New Lending Corporation Seeks to Create Affordable Housing

The lack of affordable, quality rental housing for year-round residents has long been identified as a significant issue in Door County, both in terms of furthering economic development and maintaining community stability and well-being.

That’s part of the rationale, codified in a resolution, that the Door County Board of Supervisors gave when approving a half-million-dollar donation to a new nonprofit lending corporation designed to entice developers to create affordable rental units in Door County.

The $500,000 donation came from the county’s American Rescue Plan Act dollars, which totaled $5,374,185. Affordable housing was one of the many areas in which the county could use the money.

The recipient of the funds is the Workforce Housing Lending Corporation (WHLC), a new entity that’s a partnership between the Door County Community Foundation (DCCF) and NeighborWorks Green Bay.

“We have an enormous challenge with affordable, workforce housing,” said Bret Bicoy, CEO and president of DCCF. “Part of the difficulty filling the positions we need is you can’t find the people because they can’t afford to live here.”

The Door County Community Foundation experienced that challenge itself recently. Seven years ago, it had an administrative assistant position that paid well enough to attract people from outside Door County. Last year, it had the same position available because of a promotion – and at a higher rate of pay – and the only candidates who applied were those who already had housing.

“Availability of housing had shrunk to such a degree that it’s no longer the job someone could move to Door County to create,” Bicoy said. “Multiply that by 1,000.”

How WHLC Would Work

The new corporation would try to help solve this problem by loaning money to developers who agree to set aside a few affordable units within new rental developments. The number of set-asides would vary by the project, and the loans would finance a relatively small percentage of the total financing for any particular housing development. 

The general terms of those low-interest loans – designed collaboratively with private housing developers, nonprofit affordable-housing experts and government officials – would be creative and flexible enough to sweeten the incentive for developers. Repaid loans would then be returned to the funding pool. 

“We hope to offer [loans] much cheaper than bank debt will be so it will be attractive to comply with the terms we’re asking for,” said Noel Halvorsen, CEO and president of NeighborWorks. “It will be worth pursuing the money [for developers] by having some cheaper debt in there.” 

Structure of the New Financial Corporation

The new corporation was filed with the IRS a couple of months ago. It will be the equivalent of a nonprofit subsidiary controlled jointly by the two existing charities, NeighborWorks and DCCF. 

The financial and administrative functions of WHLC will occur under the corporate umbrella of NeighborWorks, led by Halvorsen, who will also serve as the WHLC president and CEO. Bicoy will chair the WHLC board that’s currently being formed, with half of its members appointed by DCCF, and the other half by NeighborWorks. The WHLC staff member will be housed in Sturgeon Bay at DCCF. 

Halvorsen’s organization has been around for 40 years, providing homeownership preparation services, down-payment and closing-cost assistance lending, real estate development and other services. The nonprofit organization has helped 3,661 families achieve homeownership.

“This is work we’re familiar with and certainly experienced doing,” Halvorsen said.

The Wisconsin Housing and Economic Development Authority (WHEDA) will seed the corporation’s revolving loan fund with a 30-year, interest-free loan of $1.5 million. But first WHEDA is requiring that the community match that investment with at least $1.5 million in local money – the County of Door’s donation is part of that – to create an initial revolving loan pool of $3 million. Bicoy said he’s confident they’ll achieve the match – and beyond.

“The $3 million we’re securing to start is really the start,” Bicoy said. “It’s not the end point of this; it’s the beginning of this. It’s very possible that municipalities might make contributions. We might find other donors. WHEDA might get behind it in other ways. The most exciting thing for me is we’ve created a vehicle for this kind of work moving forward.”

WHLC’s plan includes generating enough financial activity to qualify for federal Community Development Financial Institution (CDFI) status, giving WHLC access to the U.S. Department of Treasury’s CDFI Fund to enable further growth of the loan pool, as well as other WHLC affordable-housing initiatives using those federal dollars.

What’s Affordable, and Why It’s Hard to Build It 

The term “affordable” for the set-aside units would mean “80% or lower of the county’s median income,” said Mariah Goode, county planning and zoning director, during the county board’s May 24 meeting. 

The 2022 median income for Door County is $82,300, according to the latest numbers released for counties across the country by the U.S. Department of Housing and Urban Development. That would mean households making less than $65,840 would be eligible for the set-aside units.

Goode is also involved with the local business leaders and residents, housing developers and government officials whom DCCF convened nearly two years ago as part of a WHEDA Rural Affordable Workforce Housing Initiative. Door County was selected as one of three pilot communities in the state to take part in that initiative, and WHLC was the result of that process.

“The thing [WHLC] came up with is nothing particularly radical,” Bicoy said. “You’ll find it in much bigger cities. Madison has a terrific program. The challenge is that no one really seems to have done it in a community our size. You need economics of scale.”

Affordable-housing challenges exist across the country and region. What complicates the problem in Door County is its geography and isolation.

“You don’t do foundations [in Door County] the same way as you do elsewhere,” Halvorsen said. “There’s a lot of construction crews that aren’t in Door County. A lot of them are driving up, and that comes with additional costs.”

Market pressures also continue to play a role, with rental, seasonal and vacation homes driving prices.

“It’s such a desirable place that there’s always that pressure from the vacation-rental sector,” Halvorsen said.

If costs are the same or higher to build the units, but Door County’s median income is lower than that of its urban counterparts, that means the rents that can be charged to recoup costs are lower than what could be collected on the same unit in, for example, Milwaukee or Madison. 

“If I’m a developer and my costs are the same or a little more, but the rents are less than I can collect in Dane County, why in the world would I build it in Door County?” Bicoy said. “What it requires, then, is a developer who has a love for Door County, or they just don’t build it here.”

The new corporation will try to change that. Though many of the corporation’s details have yet to be developed, and the fundraising for the matching money is continuing, initial estimates show that the corporation could facilitate the development of hundreds of units – maybe as many as 700 – over the life of the initial loan pool. 

“I think it’s exciting because this is a local solution,” Halvorsen said. “Folks on the front lines in Door County have been grappling with these challenges for many years. It was them coming together, gathered by WHEDA, and then just figuring out what’s the best path forward.”