Several state housing finance agencies (HFAs) have taken important steps to drive racial equity in the past year.

The moves, including changes to their low-income housing tax credit (LIHTC) programs, come at a time when there’s increased recognition of racial injustice and the importance of housing in family stability and income.

Here’s a look at what housing leaders in Wisconsin, Minnesota, and Oregon have done.

Wisconsin Housing and Economic Development Authority

In its 2021-22 qualified allocation plan (QAP), the Wisconsin Housing and Economic Development Authority (WHEDA) made several key changes, including increasing the number of points awarded to projects that provide emerging minority developers with a minimum of 24% ownership interest in the general partner/managing member role.

Joaquin Altoro
Jessica Kaminski Joaquin Altoro

WHEDA leaders wanted to make sure the relationships weren’t just monetary but also about building capacity and expertise, says CEO Joaquin Altoro, noting that some developers had been participating in the LIHTC program as a partner, but they weren’t growing to eventually do their own deals.

“How do we make change effectively and think about wealth creation and the QAP?” he says.

In many states, including Wisconsin, there’s a very narrow separation between the projects that win a LIHTC reservation from those that miss out. As a result, every point matters.

“We said, ‘Let’s give points where a majority developer partners with a minority partner, but they share a percentage equity ownership in the project,’” says Altoro. The higher the percentage shared by the partners, the more points they would be eligible for in the tight competition for housing credits.

WHEDA faced some opposition to the proposal, but officials moved ahead with the scoring change last year and are beginning to see the results.

Twenty-nine of the 54 applicants sought these points in the latest LIHTC round. Overall, 18 of the 33 projects awarded credits in April reflect minority developer collaborations. By comparison, in 2020, just three awarded projects out of 35 had co-minority developers.

Recognizing that many underserved communities have a disproportionate need for supportive services, WHEDA’s 2021-22 QAP also made strides to advance the creation of supportive housing.

Two of the three applications in the supportive housing set-aside received awards, sharing in approximately $35.1 million in state and federal housing credits this year. In addition, 49 applications received extra scoring points for offering integrated supportive services this year.

While the agency made important changes to its QAP, officials understood that points were not enough and that advancing racial equity requires more, says Altoro, who was born and raised in Milwaukee. His Mexican grandfather migrated to the state to find work.

Altoro has a 30-year career in banking and finance, including the last two as head of WHEDA.

As a young banker, it was important for him to understand why banks were often disconnected with the communities they served. “I wanted to understand what are the ingredients to a healthy neighborhood,” Altoro says. “I also wanted to understand who are the practitioners who have an impact on the growth of communities, including elected officials, bankers, and developers.”

A pivotal moment came for him when he was in the first class of the Associates in Commercial Real Estate (ACRE) program administered by LISC Milwaukee. ACRE aims to expand minority representation in the commercial real estate fields of development, property management, and construction management. So far, about 200 people have taken part in the program.

“An HFA has to be committed to something that I call the bear hug approach,” Altoro says. “The bear hug approach includes our continual support of the ACRE program. Right now, it’s mostly in Milwaukee. How do we have impact throughout the state of Wisconsin? The virtual approach within the last year has allowed the program to have more people from outside of Milwaukee. We’re also doing internal work around how do we further support CDFIs. In Wisconsin, we have about 18 or 19 community development financial institutions (CDFIs), and the majority of them are small. If they are the partners who are going to do predevelopment and do the technical assistance, we’re going to have be there to support CDFIs.”

Altoro adds that it’s also important to think beyond the LIHTC program and to recognize that developers have varying degrees of experience.

“If you want to do single-family or mixed-use or industrial, whatever it is, how do we support you?” he says. “Internally, we also have to create lending tools that address different levels of sophistication from someone who is just starting to somebody who’s been in it for a while to somebody who has a significant portfolio.”

Part of this work involves building WHEDA’s internal culture. As an example, the agency recently created an internal information series on the history of redlining, the discriminatory practice of denying loans to Black families and others in certain neighborhoods. When the staff sees that history, they feel compelled to be involved in WHEDA’s efforts around developers of color, says Altoro.

Minnesota Housing

Minnesota Housing recently worked through a new agency strategic plan that brought equity, especially racial equity, more forward.

Jennifer Ho
Jennifer Ho

“We did a different type of stakeholder engagement, both different types of stakeholders and different ways of engaging, so our informants and our commenters on the QAP have also grown,” says Commissioner Jennifer Ho. “We have groups that maybe didn’t feel they had influence or a voice get more involved in the program.”

Participants included Equity in Place, a Minneapolis-based group of partners from organizations led by people of color, and housing advocacy organizations working to advance housing justice and equitable community development.

With feedback from different stakeholders, Minnesota Housing has adopted several changes to its 2022-23 QAP, including adding “a point incentive for equitable development for projects committed to equity and inclusion” and adding a “pointing preference” to projects located in Opportunity Zones.

The agency also is renaming the “minority business enterprise/women business enterprise” description to “people of color and indigenous-owned/women-owned business enterprise” (POCIBE/WBE) and adding opportunities for POCIBE/WBE teams.

The efforts go beyond the QAP, according to Ho.

“We have what I consider a four-square grid of activities,” she says. “There’s work we’re doing internally. There’s work we’re doing externally. There’s work we’re doing on inclusion, and there’s work we’re doing on equity.”

The internal inclusion work is about making Minnesota Housing a place where you can bring your whole self to work, and everybody sees the opportunity for advancement. People’s lived experiences are valued, and there’s inclusivity as an agency.

The external inclusiveness work includes thinking about who the agency communicates with and who it gets advice from such as its relationship with Equity in Place. “It’s thinking about how do we engage with the communities that are most impacted by housing disparities and how do their voices shape what we do,” Ho says.

“There’s internal equity work, which to me is about if you’re Black, Indigenous, or People of Color, do you come into state service at the right salary level, do you have opportunities for advancement and promotion, and are we building a more diverse and representative leadership team?” she says.

The external equity work is about outcomes. “Are we working toward closing the homeownership gap?” says Ho. “Minnesota has one of the worst in the country. Are we thinking about how we distribute wealth as an agency that moves so much money? And, who becomes wealthy in our affordable housing world as a result of what we do? When we’re using scarce state and federal dollars in order to subsidize housing, are we doing our best to buy down that rent so that we’re making homes affordable to people who make the least?”

In another recent move, Minnesota Housing created a director of equity and inclusion position that’s held by Brittany Rice, who joined the agency from Minneapolis’ Civil Rights Equity Division this year.

“Brittany’s job is not to represent the agency on issues of equity and inclusion,” says Ho. “Her job is to teach the agency how to engage in this work.”

Appointed to her post by Gov. Tim Walz in December 2018, Ho joined the agency talking about the need to work on equity. It was part of what Walz and his team interviewed her for when looking for a commissioner.

A little more than a year later on May 25, 2020, George Floyd was killed in Minneapolis.

“I will say the murder of George Floyd and the conversation that we’ve had to have in Minnesota as a result has strengthened the way I think about housing justice and racial justice,” Ho says.

Officials are now building the state’s interagency council on homelessness plan around racial, housing, and health justice.

“George Floyd’s murder and the conversation since have made us kick it up a notch and really think about what is justice and what is our role in that,” says Ho, who was in the managed care industry for about 10 years, working mainly on Medicaid and Medicare policy. Seeing that some of the most expensive users of the health care programs are people who are homeless, Ho turned to working on permanent supportive housing issues and ending homelessness. She served as deputy director of the U.S. Interagency Council on Homelessness and then senior adviser for housing and services at the Department of Housing and Urban Development in the Obama administration.

Ho says she stepped into an organization that had already made a commitment to increasing its lending to households of color. “We lend at about twice the industry rate to first-time home buyers of color,” she says. “We did it through a lot of intentionality around our products, our partners, and our policies. I inherited that. That’s a great thing to build off of.”

The COVID-19 pandemic also has opened eyes about the role of housing. Ho points out that Walz was quick to act with an eviction moratorium, and, in Hennepin County, the state’s largest county, there’s been a dramatic reduction in family homelessness. A recent Star Tribune article reported that 400 homeless Minnesotans found permanent housing after being moved into hotels, where they were connected with services and housing programs. In Hennepin County, more than 1,100 people have moved through the hotels and nearly 200 have moved into apartments since last spring.

“It makes you imagine what impact we can have on family homelessness if we had better emergency assistance in the state like the federal stimulus packages have created,” she says. “Could we actually stop the constant movement of families, the disruption in school attendance for young children?”

Oregon Housing and Community Services

Leaders at Oregon Housing and Community Services (OHCS) have been looking at their work through an equity and racial justice lens prior to the global reckoning that took place in 2020.

Margaret Salazar
Margaret Salazar

In its Statewide Housing Plan that was adopted in 2019, the agency lists equity and racial justice as a priority. “We have specific goals around homeownership finance and reaching more home buyers of color as well as the work we do around homelessness,” says Margaret Salazar, OHCS executive director. “More specifically, it’s about engaging new business partners, culturally specific organizations, people of color-led development partners, and others. We’ve been on a journey to embrace and do that work.”

For example, in the current legislature, there’s a bill (HB 2100) that would open up the state’s homeless services funding for the first time to enable OHCS to contract directly with culturally specific organizations, she says. This would be a significant change from the longtime system of funneling money through 18 local Community Action Partnerships.

In the development space, OHCS has been looking at who is able to successfully compete for its funding, who is building its affordable housing projects, and who is accessing the housing, according to Salazar.

In the competition for LIHTCs, the agency awards points to projects that involve partners with culturally specific organizations. “When we say partnering, we want to be clear that there is an economic partnership, that the culturally specific organization gets to benefit economically from what they bring to the table,” says Julie Cody, OHCS director of affordable rental housing.

In the last revision of the QAP in 2019, OHCS created a 10% set-aside for tribal projects. This aims to support developments sponsored by tribal governments, tribally designated housing entities, or tribal corporate entities on tribal trust land. The agency wants to see that tribal entities are included in the partnership structure that owns the single-asset entity, say officials.

Oregon’s QAP also awards points for meaningful resident services partnerships, including having a culturally responsive service provider.

Oregon housing leaders are also looking at how developers are engaging with minority-led, women-led, and emerging or small businesses (MWESB). It is exploring ways to implement potential targets and track information, according to Cody.

Stipulated in Oregon’s QAP is the requirement that all applicants disclose their own and their general contractor’s experience in soliciting MWESB subcontractors and professional services. Additionally, they are required to provide historical participation rate track records and targets for the proposed project. The last important component of application evaluation is the requirement to draft a plan to solicit MWESB firms congruent with the project location’s availability and context.

Beyond the application requirements, awardees are required via the QAP to submit MWESB reporting throughout the construction, lease-up, and finalization of the deal.

The agency updates its QAP every two years and will begin the latest review this year.

In another move, OHCS has been working to develop and improve housing for agricultural workers, including creating non-congregate shelter opportunities during the COVID-19 pandemic.

In addition to the health crisis, Oregon suffered devastating wildfires last year, and the agricultural worker population, including Latinx and immigrant populations, were severely impacted by those fires, says Salazar.

“We’re trying to be thoughtful about how to use not only our LIHTC program but some of our state financing programs and our state tax credit to reach the ag worker population,” she says. “We’ve asked our legislature for an increase in our agricultural worker housing tax credit, and we’re doing an ag worker study as well. We need to understand the housing needs, and they’re shifting dramatically with our housing crisis and the recent wildfires.”