Analysis by the Legislative Reference Bureau
The Wisconsin Housing and Economic Development Authority (WHEDA)
administers a number of loan guarantee programs under which WHEDA guarantees
collection of a percentage of the outstanding principal amounts of loans made by
private lenders to qualified borrowers for various business and agricultural
purposes. The majority of the programs are guaranteed with funds from the
Wisconsin development reserve fund. The limit on the amount of outstanding
guaranteed loan principal that WHEDA may guarantee under all of the programs
guaranteed by the Wisconsin development reserve fund is $49,500,000, although
WHEDA may request the joint committee on finance to approve an increase or a
decrease in that guarantee limit. On June 30 each year, WHEDA must transfer to
the general fund any balance remaining in the Wisconsin development reserve fund
after deducting an amount that is sufficient for paying outstanding claims and
funding guarantees at a ratio of $1 of reserve funding to $4.50 of total outstanding
guaranteed principal that WHEDA may guarantee under all of the programs.
Under this bill, for approximately six months, WHEDA is required to guarantee
collection of loans made by private lenders to certain airline companies, which are

described in the bill as those transporting persons on regularly scheduled flights,
those delivering personal property or packages by aircraft, and those operating
aircraft for the benefit of agribusiness. The loan proceeds must be used for working
capital or the purchase or improvement of land, buildings, machinery, equipment, or
inventory. The lender must take a security interest in the assets purchased with the
loan and must believe that it is reasonably likely that the borrower will be able to
repay the loan with interest. WHEDA must approve the loan's interest rate, and the
total guaranteed principal amount of all loans to a borrower that may be guaranteed
under the program may not exceed amounts specified in the bill. WHEDA may
guarantee up to 90% of the outstanding loan principal. The total outstanding
guaranteed principal amount of all loans that WHEDA may guarantee under the
program may not exceed $10,000,000.
The loans guaranteed under the new airline loan guarantee program are
guaranteed with funds from the Wisconsin development reserve fund, and the total
outstanding guaranteed principal amount that WHEDA may guarantee under all of
the programs guaranteed under that fund is increased to $59,500,000, subject to the
guarantee limit for the airline loan guarantee program. The bill directs WHEDA to
transfer $1,750,000 from its housing rehabilitation loan program administration
fund to the Wisconsin development reserve fund. In addition, the bill transfers
$475,000 to the Wisconsin development reserve fund from a department of commerce
general purpose revenue appropriation that funds various economic development
and technology loan and grant programs (commonly known as the Wisconsin
development fund). WHEDA may not request the joint committee on finance to
increase or decrease the guarantee limit for the airline loan guarantee program, and
when WHEDA annually transfers to the general fund the balance remaining in the
Wisconsin development reserve fund after deducting amounts for paying claims and
funding guarantees, WHEDA must deduct an amount sufficient for funding
guarantees under the airline loan guarantee program at a ratio of $1 of reserve
funding to $1 of total outstanding guaranteed principal that WHEDA may guarantee
under that program.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB576, s. 1 1Section 1. 20.005 (3) (schedule) of the statutes: at the appropriate place, insert
2the following amounts for the purposes indicated: - See PDF for table PDF
AB576, s. 2 1Section 2. 20.143 (1) (c) of the statutes, as affected by 2001 Wisconsin Act 16,
2is amended to read:
AB576,3,183 20.143 (1) (c) Wisconsin development fund; grants, loans, reimbursements, and
4assistance.
Biennially, the amounts in the schedule for grants under ss. 560.145,
5560.16, 560.175, and 560.26; for grants and loans under ss. 560.62, 560.63, and
6560.66; for loans under s. 560.147; for reimbursements under s. 560.167; for
7providing assistance under s. 560.06; for the costs specified in s. 560.607; for the loan
8under 1999 Wisconsin Act 9, section 9110 (4); for the grants under 1995 Wisconsin
9Act 27
, section 9116 (7gg), 1995 Wisconsin Act 119, section 2 (1), 1997 Wisconsin Act
1027
, section 9110 (6g), and 1999 Wisconsin Act 9, section 9110 (5) ; and for providing
11up to $100,000 annually for the continued development of a manufacturing and
12advanced technology training center in Racine; and to transfer to the appropriation
13account under s. 20.490 (7) (k) in fiscal year 2001-02 the amounts in the schedule
14under s. 20.490 (7) (k)
. Of the amounts in the schedule, $50,000 shall be allocated
15in each of fiscal years 1997-98 and 1998-99 for providing the assistance under s.
16560.06 (1). Notwithstanding s. 560.607, of the amounts in the schedule, $125,000
17shall be allocated in each of 4 consecutive fiscal years, beginning with fiscal year
181998-99, for grants and loans under s. 560.62 (1) (a).
AB576, s. 3
1Section 3 . 20.143 (1) (c) of the statutes, as affected by 2001 Wisconsin Act ....
2(this act), is amended to read:
AB576,4,183 20.143 (1) (c) Wisconsin development fund; grants, loans, reimbursements, and
4assistance.
Biennially, the amounts in the schedule for grants under ss. 560.145,
5560.16, 560.175, and 560.26; for grants and loans under ss. 560.62, 560.63, and
6560.66; for loans under s. 560.147; for reimbursements under s. 560.167; for
7providing assistance under s. 560.06; for the costs specified in s. 560.607; for the loan
8under 1999 Wisconsin Act 9, section 9110 (4); for the grants under 1995 Wisconsin
9Act 27
, section 9116 (7gg), 1995 Wisconsin Act 119, section 2 (1), 1997 Wisconsin Act
1027
, section 9110 (6g), and 1999 Wisconsin Act 9, section 9110 (5) ; and for providing
11up to $100,000 annually for the continued development of a manufacturing and
12advanced technology training center in Racine; and to transfer to the appropriation
13account under s. 20.490 (7) (k) in fiscal year 2001-02 the amounts in the schedule
14under s. 20.490 (7) (k)
. Of the amounts in the schedule, $50,000 shall be allocated
15in each of fiscal years 1997-98 and 1998-99 for providing the assistance under s.
16560.06 (1). Notwithstanding s. 560.607, of the amounts in the schedule, $125,000
17shall be allocated in each of 4 consecutive fiscal years, beginning with fiscal year
181998-99, for grants and loans under s. 560.62 (1) (a).
AB576, s. 4 19Section 4. 20.490 (7) of the statutes is created to read:
AB576,4,2420 20.490 (7) Wisconsin airline loan guarantees. (k) Development fund transfer
21to reserve fund.
The amounts in the schedule to be transferred to the Wisconsin
22development reserve fund under s. 234.93. All moneys transferred from the
23appropriation account under s. 20.143 (1) (c) shall be credited to this appropriation
24account.
AB576, s. 5
1Section 5. 20.490 (7) of the statutes, as created by 2001 Wisconsin Act .... (this
2act), is repealed.
AB576, s. 6 3Section 6. 234.265 (2) of the statutes is amended to read:
AB576,5,104 234.265 (2) Records or portions of records consisting of personal or financial
5information provided by a person seeking a grant or loan under s. 234.08, 234.49,
6234.59, 234.61, 234.65, 234.67, 234.80, 234.83, 234.84, 234.90, 234.905, 234.907, or
7234.91, seeking a loan under ss. 234.621 to 234.626, seeking financial assistance
8under s. 234.66, seeking investment of funds under s. 234.03 (18m) , or in which the
9authority has invested funds under s. 234.03 (18m), unless the person consents to
10disclosure of the information.
AB576, s. 7 11Section 7. 234.51 (2) (d) of the statutes is created to read:
AB576,5,1312 234.51 (2) (d) To make the transfer under 2001 Wisconsin Act .... (this act),
13section 17 (1), to the Wisconsin development reserve fund under s. 234.93.
AB576, s. 8 14Section 8. 234.51 (2) (d) of the statutes, as created by 2001 Wisconsin Act ....
15(this act), is repealed.
AB576, s. 9 16Section 9. 234.80 of the statutes is created to read:
AB576,5,19 17234.80 Airline loan guarantees. (1) Guarantee requirements. The
18authority may use money from the Wisconsin development reserve fund to guarantee
19a loan under this section if all of the following apply:
AB576,5,2020 (a) The borrower qualifies as an eligible borrower under sub. (2).
AB576,5,2121 (b) The loan qualifies as an eligible loan under sub. (3).
AB576,5,2222 (c) The lender enters into an agreement under s. 234.93 (2) (a).
AB576,5,23 23(2) Eligible borrowers. Any of the following qualifies as an eligible borrower:
AB576,5,2524 (a) A person that is engaged in the business of transporting persons in aircraft,
25for hire, on regularly scheduled flights and that is headquartered in this state.
AB576,6,2
1(b) A person that is engaged in the business of delivering personal property or
2packages in aircraft and that is headquartered in this state.
AB576,6,43 (c) A person that is engaged in the business of operating aircraft for the benefit
4of agribusiness and that is headquartered in this state.
AB576,6,6 5(3) Eligible loans. A loan is eligible for guarantee of collection from the
6Wisconsin development reserve fund under s. 243.93 if all of the following apply:
AB576,6,87 (a) The borrower uses the loan proceeds for working capital or the purchase or
8improvement of land, buildings, machinery, equipment, or inventory.
AB576,6,109 (b) The interest rate on the loan, including any origination fees or other
10charges, is approved by the authority.
AB576,6,1211 (c) The lender obtains a security interest in the physical plant, equipment,
12machinery, or other assets.
AB576,6,1413 (d) The lender believes that it is reasonably likely that the borrower will be able
14to repay the loan in full with interest.
AB576,6,1615 (e) The lender agrees to the percentage of guarantee established for the loan
16by the authority.
AB576,6,1817 (f) The loan is closed no later than the first day of the 7th month beginning after
18the effective date of this paragraph .... [revisor inserts date].
AB576,6,2419 (g) With respect to a borrower under sub. (2) (a), the total guaranteed principal
20amount of all loans to the borrower that are guaranteed under this section does not
21exceed $4,500,000, except that, after reviewing all applications for guarantees that
22are received by the authority, the authority may, in its discretion, guarantee a total
23guaranteed principal amount of up to the amount specified in sub. (4) (b) in loans to
24a borrower under this paragraph.
AB576,7,3
1(h) With respect to a borrower under sub. (2) (b) or (c), the total guaranteed
2principal amount of all loans to the borrower that are guaranteed under this section
3does not exceed $100,000.
AB576,7,11 4(4) Guarantee of collection. (a) Subject to par. (b), on or before the first day
5of the 7th month beginning after the effective date of this paragraph .... [revisor
6inserts date], the authority shall guarantee collection of a percentage, not exceeding
790%, of the principal of any loan eligible for a guarantee under this section. The
8authority shall establish the percentage of the principal of an eligible loan that will
9be guaranteed, using the procedures described in the agreement under s. 234.93 (2)
10(a). The authority may establish a single percentage for all guaranteed loans or
11establish different percentages for eligible loans on an individual basis.
AB576,7,1312 (b) The total outstanding guaranteed principal amount of all loans that the
13authority may guarantee under par. (a) may not exceed $10,000,000.
AB576, s. 10 14Section 10. 234.93 (1) (cr) of the statutes is created to read:
AB576,7,1615 234.93 (1) (cr) Any moneys transferred under 2001 Wisconsin Act .... (this act),
16section 17 (1), from the housing rehabilitation loan program administration fund.
AB576, s. 11 17Section 11. 234.93 (3) (a) of the statutes, as created by 2001 Wisconsin Act 16,
18is amended to read:
AB576,7,2319 234.93 (3) (a) Except as provided in par. (b) and subject to s. 234.80 (4) (b), the
20total principal amount or total outstanding guaranteed principal amount of all loans
21that the authority may guarantee under the aggregate of the programs guaranteed
22by funds from the Wisconsin development reserve fund, excluding the program
23under s. 234.935, 1997 stats., may not exceed $49,500,000 $59,500,000.
AB576, s. 12 24Section 12. 234.93 (3) (b) of the statutes, as affected by 2001 Wisconsin Act 16,
25is amended to read:
AB576,8,12
1234.93 (3) (b) The authority may request the joint committee on finance to take
2action under s. 13.10 to permit the authority to increase or decrease the total
3principal amount or total outstanding guaranteed principal amount of loans that it
4may guarantee under the aggregate of the programs guaranteed by the Wisconsin
5development reserve fund, excluding the programs under s. 234.935, 1997 stats., and
6s. 234.80
. Included with its request, the authority shall provide a projection, for the
7next June 30, that compares the amounts required on that date to pay outstanding
8claims and to fund guarantees under the aggregate of the programs guaranteed by
9funds from the Wisconsin development reserve fund, and the balance remaining in
10the Wisconsin development reserve fund on that date after deducting such amounts,
11if the increase or decrease is approved, with such amounts and the balance
12remaining, if the increase or decrease is not approved.
AB576, s. 13 13Section 13. 234.93 (4) (a) 2. of the statutes is amended to read:
AB576,8,1814 234.93 (4) (a) 2. To fund guarantees under all of the programs guaranteed by
15funds from the Wisconsin development reserve fund, except for the program
16programs under s. 234.935, 1997 stats., and s. 234.80, at a ratio of $1 of reserve
17funding to $4.50 of total outstanding principal and outstanding guaranteed principal
18that the authority may guarantee under all of those programs.
AB576, s. 14 19Section 14. 234.93 (4) (a) 4. of the statutes is created to read:
AB576,8,2220 234.93 (4) (a) 4. To fund guarantees under the program under s. 234.80 at a
21ratio of $1 of reserve funding to $1 of total outstanding guaranteed principal that the
22authority may guarantee under that program.
AB576, s. 15 23Section 15. 234.93 (4m) of the statutes, as affected by 2001 Wisconsin Act 16,
24is amended to read:
AB576,9,4
1234.93 (4m) Limitation on loan guarantees. The authority shall regularly
2monitor the cash balance in the Wisconsin development reserve fund. The authority
3shall ensure that the cash balance in the fund is sufficient for the purposes specified
4in sub. (4) (a) 1., 2., and 3 to 4.
AB576, s. 16 5Section 16. 600.01 (1) (b) 8. of the statutes is amended to read:
AB576,9,96 600.01 (1) (b) 8. Guarantees of the Wisconsin Housing and Economic
7Development Authority under s. 234.68, 1995 stats., s. 234.69, 1995 stats., s.
8234.765, 1995 stats., s. 234.82, 1995 stats., s. 234.87, 1995 stats., and ss. 234.67,
9234.80, 234.83, 234.84, 234.90, 234.905, 234.907, and 234.91.
AB576, s. 17 10Section 17 . Nonstatutory provisions.
AB576,9,1311 (1) In fiscal year 2001-02, the Wisconsin Housing and Economic Development
12Authority shall transfer $1,750,000 from the housing rehabilitation loan program
13administration fund to the Wisconsin development reserve fund.
AB576, s. 18 14Section 18. Effective dates. This act takes effect on the day after publication,
15except as follows:
AB576,9,1716 (1) The repeal of section 20.490 (7) of the statutes and the amendment of section
1720.143 (1) (c) (by Section 3 ) of the statutes take effect on July 1, 2003.
AB576,9,1918 (2) The repeal of section 234.51 (2) (d) of the statutes takes effect on July 1,
192002.
AB576,9,2020 (End)
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