It’s no secret that in recent years, the political divide between the left and the right has been growing. In today’s highly politicized environment, legislation and policy is often bogged down by political theater or diluted (or inflated) to get just enough votes for approval. The result can make for bad policy in some cases, and no policy in others.
At a time when many seem to pledge their allegiances to Fox News or CNN, a key issue that transcends and unifies across party lines is community and economic development incentives. With program expansions on the table at the local and federal levels, it is more important than ever to foster this seemingly rare consensus.
From President Obama’s Promise Zones to President Trump’s Opportunity Zones, these programs and policies are historically bipartisan and effective at achieving their goals, but without the fanfare of many other better known government programs. Those not in the real estate or economic development world probably don’t often think about the impact community development financing has in their communities. Look at the skyline and you’ll see that a significant portion of the redevelopment of Milwaukee has been built with the assistance of federal, state and local development incentives.
From The Couture and Northwestern Mutual’s Office Tower, to the Fortress Building and Fiserv Forum (to name only a limited few) — many of Milwaukee’s most prized landmarks would not have happened without development incentives.
Knitting together a package of development incentives, equity and traditional debt, or a “capital stack,” to make a project feasible is complex. Whether it is Historic Tax Credits, New Market Tax Credits, Low Incoming Housing Tax Credits, Brownfield Grants, Property Assessed Clean Energy Financing, Tax-Exempt Bonds, and/or TIF, incentives exist at the local, state and federal level and can be carefully crafted to be used together to encourage a developer to take on what might otherwise be a financially infeasible project.
When thinking about piecing together a financing package to make a beneficial project a reality, one recent project comes to mind: Wangard Partners’ Eagleknit development. The $30 million conversion of a historic Walker’s Point industrial building into a 107,000-square-foot office and innovation hub will activate an otherwise stagnant block of Milwaukee and, hopefully, attract hustle, bustle and additional investment. The development was made possible thanks to a complex financing package that included New Market Tax Credits, State Historic Tax Credits, Opportunity Zone funds and Property Assessed Clean Energy financing in addition to conventional financing. Together, these financing options made the project possible, resulting in increased tax base for the City and the creation of new jobs.
Eagleknit is one example of the long list of Milwaukee redevelopment projects that have leveraged development incentives to fuel the resurgence of areas such as the Third Ward and Walker’s Point, bringing back Milwaukee’s urban core. With anticipated expansions of key incentive programs, including Low Income Housing Tax Credits and New Market Tax Credits, the coming months and years could show even greater investment in and redevelopment of Milwaukee neighborhoods and commercial corridors.
Since 1986, the federal Low Income Housing Tax Credits program has leveraged private capital to fund high quality and affordable rental housing. According to the Wisconsin Housing and Economic Development Authority (WHEDA), the sole administrator for federal housing tax credits in Wisconsin, more than $445 million has been awarded for the development and rehabilitation of more than 53,000 units of rental housing since the program’s creation. In April, a bipartisan group within the U.S. Congress introduced the Affordable Housing Credit Improvement Act (AHCIA) of 2021 aimed at addressing the nation’s shortage of affordable housing through the expansion of the Low Income Housing Tax Credits program.
The passage of the AHCIA would build upon the Consolidated Appropriations Act of 2021, which was passed by Congress in December 2020. The bill included a five-year, $25 billion annual extension of New Markets Tax Credits, which incentivize growth and investment in low-income communities. According to the U.S. Department of the Treasury, for every $1 invested by the Federal government, the New Markets Tax Credits Program generates over $8 of private investment. Additionally, since 2003, the program has created or retained more than 830,000 jobs.
These bills — and the investment they have encouraged — have been a bright spot in what has otherwise been partisan politics. Our hope is that these programs and other economic development programs like them will continue to be valued and promoted by both sides of the aisle. Our communities will be better for it.