying affordable housing for young working families will help address the workforce shortage, plus bring school-age kids into your community, which many rural school districts desperately need. But there is one challenge. Many seniors want to stay in their homes. To address this challenge, communities can promote the development of attractive housing options for seniors that will make them comfortable making a move. New developments should provide optional housing choices, including rental or owner-occupied, plus amenities available to enhance quality of life. New senior house stock can make a major impact on the houses market. The homes that senior move out of now are available workforce-age families.

Public Funding Strategies

While there are many public programs available to promote affordable housing, . Tax Incremental Financing (TIF) is the best local funding tool available. There are numerous TIF strategies available including:

  • Mixed-Use Tax Incremental Districts (TIDs): Mixed-Use TIDs are the only TIDs that can fund newly platted residential development. Up to 35% of the territory within a Mixed-Use TID may be devoted to newly platted residential development. Eligible TIF expenditures include land acquisition, infrastructure, site development, developer incentives, and other soft costs. In addition, the development needs to meet one of the following criteria: density of at least three units per acre, conservation subdivision, or a traditional neighborhood.

  • Affordable Housing Extension: Communities can now extend the life of a TID for up to one year and use the additional revenue for affordable housing. At least 75% of the additional revenue must be used for affordable housing – defined as housing costs that are less than 30% of the household’s gross income. The remaining funds may be used to improve the housing stock anywhere in your community, not just within the TID.

  • Infill, Redevelopment & Rehab-Conversion Housing: New housing development, not involving newly platted residential, can be funded by most types of TIDs. These projects may include multi-family housing on vacant parcels, redevelopment sites, or converting old buildings to residential. TIF can be used for acquisition, demolition, environmental remediation, site improvements, infrastructure, developer incentives, and soft costs. In many cases these types of projects also use other public funding programs like low income tax credits, loans or loan guarantees from agencies such as WHEDA, USDA Rural Development, or HUD. Thus, TIF can play a critical part in bridging the financing gap and can be leveraged to secure other funding.

From starter to senior housing, creative communities make decisions that are in the best interest of citizens and are market friendly. Smaller lots sizes, walkable neighborhoods and increased community amenities are trends that we will continue to see and will be what people look for in their neighborhoods. We will also continue to see the need for more affordable housing options in our communities. This results in homes our teachers, healthcare workers and young professionals can afford. Elected officials have to make the decision to embrace change, be flexible and may require outside of the box thinking. The communities that put together the best mix of housing options should experience growth in their community, increases in tax base and will provide flexibility, many housing options and opportunities for all residents.

About Vierbicher Associates, Inc.: Vierbicher started in 1976 with the mission to enhance Wisconsin communities and their residents’ quality of life. Today, more than 45 years later, our multi-faceted team continues to help Wisconsin communities and developers meet their unique development and revitalization goals- all with the least impact possible to taxpayers. Vierbicher’s services include engineering, planning & community development, water resources, surveying, GIS and landscape architecture.