AB265: Bill Text

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2023 - 2024 LEGISLATURE

2023 Assembly BILL 265

May 16, 2023 - Introduced by Representatives Hurd, Brooks, Emerson, Snyder, Steffen, Rozar, Allen, C. Anderson, Behnke, Brandtjen, Dittrich, Donovan, Doyle, Duchow, Edming, Green, Gundrum, Joers, Kitchens, Murphy, O'Connor, Ortiz-Velez, Penterman, Petryk, Plumer, Rettinger, Schmidt, Schraa, Shankland, Sinicki, Swearingen, Wichgers and Krug, cosponsored by Senators Jagler, Quinn, Feyen, Jacque, Stroebel and Stafsholt. Referred to Committee on Housing and Real Estate.

AB265,1,2 An Act to create 234.661 of the statutes; relating to: a main street housing rehabilitation revolving loan fund and loan program.

Analysis by the Legislative Reference Bureau

This bill establishes a main street housing rehabilitation revolving loan fund under the jurisdiction and control of the Wisconsin Housing and Economic Development Authority. The purpose of the fund is for WHEDA to award loans as provided in the bill to owners of rental housing for eligible projects. A project is eligible under the bill if it is for housing rehabilitation of single-family or multifamily rental housing to which all of the following apply:

1. Is located on the second or third floor of an existing two- or three-story building with a commercial use on the main floor, if the space in the building that is devoted to a commercial use constitutes no more than two-thirds of the building's gross square footage.

2. Was constructed at least 40 years prior to the loan application.

3. Has not been significantly improved for at least 30 years prior to the loan application.

4. Is vacant or has been underutilized.

5. Constitutes workforce housing. The bill defines workforce housing based on the ratio of housing costs and the ratio of household income to the area median income of the county in which the rental housing is located, adjusted for family size, as published annually by the federal Department of Housing and Urban Development.

Under the bill, eligible housing rehabilitation consists of improvements to maintain the housing in a decent, safe, and sanitary condition or to restore it to that condition, including any of the following:

1. Repairing or replacing a heating system, electrical system, internal plumbing system, interior wall or ceiling, roof, window, exterior door, or flooring.

2. Repairing or replacing insulation or siding.

3. Remediating lead paint or asbestos.

In accordance with a semiannual application process established by WHEDA, an owner of rental housing may apply to WHEDA for a loan for an eligible project under the program, but WHEDA may not award the loan unless the rental housing owner and the political subdivision having jurisdiction of the housing rehabilitation project demonstrate to the satisfaction of WHEDA in one or more forms prescribed by WHEDA that all of the following apply:

1. The owner has secured has secured the necessary financial resources for the total cost of the housing rehabilitation project not to be covered by a loan from WHEDA.

2. The owner 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 rental housing in connection with the eligible project by voluntarily revising zoning ordinances, subdivision regulations, or other land development regulations to increase development density, expedite approvals, reduce impact fees, or reduce parking, building, or other development costs with respect to the eligible project.

4. The eligible political subdivision is in compliance with certain statutory housing planning and reporting requirements.

5. The eligible political subdivision has updated the housing element of its comprehensive plan required by statute within the immediately preceding five years.

If in any application cycle there are insufficient moneys available in the main street housing rehabilitation revolving loan fund to fund all applications that meet the requirements of the bill and are otherwise acceptable to WHEDA, WHEDA is required to prioritize funding loans for eligible projects in eligible political subdivisions that have reduced the cost of rental housing as described in item 3 above with respect to the political subdivision as a whole.

The bill requires that WHEDA enter into an agreement with each owner of rental housing receiving a loan under the bill that establishes the term and other conditions of the loan. The agreement is required to include certain provisions, some of which are to be recorded with the applicable register of deeds and to run with the land, that are designed to ensure that the rental housing rehabilitated using loan proceeds remains workforce housing for at least 10 years.

Additionally, the bill requires WHEDA, for a period of four years, to set aside 30 percent of any moneys appropriated to the fund in the 2023-25 fiscal biennium for rental housing rehabilitation projects in cities, villages, and towns with a population of 10,000 or less. The bill also limits the amount of each loan to $20,000 per dwelling unit or 25 percent of the total cost of the housing rehabilitation project, whichever is less.

Finally, the bill prohibits WHEDA from charging any interest on a loan, requires that WHEDA take actions to market the availability of loans under the bill, and requires WHEDA to submit annual reports to the Joint Committee on Finance and legislative committees having jurisdiction over housing relating to the loan program and the main street housing rehabilitation revolving loan fund created under the bill.

Because this bill may increase or decrease, directly or indirectly, the cost of the development, construction, financing, purchasing, sale, ownership, or availability of housing in this state, the Department of Administration, as required by law, will prepare a report to be printed as an appendix to this bill.

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:

AB265,1 Section 1. 234.661 of the statutes is created to read:

AB265,3,3 234.661 Main street housing rehabilitation revolving loan fund and loan program. (1) Definitions. In this section:

AB265,3,6 (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 development.

AB265,3,8 (b) “Eligible political subdivision” means the city, village, town, or county having jurisdiction of an eligible project, as determined by the authority.

AB265,3,10 (c) “Eligible project” means a project for housing rehabilitation of existing workforce housing that satisfies all of the following conditions:

AB265,3,14 1. Is located on the 2nd or 3rd floor of an existing 2-story or 3-story building with a commercial use on the main floor, if the space in the building that is devoted to a commercial use constitutes no more than two-thirds of the building's gross square footage.

AB265,4,2 2. Is located in a building that was constructed at least 40 years prior to the date of application under sub. (3) (b).

AB265,4,4 3. Has not been significantly improved for at least 30 years prior to the date of application under sub. (3) (b), as determined by the authority.

AB265,4,5 4. Is vacant or has been underutilized, as determined by the authority.

AB265,4,9 (d) “Housing rehabilitation” means that portion of an improvement to rental housing that relates to an eligible project if the improvement is to maintain the housing in a decent, safe, and sanitary condition or to restore it to that condition, including any of the following:

AB265,4,11 1. Repairing or replacing a heating system, electrical system, internal plumbing system, interior wall or ceiling, roof, window, exterior door, or flooring.

AB265,4,12 2. Repairing or replacing insulation or siding.

AB265,4,13 3. Remediating lead paint or asbestos.

AB265,4,15 (e) “Rental housing” means single-family or multifamily housing offered or intended to be offered for rent that is subject to taxation under ch. 70.

AB265,4,17 (f) “Workforce housing” means rental housing to which all of the following apply:

AB265,4,23 1. 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 allowance determined by the federal department of housing and urban development.

AB265,4,25 2. The housing is for occupancy by individuals whose annual household income does not exceed 100 percent of the area median income.

AB265,5,6 (2) Establishment of fund. (a) There is established under the jurisdiction and control of the authority a main street housing rehabilitation 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, including marketing expenses under sub. (4), incurred to accomplish the purposes of this section and administer the fund. The fund shall consist of all of the following:

AB265,5,7 1. All moneys appropriated to the authority for the fund.