AB606: Bill Text

AB606,1,3 An Act to create 77.54 (70) and 234.47 of the statutes; relating to: creating a sales tax exemption for materials used to construct workforce housing developments or to conduct workforce housing rehabilitation projects.

Analysis by the Legislative Reference Bureau

This bill creates a sales and use tax exemption for the sale of building materials, supplies, and equipment and landscaping and lawn maintenance services if the property or service is acquired solely for, or used solely in, the construction or development of a workforce housing development or is acquired solely for, or used solely in, a workforce housing rehabilitation project. The bill defines “ workforce housing development” to mean a housing development in Wisconsin that meets all of the following conditions:

1. It consists of land proposed for newly platted residential use.

2. The housing costs for households occupying the development's residential units do not exceed, or are not expected to exceed, 30 percent of the median household income for the county in which the development is located.

3. The residential units are intended for initial occupancy by households whose income is at least 60 percent, but not more than 120 percent, of the county's median household income.

4. The price per residential unit in the development does not exceed a maximum amount determined by the Wisconsin Housing and Economic Development Authority.

The bill defines “workforce housing rehabilitation project” as a project involving improvement to housing in this state to maintain the housing in a decent, safe, and sanitary condition or to restore it to that condition if the estimated value of each residential unit undergoing rehabilitation does not exceed a maximum amount determined by WHEDA and if the project involves the removal of lead paint or structural improvements.

Under the bill, the tax exemption may only be claimed by a person holding an exemption certificate issued by WHEDA. In order to receive an exemption certificate, a person must submit an application to WHEDA that includes the following:

1. A description of the project.

2. A certification that the project is a workforce housing development or workforce housing rehabilitation project.

3. If the application relates to a workforce housing development, documentation showing the housing costs, or expected housing costs, of the initial occupant of each residential unit in the development and the anticipated price per residential unit in the development.

4. If the application relates to a workforce housing rehabilitation project, the estimated value of each house undergoing rehabilitation.

The bill requires WHEDA to issue an exemption certificate to a person who submits a completed application if WHEDA determines that the person is constructing or developing an eligible workforce housing development or is conducting an eligible workforce housing rehabilitation project. WHEDA must notify the person of its determination no later than 15 days after receiving the person's application. If WHEDA does not notify the applicant within the 15 days, the application is automatically approved and WHEDA must issue an exemption certificate to the person.

Under the bill, the sales and use tax exemption may not be claimed for property and services acquired for or used in the construction or development of property for public use within a workforce housing development. The bill defines “property for public use” to include sidewalks, wastewater collection and treatment systems, drinking water systems, storm sewers, utility extensions, telecommunications infrastructure, streets, roads, bridges, and parking ramps.

Because this bill relates to an exemption from state or local taxes, it may be referred to the Joint Survey Committee on Tax Exemptions for a report to be printed as an appendix to the 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:

AB606,1 Section 1 . 77.54 (70) of the statutes is created to read:

AB606,3,8 77.54 (70) The sales price from the sale of building materials, supplies, and equipment and the sale of services described in s. 77.52 (2) (a) 20., and the storage, use, or other consumption of the same property and services, to a person holding an exemption certificate issued under s. 234.47 if the property or service is acquired solely for, or used solely in, the construction or development of a workforce housing development, as defined in s. 234.47 (1) (d), or is acquired solely for, or used solely in a workforce housing rehabilitation project, as defined in s. 234.47 (1) (e). This subsection does not apply to property and services acquired for or used in the construction or development of property for public use, as defined in s. 234.47 (1) (c), within the development.

AB606,2 Section 2 . 234.47 of the statutes is created to read:

AB606,3,11 234.47 Workforce housing sales tax exemption. (1) Definitions. In this section:

AB606,3,14 (a) “Exemption certificate” means a certificate issued by the authority that authorizes the person holding the certificate to claim the tax exemption under s. 77.54 (70).

AB606,3,15 (b) “Housing costs” has the meaning given in s. 16.301 (3) (a) and (b).

AB606,3,18 (c) “Property for public use” includes sidewalks, wastewater collection and treatment systems, drinking water systems, storm sewers, utility extensions, telecommunications infrastructure, streets, roads, bridges, and parking ramps.

AB606,3,20 (d) “Workforce housing development” means a housing development in this state that meets all of the following conditions:

AB606,3,21 1. It consists of land proposed for newly platted residential use.

AB606,4,2 2. The housing costs for each household occupying a residential unit in the development do not exceed, or are not expected to exceed, 30 percent of the median household income in the county in which the development is located, based on the American community survey 5-year estimates produced by the U.S. bureau of the census.

AB606,4,7 3. The residential units in the development are intended for initial occupancy by individuals whose household income is at least 60 percent, but not more than 120 percent, of the median household income in the county in which the development is located, based on the American community survey 5-year estimates produced by the U.S. bureau of the census.

AB606,4,9 4. The price per residential unit does not exceed the maximum price determined by the authority under sub. (4).

AB606,4,15 (e) “Workforce housing rehabilitation project” means a project involving improvement to housing in this state to maintain the housing in a decent, safe, and sanitary condition or to restore it to that condition if the estimated value of each residential unit undergoing rehabilitation does not exceed the maximum unit price determined by the authority under sub. (4) and if the project involves the removal of lead paint or structural improvements, including any of the following:

AB606,4,17 1. Repairing or replacing a heating system, electrical system, plumbing system, roof, window, or exterior door.

AB606,4,18 2. Repairing the foundation.

AB606,4,19 3. Repairing or replacing insulation or siding.

AB606,4,24 (2) Certification to claim tax exemption. The authority shall establish and administer a program to issue exemption certificates for purposes of claiming the tax exemption under s. 77.54 (70). A person who wishes to be issued an exemption certificate shall apply to the authority on a form prescribed by the authority. The application shall contain all of the following:

AB606,4,25 (a) A description of the project, including its location.

AB606,5,2 (b) A certification by the person that the project is a workforce housing development or workforce housing rehabilitation project.

AB606,5,4 (c) If the application relates to a workforce housing development, documentation showing all of the following:

AB606,5,6 1. The housing costs, or expected housing costs, of the initial occupant of each residential unit in the development.

AB606,5,7 2. The anticipated price per residential unit in the development.

AB606,5,9 (d) If the application relates to a workforce housing rehabilitation project, the estimated value of each house undergoing rehabilitation.

AB606,5,19 (3) Approval. The authority shall issue an exemption certificate to a person who submits a completed application under sub. (2) if the authority determines that the person is constructing or developing a workforce housing development or is undertaking a workforce housing rehabilitation project. No later than 15 days after receipt of an application under sub. (2), the authority shall determine whether to approve the application, notify the applicant of the authority's determination, and, if the application is approved, issue an exemption certificate to the applicant. If the authority does not notify the applicant within 15 days of receipt of the application, the application shall be approved and the authority shall issue the person an exemption certificate.

AB606,6,2 (4) Maximum unit price. The authority shall determine the maximum residential unit price for each workforce housing development and for each workforce housing rehabilitation project subject to an exemption certificate under this section. The maximum unit price may not exceed $250,000 in Chippewa County, adjusted for inflation, or the price of a substantially equivalent home in the county in which the workforce housing development is located, as determined by the authority.

AB606,6,6 (5) Public use property. A person may not use the exemption certificate issued under sub. (3) to claim an exemption under s. 77.54 (70) for property and services acquired for or used in the construction or development of property for public use within the workforce housing development.

AB606,6,9 (6) Information sharing. The authority shall provide to the department of revenue a copy of each exemption certificate issued under sub. (3) and, upon request by the department, a copy of any application submitted under sub. (2).

AB606,6,12 (7) Policies and procedures. The authority, in consultation with the department of revenue, shall establish policies and procedures to administer this section.

AB606,6,13 (End)