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Developers seek tax-exempt bonds to convert hundreds of market-rate units to affordable housing; alderman urges developer outreach
Summary
Bond counsel and private developers told the committee they plan to use tax-exempt conduit bonds to enable nonprofit ownership and convert 374 apartment units to affordable housing with Fannie Mae monitoring and roughly $2.25M in upfront work; Alderman Taylor pressed developers for more local outreach and said she was inclined to oppose in the absence of local engagement.
The committee heard a substantial Q&A on a TEFRA (Tax Equity and Fiscal Responsibility Act) matter: private developers seek the council's approval for tax-exempt conduit revenue bonds that would enable nonprofit acquisition and conversion of two existing multifamily properties (discussed rental unit total ~374) to affordable housing.
Deputy city attorney Mary Shannon explained the procedural requirement: local approval and a TEFRA public hearing are prerequisites for tax-exempt status on conduit bonds issued through a Wisconsin issuer (the Public Finance Authority). Ray Jones, bond counsel for the project, and representatives from Post Real Estate Group described a plan to use tax-exempt financing to reduce borrowing costs, invest about $2.25 million into property upgrades, and convert rental portions of the projects to affordable units with ongoing oversight supported by Fannie Mae.
"Because a nonprofit would purchase them using tax exempt debt...we would then convert all 100% of the units to affordable units," bond counsel Ray Jones said. The project team described targeted affordability levels of 40% of units at 60% AMI and 60% at 80% AMI, monitored by Fannie Mae credit enhancement and oversight.
Alderman Taylor objected that developers had not meaningfully engaged local stakeholders and said two well-managed complexes in her district were at risk of being altered without local input: "We certainly don't wanna lose the 2 that we have, based on a developer, who is not local to the area coming in and taking what we do have and turning it into, affordable units," she said. Several members questioned why no local owners or principals appeared in person; developers said they had worked with city staff and that legal counsel and sponsor representatives were online for the committee.
Procedurally, the committee introduced a substitute to correct the TEFRA hearing date and placed the matter on file so the scheduled TEFRA hearing could proceed; no final approval of bond issuance occurred at the committee meeting. The city attorney and bond counsel said the formal local public hearing (TEFRA) and later a common council vote are required steps in the approvals process.
Next steps: the TEFRA hearing date will be set and the matter will appear before the common council; developers and bond counsel indicated they will present details including ownership structure and a plan for tenant protections and rolling conversion to affordable units.
