Date of enactment: June 22, 2023
2023 Assembly Bill 268 Date of publication*: June 23, 2023
2023 WISCONSIN ACT 18
AN ACT to create 234.662 of the statutes; relating to: commercial−to−housing conversion revolving loan fund and
loan program.
The people of the state of Wisconsin, represented in
senate and assembly, do enact as follows:
SECTION 1. 234.662 of the statutes is created to read:
234.662 Commercial−to−housing conversion
revolving loan fund and loan program. (1) DEFINI-
TIONS. In this section:
(a) “Area median income” means the area median
family income in the county in which the housing is
located, adjusted for family size, as published annually
by the federal department of housing and urban develop-
ment.
(b) “Commercial” means nonresidential.
(c) “Developer” means a person other than a city, vil-
lage, town, or county, that converts a vacant commercial
building to residential use.
(d) “Eligible political subdivision” means the city,
village, town, or county having jurisdiction of an eligible
project, as determined by the authority.
(e) “Eligible project” means a construction project
for the conversion of a vacant commercial building to a
new residential housing development that consists of
workforce housing or senior housing if all of the follow-
ing apply:
1. The building has been vacant for at least one year
or has been underutilized, as determined by the authority.
2. The building’s current zoning permits a residential
use.
3. The building has not been the subject of a claim for
a state or federal historic rehabilitation tax credit, as
determined by the authority.
4. The building has not received financial assistance
from tax increments generated by an active tax incremen-
tal district.
(f) “Residential housing” means single−family or
multifamily housing for rent or sale that is subject to taxa-
tion under ch. 70.
(g) “Residential housing development” means resi-
dential housing that consists of 16 or more dwelling units.
(h) “Senior housing” means residential housing that
satisfies par. (i) 1. to 4. that is intended and operated pri-
marily for occupancy by at least one person 55 years of
age or older per dwelling unit, as determined by the
authority.
(i) “Workforce housing” means residential housing
that satisfies all of the following, as determined by the
authority.
1. For housing intended to be rented, the estimated
annual housing costs, as defined under s. 16.301 (3), do
not exceed, or are not expected to exceed, 30 percent of
100 percent of the area median income, with family size
determined using the federal imputed income limitation,
as defined in 26 USC 42 (g) (2) (C), and the utility−
related costs if not included in the rent equal the utility
* Section 991.11, WISCONSIN STATUTES: Effective date of acts. “Every act and every portion of an act enacted by the legislature over the governor’s
partial veto which does not expressly prescribe the time when it takes effect shall take effect on the day after its date of publication.” − 2 −2023 Wisconsin Act 18 2023 Assembly Bill 268
allowance determined by the federal department of hous-
ing and urban development.
2. For housing intended to be occupied by the owner,
the estimated annual housing costs, as defined under s.
16.301 (3), do not exceed, or are not expected to exceed,
30 percent of 140 percent of the area median income,
with family size determined using the federal imputed
income limitation, as defined in 26 USC 42 (g) (2) (C).
3. For housing intended to be rented, the housing is
for occupancy by individuals whose annual household
income does not exceed 100 percent of the area median
income.
4. For housing intended to be occupied by the owner,
the housing is for purchase by individuals whose annual
household income is not more than 140 percent of the
area median income.
(2) ESTABLISHMENT OF FUND. (a) There is established
under the jurisdiction and control of the authority a com-
mercial−to−housing conversion revolving loan fund, for
the purpose of providing loans under sub. (3). The
authority may use moneys in the fund to cover actual and
necessary expenses incurred to accomplish the purposes
of this section, including marketing expenses under sub.
(4), and administer the fund. The fund shall consist of all
of the following:
1. All moneys appropriated to the authority for the
fund.
2. All moneys received from the repayment of loans
under sub. (3).
(am) In its discretion, the authority may invest fund
moneys that are not required for immediate use or dis-
bursement in all of the following to the extent lawful for
fiduciaries in this state:
1. An obligation of the United States or one of its
agencies or instrumentalities, or an obligation the princi-
pal and interest of which are guaranteed by the United
States or one of its agencies or instrumentalities.
2. An obligation of any state, or of any county, city,
or other political subdivision of a state, having long−term
ratings in the AA category or higher.
3. A certificate of deposit.
4. The state investment fund.
5. A money market mutual fund restricted to one or
more investments as provided in subd. 1., 2., 3., or 4.
(an) All investments under par. (am) shall be the
exclusive property of the fund. All earnings on or income
from such investments shall be credited to the fund.
(b) Of the amounts deposited in the fund under par.
(a) 1. in the 2023−25 fiscal biennium, the authority shall
return to the secretary of administration for deposit in the
general fund all such amounts not encumbered or
expended for an eligible project as of the first day of the
8th year beginning after the effective date of this para-
graph .... [LRB inserts date].
(c) No moneys in the fund may be invested under s.
234.03 (18).
(3) ESTABLISHMENT AND ADMINISTRATION OF REVOLV-
ING LOAN PROGRAM. (a) The authority shall establish and
administer a commercial−to−housing conversion revolv-
ing loan program for the purpose of awarding loans under
this subsection.
(b) From the commercial−to−housing conversion
revolving loan fund, the authority may award loans to
developers to cover construction costs for an eligible
project, including demolition. Any developer may apply
to the authority for a loan in accordance with the applica-
tion process established by the authority under par. (c),
but the authority may not award the loan unless the devel-
oper and the eligible political subdivision demonstrate to
the satisfaction of the authority in one or more forms pre-
scribed by the authority that all of the following apply:
1. The developer has secured the necessary financial
resources for the total cost of the eligible project not to be
covered by a loan from the authority under this subsec-
tion.
2. The developer has secured all applicable federal,
state, and local government permits or other approvals
for the eligible project.
3. The eligible political subdivision has reduced the
cost of residential housing in connection with the eligible
project by voluntarily revising zoning ordinances, subdi-
vision regulations, or other land development regulations
to increase development density, expedite approvals,
reduce impact, water connection, and inspection fees, or
reduce parking, building, or other development costs
with respect to the development of residential housing
supported by the project. For purposes of this subdivi-
sion, the political subdivision in cooperation with the
developer shall submit to the authority a cost reduction
analysis in a form prescribed by the authority and signed
by the developer and the head of the political subdivi-
sion’s governing body that shows the cost reduction mea-
sures, including time saving measures, undertaken by the
political subdivision on or after January 1, 2023, that
have reduced the cost of residential housing in connec-
tion with the eligible project. The signed analysis shall
clearly show for each time saving or cost reduction mea-
sure the estimated time or dollar amount saved by the
developer and the estimated percentage reduction in
housing costs.
4. The eligible political subdivision is in compliance
with the requirements under ss. 66.1001, 66.10013, and
66.10014, to the extent those requirements apply to the
political subdivision.
5. The eligible political subdivision has updated the
housing element of its comprehensive plan under s.
66.1001 (2) (b) within the 5 years immediately preceding
the date of the loan application.
(c) The authority shall establish a semiannual appli-
cation process for the award of loans under this subsec-
tion. If in any application cycle there are insufficient
moneys available in the commercial−to−housing conver- − 3 − 2023 Wisconsin Act 18 2023 Assembly Bill 268
sion revolving loan fund to fund all applications that meet
the requirements under par. (b) and are otherwise accept-
able to the authority, the authority shall prioritize funding
loans for eligible projects in eligible political subdivi-
sions that have reduced the cost of residential housing as
described in par. (b) 3. but with respect to the political
subdivision as a whole.
(d) 1. The authority may establish an interest rate for
any loan awarded under this subsection at or below the
market interest rate or may charge no interest.
2. No loan awarded under this subsection may exceed
$1,000,000 per eligible project or 20 percent of the total
project costs, including any land purchase, whichever is
less.
(e) The authority shall set aside 25 percent of all mon-
eys deposited in the fund under sub. (2) (a) 1. in the
2023−25 fiscal biennium for a period of not less than 4
years following the effective date of this paragraph ....
[LRB inserts date], for loans under this subsection for eli-
gible projects for senior housing. For purposes of this
paragraph, if a loan supports both workforce housing and
senior housing, the amount of such loan supporting
senior housing shall be calculated by prorating the loan
amount between the 2 uses based on the number of resi-
dential housing units supported by the loan.
(f) The authority shall set aside 30 percent of all mon-
eys deposited in the fund under sub. (2) (a) 1. in the
2023−25 fiscal biennium, including 30 percent of all
moneys set aside under par. (e), for a period of not less
than 4 years following the effective date of this paragraph
.... [LRB inserts date], for loans under this subsection to
developers for eligible projects in cities, villages, and
towns with a population of 10,000 or less. For purposes
of this paragraph, if a single loan supports eligible proj-
ects in more than one city, village, or town, the amount
of such loan attributable to any one city, village, or town
shall be calculated by prorating the loan amount between
the cities, villages, and towns based on the number of res-
idential housing units supported by the loan.
(g) 1. The authority and each developer receiving a
loan under this subsection shall enter into an agreement
establishing the term and other conditions of the loan.
The agreement shall include, and give the authority the
power to enforce, all of the following requirements:
a. That the full amount of the loan shall become due
upon the developer’s sale or transfer of all residential
housing constructed in connection with the loan.
b. That all residential housing constructed in connec-
tion with the loan shall remain workforce housing or
senior housing, as applicable, for a period commencing
on the date of the loan and concluding 10 years following
initial occupancy of the residential housing constructed
in connection with the loan. This restriction shall be
recorded against the residential property with the appli-
cable register of deeds and shall run with the land.
c. With respect to each loan under this subsection for
workforce housing or senior housing intended for rent,
that the owner of the rental housing, for a period com-
mencing on the date of the loan and concluding 10 years
following initial occupancy of all of the rental units con-
structed in connection with the loan, shall annually sub-
mit to the authority a certified rent roll for the housing
that sets forth for each rental unit the monthly rent
required under the lease, the actual monthly rent received
for the preceding year, and an identification of the utili-
ties and their amounts included in the rent. This restric-
tion shall be recorded against the residential property
with the applicable register of deeds and shall run with
the land. The authority shall use the information pro-
vided under this subd. 1. c. to confirm that the rental hous-
ing continues to meet the housing costs limitation for pur-
poses of sub. (1) (h) and (i) 1. The authority shall
calculate the applicable monthly limitation on housing
costs for each year by dividing the area median income
for the year by 12, with family size determined using the
federal imputed income limitation, as defined in 26 USC
42 (g) (2) (C). If in any year the area median income has
decreased compared to the prior year, the applicable
housing cost limitation shall be calculated based on the
most recent area median income information prior to
such decrease. The authority shall keep confidential all
information an owner of rental housing submits to the
authority under this subd. 1. c.
d. With respect to each loan under this subsection for
workforce housing or senior housing intended to be own-
er−occupied, that for the 10−year period commencing
immediately after the developer closes on the sale of the
housing to the initial owner−occupier, the housing shall
remain owner−occupied and may not be sold for a price
that exceeds the price charged by the developer to the ini-
tial owner−occupier, adjusted annually by the average
compounded annual percentage increase in the sale price
of all residential housing in the county in which the hous-
ing is located, as determined by the authority. These
restrictions shall be recorded against the residential prop-
erty with the applicable register of deeds and shall run
with the land. For the 10−year period, the authority shall
publish on its website the acceptable sales price range for
the residential property.
e. If a vacant commercial building contains lead
paint, asbestos, or mold, the authority’s loan agreement
with the developer shall require the developer to remedi-
ate the hazardous material or condition as required by and
in accordance with local, state, and federal laws or regu-
lations.
2. Any restriction recorded against the property
under subd. 1. shall terminate on the date the property is
acquired by foreclosure, or by an instrument in lieu of
foreclosure, unless the authority determines that the − 4 −2023 Wisconsin Act 18 2023 Assembly Bill 268
acquisition is part of an arrangement a purpose of which
is to terminate the restriction.
(h) In addition to other criteria explicitly provided for
under this subsection, in awarding each loan under this
subsection, the authority shall take into account only the
following in descending order of priority:
1. Credit risk, collateral, and the need for a loan guar-
antee.
2. The estimated reduction in housing costs.
3. The need for workforce housing or senior housing
in the area.
(3m) POLICIES AND PROCEDURES. The authority shall
establish policies and procedures to administer the com-
mercial−to−housing conversion revolving loan fund and
program under this section. The policies and procedures
shall, to the extent practicable, do all of the following:
(a) Incorporate the authority’s policies and proce-
dures for establishing credit underwriting guidelines.
(b) Require that the full amount of each loan awarded
under sub. (3) is secured by one or more unlimited per-
sonal guarantees, unless the developer provides no per-
sonal guarantee on any first mortgage for the eligible
project and the developer’s total debt associated with the
project does not exceed 75 percent of the total collateral
value of the project, as determined by the authority.
(c) Establish loan repayment requirements.
(4) MARKETING. The authority shall establish and
administer a marketing program to advertise the loans
available under this section.
(5) ANNUAL REPORTS. Beginning in 2024, no later
than August 1 of each year, the authority shall submit to
the joint committee on finance and under s. 13.172 (3) to
the standing committees of the legislature having juris-
diction over matters related to housing a report that
includes all of the following:
(a) A statement of the condition and balance of the
commercial−to−housing conversion revolving loan
fund.
(b) Information concerning each loan awarded under
sub. (3), including all of the following:
1. The date, amount, amortization period, and current
status of the loan.
2. An identification of the developer receiving the
loan.
3. A description of the eligible project funded with
the loan, including whether the project is for workforce
housing or senior housing.
4. An identification of the eligible political subdivi-
sion with respect to which the loan was awarded.
(c) The number of dwelling units created to date as
a result of the loan program, the locations and sale or
rental prices of the dwelling units, and whether the
dwelling units constitute workforce housing or senior
housing.