Tax Credit Housing Projects in Metropolitan Milwaukee

In his book “Evicted,” Matthew Desmond makes a compelling case that affordable housing is a form of human capital investment, akin to job programs or education, which can strengthen and stabilize the American workforce. This perspective aligns with Maslow’s hierarchy of needs, which posits that basic physiological needs, such as shelter, must be met before individuals can focus on higher-order needs like employment and education. Therefore, one effective strategy for local and state governments to improve the lives of the working poor and foster community development is to thoughtfully consider the placement of federal low-income housing tax credit (LIHTC) projects. This paper explores the strategic placement of LIHTC projects, focusing on the case study of metropolitan Milwaukee, Wisconsin, and the allocation decisions made by the Wisconsin Housing and Economic Development Authority (WHEDA).

The placement of LIHTC projects can significantly impact the lives of lower-income individuals. When located in opportunity areas with quality schools, jobs, and safe surroundings, these projects can provide residents with better access to essential services and employment opportunities. Alternatively, placing LIHTC projects in redeveloping areas that are part of a well-defined redevelopment plan can contribute to the revitalization of these neighborhoods, potentially improving living conditions and economic prospects for existing residents. Both approaches have their merits, but they also come with unique challenges and considerations.

State housing finance authorities (HFAs) play a crucial role in the allocation of LIHTC projects. These authorities must balance the dual objectives of fair housing and community development. On one hand, dispersing subsidized housing across various neighborhoods can help deconcentrate poverty and provide residents with access to better opportunities. On the other hand, targeting aid to disinvested areas can contribute to the revitalization of these communities and address historical inequities. However, placing subsidized housing in areas with high levels of segregation or poverty may limit household income mobility and expose residents to higher crime rates and poorer health outcomes.

The allocation of low-income housing tax credit projects LIHTC projects in metropolitan Milwaukee provides a compelling case study for examining the conflicting objectives inherent in low-income housing tax credit projects LIHTC placement. Milwaukee, like many urban areas, faces challenges related to housing affordability, economic inequality, and neighborhood segregation. The Wisconsin Housing and Economic Development Authority (WHEDA) is responsible for allocating LIHTC projects in the state, and its decisions have significant implications for the residents of Milwaukee.

WHEDA’s allocation strategies have historically aimed to balance the need for affordable housing with the goals of community development and fair housing. However, the specific outcomes of these strategies can vary widely depending on the neighborhoods targeted for low-income housing tax credit projects. Projects placed in opportunity areas may provide residents with better access to jobs and quality education, potentially improving their long-term economic prospects. Conversely, projects in redeveloping areas may contribute to the revitalization of these neighborhoods but may also face challenges related to crime, poverty, and limited access to essential services.

In 2015, the US Supreme Court affirmed disparate impact claims under the Fair Housing Act (FHA), highlighting the importance of considering the broader social and economic impacts of housing policies. This ruling has significant implications for the allocation of low-income housing tax credit LIHTC projects, as state HFAs must now ensure that their decisions do not disproportionately burden minority or low-income communities. This requires a careful balancing of fair housing concerns with the goals of community development and economic revitalization.

The placement of low-income housing tax credit LIHTC projects is a complex issue that requires careful consideration of multiple factors, including access to opportunity, community development needs, and fair housing concerns. The case of metropolitan Milwaukee demonstrates the challenges and potential benefits of different allocation strategies, highlighting the need for thoughtful and strategic decision-making by state HFAs. By carefully balancing these competing objectives, it is possible to create affordable housing projects that not only provide immediate relief to low-income families but also contribute to long-term community development and economic mobility.