Wisconsin 2023-2024 Regular Session

Wisconsin Assembly Bill AB268 Compare Versions

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3	3	2023 - 2024 LEGISLATURE
4	4	2023 ASSEMBLY BILL 268
5	5	May 16, 2023 - Introduced by Representatives SUMMERFIELD, BROOKS, EMERSON,
6	6	STEFFEN, C. ANDERSON, BEHNKE, BRANDTJEN, DITTRICH, DOYLE, DUCHOW,
7	7	EDMING, GREEN, JOERS, KITCHENS, MOSES, MURPHY, ORTIZ-VELEZ, PENTERMAN,
8	8	PETRYK, PLUMER, RETTINGER, SCHRAA, SHANKLAND, SINICKI, SNYDER,
9	9	SWEARINGEN, WICHGERS and KRUG, cosponsored by Senators FEYEN, QUINN,
10	10	JACQUE, JAGLER and NASS. Referred to Committee on Housing and Real Estate.
11	11	*AUTHORS SUBJECT TO CHANGE*
12	12	AN ACT to create 234.662 of the statutes; relating to: commercial-to-housing
13	13	conversion revolving loan fund and loan program.
14	14	Analysis by the Legislative Reference Bureau
15	15	This bill establishes a commercial-to-housing conversion revolving loan fund
16	16	under the jurisdiction and control of the Wisconsin Housing and Economic
17	17	Development Authority. The purpose of the fund is for WHEDA to award loans as
18	18	provided in the bill to developers for the conversion of vacant commercial buildings
19	19	to new residential developments consisting of workforce or senior housing and
20	20	containing at least 16 dwelling units. The bill requires WHEDA, for a period of four
21	21	years, to set aside 25 percent of any moneys appropriated to the fund in the 2023-25
22	22	fiscal biennium for commercial-to-housing conversion projects supporting senior
23	23	housing.
24	24	The bill includes definitions of both workforce housing and senior housing.
25	25	Workforce housing is defined for both rental and owner-occupied housing based on
26	26	the ratio of housing costs and the ratio of household income to the area median
27	27	income of the county in which the housing is located, adjusted for family size, as
28	28	published annually by the federal Department of Housing and Urban Development.
29	29	Under the bill, senior housing is housing that satisfies the definition of workforce
30	30	housing but is intended and operated primarily for occupancy by at least one person
31	31	55 years of age or older per dwelling unit.
32	32	In accordance with a semiannual application process established by WHEDA,
33	33	a residential housing developer may apply to WHEDA for a loan under the program,
34	34	but WHEDA may not award the loan unless the developer and the political
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39	39	subdivision having jurisdiction of the commercial-to-housing conversion project
40	40	demonstrate to the satisfaction of WHEDA in one or more forms prescribed by
41	41	WHEDA that all of the following apply:
42	42	1. The developer has secured the necessary financial resources for the total cost
43	43	of development of the residential housing supported by the eligible project.
44	44	2. The developer has secured all applicable federal, state, and local government
45	45	permits or other approvals for the eligible project and the residential housing
46	46	supported by the eligible project.
47	47	3. The eligible political subdivision has reduced the cost of residential housing
48	48	in connection with the specific commercial-to-housing conversion project to be
49	49	funded by the loan by voluntarily revising zoning ordinances, subdivision
50	50	regulations, or other land development regulations to increase development density,
51	51	expedite approvals, reduce impact fees, or reduce parking, building, or other
52	52	development costs with respect to the construction of residential housing supported
53	53	by the project.
54	54	4. The eligible political subdivision is in compliance with certain statutory
55	55	housing planning and reporting requirements.
56	56	5. The eligible political subdivision has updated the housing element of its
57	57	comprehensive plan required by statute within the immediately preceding five
58	58	years.
59	59	If in any application cycle there are insufficient moneys available in the
60	60	commercial-to-housing conversion revolving loan fund to fund all applications that
61	61	meet the requirements of the bill and are otherwise acceptable to WHEDA, WHEDA
62	62	is required to prioritize funding loans for eligible projects in eligible political
63	63	subdivisions that have reduced the cost of residential housing as described in item
64	64	3 above with respect to the political subdivision as a whole.
65	65	The bill prohibits WHEDA from charging any interest on a loan awarded to a
66	66	developer under the bill and limits the amount of each loan to the lesser of $1,000,000
67	67	per eligible project or 20 percent of the total project costs.
68	68	The bill requires that WHEDA enter into an agreement with each developer
69	69	receiving a loan under the bill that establishes the term and other conditions of the
70	70	loan. The agreement is required to include certain provisions, some of which are to
71	71	be recorded with the applicable register of deeds and to run with the land, that are
72	72	designed to ensure that the residential housing constructed in connection with a loan
73	73	remains workforce or senior housing for at least 10 years, whether rental or
74	74	owner-occupied, that require owner-occupied residential housing constructed in
75	75	connection with a loan to remain owner-occupied for at least 10 years, and that limit
76	76	for a 10-year period the sales price of such owner-occupied residential housing,
77	77	adjusted annually by the average compounded annual percentage increase in the
78	78	sale price of all residential housing in the county in which the housing is located, as
79	79	determined by WHEDA.
80	80	In addition to the requirement described above that WHEDA set aside for
81	81	senior housing 25 percent of any moneys appropriated to the fund in the 2023-25
82	82	fiscal biennium, the bill provides that WHEDA must, for a period of four years, set - 3 -2023 - 2024 Legislature
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86	86	aside 30 percent of such moneys for commercial-to-housing conversion projects in
87	87	cities, villages, and towns with a population of 10,000 or less.
88	88	Finally, the bill requires that WHEDA take actions to market the availability
89	89	of loans under the bill and to submit annual reports to the Joint Committee on
90	90	Finance and legislative committees having jurisdiction over housing relating to the
91	91	loan program and the commercial-to-housing conversion revolving loan fund
92	92	created under the bill.
93	93	Because this bill may increase or decrease, directly or indirectly, the cost of the
94	94	development, construction, financing, purchasing, sale, ownership, or availability of
95	95	housing in this state, the Department of Administration, as required by law, will
96	96	prepare a report to be printed as an appendix to this bill.
97	97	For further information see the state fiscal estimate, which will be printed as
98	98	an appendix to this bill.
99	99	The people of the state of Wisconsin, represented in senate and assembly, do
100	100	enact as follows:
101	101	SECTION 1. 234.662 of the statutes is created to read:
102	102	234.662 Commercial-to-housing conversion revolving loan fund and
103	103	loan program. (1) DEFINITIONS. In this section:
104	104	(a) “Area median income" means the area median family income in the county
105	105	in which the housing is located, adjusted for family size, as published annually by
106	106	the federal department of housing and urban development.
107	107	(b) “Commercial” means nonresidential.
108	108	(c) “Developer” means a person other than a city, village, town, or county, that
109	109	converts a vacant commercial building to residential use.
110	110	(d) “Eligible political subdivision” means the city, village, town, or county
111	111	having jurisdiction of an eligible project, as determined by the authority.
112	112	(e) “Eligible project” means a construction project for the conversion of a vacant
113	113	commercial building to a new residential housing development that consists of
114	114	workforce housing or senior housing if all of the following apply:
115	115	1. The building has been vacant for at least one year.
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132	132	SECTION 1 ASSEMBLY BILL 268
133	133	2. The building is zoned for residential use.
134	134	(f) “Residential housing” means single-family or multifamily housing for rent
135	135	or sale that is subject to taxation under ch. 70.
136	136	(g) “Residential housing development” means residential housing that consists
137	137	of 16 or more dwelling units.
138	138	(h) “Senior housing” means residential housing that satisfies par. (i) 1. to 4. that
139	139	is intended and operated primarily for occupancy by at least one person 55 years of
140	140	age or older per dwelling unit, as determined by the authority.
141	141	(i) “Workforce housing” means residential housing that satisfies all of the
142	142	following, as determined by the authority.
143	143	1. For housing intended to be rented, the estimated annual housing costs, as
144	144	defined under s. 16.301 (3), do not exceed, or are not expected to exceed, 30 percent
145	145	of 100 percent of the area median income, with family size determined using the
146	146	federal imputed income limitation, as defined in 26 USC 42 (g) (2) (C), and the
147	147	utility-related costs if not included in the rent equal the utility allowance
148	148	determined by the federal department of housing and urban development.
149	149	2. For housing intended to be occupied by the owner, the estimated annual
150	150	housing costs, as defined under s. 16.301 (3), do not exceed, or are not expected to
151	151	exceed, 30 percent of 140 percent of the area median income, with family size
152	152	determined using the federal imputed income limitation, as defined in 26 USC 42 (g)
153	153	(2) (C).
154	154	3. For housing intended to be rented, the housing is for occupancy by
155	155	individuals whose annual household income does not exceed 100 percent of the area
156	156	median income.
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183	183	SECTION 1
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185	185	4. For housing intended to be occupied by the owner, the housing is for purchase
186	186	by individuals whose annual household income is not more than 140 percent of the
187	187	area median income.
188	188	(2) ESTABLISHMENT OF FUND. (a) There is established under the jurisdiction and
189	189	control of the authority a commercial-to-housing conversion revolving loan fund, for
190	190	the purpose of providing loans under sub. (3). The authority may use moneys in the
191	191	fund to cover actual and necessary expenses incurred to accomplish the purposes of
192	192	this section, including marketing expenses under sub. (4), and administer the fund.
193	193	The fund shall consist of all of the following:
194	194	1. All moneys appropriated to the authority for the fund.
195	195	2. All moneys received from the repayment of loans under sub. (3).
196	196	(b) Of the amounts deposited in the fund under par. (a) 1. in the 2023-25 fiscal
197	197	biennium, the authority shall return to the secretary of administration for deposit
198	198	in the general fund all such amounts not encumbered or expended for an eligible
199	199	project as of the first day of the 8th year beginning after the effective date of this
200	200	paragraph .... [LRB inserts date].
201	201	(c) No moneys in the fund may be invested under s. 234.03 (18).
202	202	(3) ESTABLISHMENT AND ADMINISTRATION OF REVOLVING LOAN PROGRAM. (a) The
203	203	authority shall establish and administer a commercial-to-housing conversion
204	204	revolving loan program for the purpose of awarding loans under this subsection.
205	205	(b) From the commercial-to-housing conversion revolving loan fund, the
206	206	authority may award loans to developers to cover construction costs for an eligible
207	207	project, including demolition. Any developer may apply to the authority for a loan
208	208	in accordance with the application process established by the authority under par.
209	209	(c), but the authority may not award the loan unless the developer and the eligible
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236	236	SECTION 1 ASSEMBLY BILL 268
237	237	political subdivision demonstrate to the satisfaction of the authority in one or more
238	238	forms prescribed by the authority that all of the following apply:
239	239	1. The developer has secured the necessary financial resources for the total cost
240	240	of the eligible project not to be covered by a loan from the authority under this
241	241	subsection.
242	242	2. The developer has secured all applicable federal, state, and local government
243	243	permits or other approvals for the eligible project.
244	244	3. The eligible political subdivision has reduced the cost of residential housing
245	245	in connection with the eligible project by voluntarily revising zoning ordinances,
246	246	subdivision regulations, or other land development regulations to increase
247	247	development density, expedite approvals, reduce impact, water connection, and
248	248	inspection fees, or reduce parking, building, or other development costs with respect
249	249	to the development of residential housing supported by the project. For purposes of
250	250	this subdivision, the political subdivision in cooperation with the developer shall
251	251	submit to the authority a cost reduction analysis in a form prescribed by the
252	252	authority and signed by the developer and the head of the political subdivision's
253	253	governing body that shows the cost reduction measures, including time saving
254	254	measures, undertaken by the political subdivision on or after January 1, 2023, that
255	255	have reduced the cost of residential housing in connection with the eligible project.
256	256	The signed analysis shall clearly show for each time saving or cost reduction measure
257	257	the estimated time or dollar amount saved by the developer and the estimated
258	258	percentage reduction in housing costs.
259	259	4. The eligible political subdivision is in compliance with the requirements
260	260	under ss. 66.1001, 66.10013, and 66.10014, to the extent those requirements apply
261	261	to the political subdivision.
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291	291	5. The eligible political subdivision has updated the housing element of its
292	292	comprehensive plan under s. 66.1001 (2) (b) within the 5 years immediately
293	293	preceding the date of the loan application.
294	294	(c) The authority shall establish a semiannual application process for the
295	295	award of loans under this subsection. If in any application cycle there are insufficient
296	296	moneys available in the commercial-to-housing conversion revolving loan fund to
297	297	fund all applications that meet the requirements under par. (b) and are otherwise
298	298	acceptable to the authority, the authority shall prioritize funding loans for eligible
299	299	projects in eligible political subdivisions that have reduced the cost of residential
300	300	housing as described in par. (b) 3. but with respect to the political subdivision as a
301	301	whole.
302	302	(d) 1. The authority shall charge no interest on a loan awarded under this
303	303	subsection.
304	304	2. No loan awarded under this subsection may exceed $1,000,000 per eligible
305	305	project or 20 percent of the total project costs, including any land purchase,
306	306	whichever is less.
307	307	(e) The authority shall set aside 25 percent of all moneys deposited in the fund
308	308	under sub. (2) (a) 1. in the 2023-25 fiscal biennium for a period of not less than 4 years
309	309	following the effective date of this paragraph .... [LRB inserts date], for loans under
310	310	this subsection for eligible projects for senior housing. For purposes of this
311	311	paragraph, if a loan supports both workforce housing and senior housing, the
312	312	amount of such loan supporting senior housing shall be calculated by prorating the
313	313	loan amount between the 2 uses based on the number of residential housing units
314	314	supported by the loan.
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340	340	SECTION 1 ASSEMBLY BILL 268
341	341	(f) The authority shall set aside 30 percent of all moneys deposited in the fund
342	342	under sub. (2) (a) 1. in the 2023-25 fiscal biennium, including 30 percent of all
343	343	moneys set aside under par. (e), for a period of not less than 4 years following the
344	344	effective date of this paragraph .... [LRB inserts date], for loans under this subsection
345	345	to developers for eligible projects in cities, villages, and towns with a population of
346	346	10,000 or less. For purposes of this paragraph, if a single loan supports eligible
347	347	projects in more than one city, village, or town, the amount of such loan attributable
348	348	to any one city, village, or town shall be calculated by prorating the loan amount
349	349	between the cities, villages, and towns based on the number of residential housing
350	350	units supported by the loan.
351	351	(g) 1. The authority and each developer receiving a loan under this subsection
352	352	shall enter into an agreement establishing the term and other conditions of the loan.
353	353	The agreement shall include, and give the authority the power to enforce, all of the
354	354	following requirements:
355	355	a. That the full amount of the loan shall become due upon the developer's sale
356	356	or transfer of all residential housing constructed in connection with the loan.
357	357	b. That all residential housing constructed in connection with the loan shall
358	358	remain workforce housing or senior housing, as applicable, for a period commencing
359	359	on the date of the loan and concluding 10 years following initial occupancy of the
360	360	residential housing constructed in connection with the loan. This restriction shall
361	361	be recorded against the residential property with the applicable register of deeds and
362	362	shall run with the land.
363	363	c. With respect to each loan under this subsection for workforce housing or
364	364	senior housing intended for rent, that the owner of the rental housing, for a period
365	365	commencing on the date of the loan and concluding 10 years following initial
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393	393	SECTION 1
394	394	ASSEMBLY BILL 268
395	395	occupancy of all of the rental units constructed in connection with the loan, shall
396	396	annually submit to the authority a certified rent roll for the housing that sets forth
397	397	for each rental unit the monthly rent required under the lease, the actual monthly
398	398	rent received for the preceding year, and an identification of the utilities and their
399	399	amounts included in the rent. This restriction shall be recorded against the
400	400	residential property with the applicable register of deeds and shall run with the land.
401	401	The authority shall use the information provided under this subd. 1. c. to confirm
402	402	that the rental housing continues to meet the housing costs limitation for purposes
403	403	of sub. (1) (h) and (i) 1. The authority shall calculate the applicable monthly
404	404	limitation on housing costs for each year by dividing the area median income for the
405	405	year by 12, with family size determined using the federal imputed income limitation,
406	406	as defined in 26 USC 42 (g) (2) (C). If in any year the area median income has
407	407	decreased compared to the prior year, the applicable housing cost limitation shall be
408	408	calculated based on the most recent area median income information prior to such
409	409	decrease.
410	410	d. With respect to each loan under this subsection for workforce housing or
411	411	senior housing intended to be owner-occupied, that for the 10-year period
412	412	commencing immediately after the developer closes on the sale of the housing to the
413	413	initial owner-occupier, the housing shall remain owner-occupied and may not be
414	414	sold for a price that exceeds the price charged by the developer to the initial
415	415	owner-occupier, adjusted annually by the average compounded annual percentage
416	416	increase in the sale price of all residential housing in the county in which the housing
417	417	is located, as determined by the authority. These restrictions shall be recorded
418	418	against the residential property with the applicable register of deeds and shall run
419	419	with the land.
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446	446	SECTION 1 ASSEMBLY BILL 268
447	447	2. Any restriction recorded against the property under subd. 1. shall terminate
448	448	on the date the property is acquired by foreclosure, or by an instrument in lieu of
449	449	foreclosure, unless the authority determines that the acquisition is part of an
450	450	arrangement a purpose of which is to terminate the restriction.
451	451	(h) In addition to other criteria explicitly provided for under this subsection,
452	452	in awarding each loan under this subsection, the authority shall take into account
453	453	only the following in descending order of priority:
454	454	1. Credit risk, collateral, and the need for a loan guarantee.
455	455	2. The estimated reduction in housing costs.
456	456	3. The need for workforce housing or senior housing in the area.
457	457	(4) MARKETING. The authority shall establish and administer a marketing
458	458	program to advertise the loans available under this section.
459	459	(5) ANNUAL REPORTS. Beginning in 2024, no later than August 1 of each year,
460	460	the authority shall submit to the joint committee on finance and under s. 13.172 (3)
461	461	to the standing committees of the legislature having jurisdiction over matters
462	462	related to housing a report that includes all of the following:
463	463	(a) A statement of the condition and balance of the commercial-to-housing
464	464	conversion revolving loan fund.
465	465	(b) Information concerning each loan awarded under sub. (3), including all of
466	466	the following:
467	467	1. The date, amount, amortization period, and current status of the loan.
468	468	2. An identification of the developer receiving the loan.
469	469	3. A description of the eligible project funded with the loan, including whether
470	470	the project is for workforce housing or senior housing.
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499	499	4. An identification of the eligible political subdivision with respect to which
500	500	the loan was awarded.
501	501	(c) The number of dwelling units created to date as a result of the loan program,
502	502	the locations and sale or rental prices of the dwelling units, and whether the dwelling
503	503	units constitute workforce housing or senior housing.
504	504	(END)
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