Pulse of Philanthropy: A New Tool to Build Affordable Housing

Bret Bicoy is President and CEO, Door County Community Foundation

Every fully employed person in Door County should be able to afford a safe, quality place to live. This simple idea is the driving force behind the launch of Door County’s Workforce Housing Lending Corporation.

For more than two years, the Door County Community Foundation has convened groups of business leaders, housing developers, government officials and local citizens to develop a new approach to affordable workforce housing. Rather than establish another government program, our goal was to use targeted incentives to create a market-based solution to this problem.

In most communities, it’s not possible for a private developer to build a multifamily unit, rent it out at a rate commensurate with the U.S. Department of Housing and Urban Development’s (HUD) definition of affordability, and still make a profit. As a result, affordable-housing developments typically involve a “funding cake” in which there are several layers of financing and incentives.

The first layer might be some traditional bank financing, but other layers likely include financial assistance from HUD, low-interest financing from the Wisconsin Housing and Economic Development Authority (WHEDA), or refundable tax credits from the state. By combining several layers of financing and incentives, private developers can create a funding cake that lowers their construction costs and thereby enables them to rent units at an affordable price.

Unfortunately, private developers have a strong financial incentive to build their affordable properties in Madison, Milwaukee or other urban areas where HUD regulations allow them to charge higher “affordable” rents than they can charge in rural Door County. If the goal is to make a profit, it’s typically the better business decision to avoid building an affordable rental project in Door County.

Consequently, the few affordable units that are constructed in Door County involve a private developer who has a personal commitment to our community. Although we’re lucky that so many people love Door County, this is not a sustainable strategy for creating workforce housing. Instead, we need a tool that provides a financial incentive for private developers to build in Door County.

That’s at the heart of this entire project: We are adding a new layer to the funding cake that is available only to developers who build their affordable units in Door County.

Central to our plan is Door County’s Workforce Housing Lending Corporation, a newly created 501(c)(3) corporation that is governed by the Community Foundation in partnership with the nonprofit NeighborWorks Green Bay. Because this is not a government program, we have the flexibility to offer low interest rates, years of early forbearance while a developer meets other obligations, and payment terms that can be tied to cash flows.

The units we partially finance may constitute the entirety of an affordable development or may involve a negotiated number of affordable units set aside as a part of a larger project. Furthermore, restrictive covenants ensure that the units we finance cannot be converted to short-term vacation-rental properties.

Each individual loan that the Workforce Housing Lending Corporation makes will be a relatively small percentage of the total financing for any particular housing development – remember, we’re just a single layer in the overall funding cake – but our loans will offer an incentive to developers to build their affordable units in Door County.

WHEDA approved an investment of $1.5 million in our effort to be earned on a matching basis. Hence, the first $1.5 million in contributions to the Workforce Housing Lending Corporation will be matched dollar for dollar, thereby doubling the impact of each gift.

The Door County Board of Supervisors has already allocated $500,000 to this effort, and private donors have contributed nearly that amount as well. Our ultimate goal is to raise another $2 million beyond the WHEDA match so that we can achieve a total loan pool of $5 million. Through the use of our leveraged loan structure, as well as “recycling” the money several times over as loans are paid off and the capital is redeployed, we seek to assist in constructing hundreds of affordable workforce rental units in the years to come.

Although our initial focus is on fostering this construction, our future plans potentially include a down-payment assistance program to promote homeownership, a housing-rehab loan program to help restore dilapidated housing stock, and employer-assisted homeownership programs.

If you’re affiliated with a for-profit housing developer, nonprofit housing organization or local business that recognizes the need to provide affordable rental units for our community, visit to learn more. Door County’s Workforce Housing Lending Corporation is open for business.

Contact Bret Bicoy at [email protected]

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