Wis. Stat. § 234.662 — WI Code / Chapter 234 / Section 234.662
Commercial-to-housing conversion revolving loan fund and loan program.
Status: in_force

(1) Definitions. 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 development.

(b) “Commercial” means nonresidential.

(c) “Developer” means a person that converts a vacant commercial building to residential use and that is any of the following:

1. A person other than a city, village, town, or county.

2. A tribal housing authority or business entity created by a tribal council.

(d) “Eligible governmental unit” means the governmental unit having jurisdiction over 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, or a construction project for the conversion of a vacant commercial building to a new mixed-use development that contains a residential housing development, that consists of workforce housing or senior housing if all of the following 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.

(em) “Governmental unit” means a city, village, town, county, or federally recognized American Indian tribe or band.

(f) “Residential housing” means single-family or multifamily housing for rent or sale that is subject to taxation under ch. 70 .

(g) “Residential housing development” means residential housing that consists of 16 or more dwelling units in a governmental unit with a population greater than 10,000 or residential housing that consists of 4 or more dwelling units in a governmental unit with a population of 10,000 or less.

(h) “Senior housing” means residential housing that satisfies par. (i) 1. to 4. that is intended and operated primarily 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 allowance determined by the federal department of housing 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 commercial-to-housing conversion revolving loan fund, for the purpose of providing loans under sub. (3) and for deposit in the workforce home loan fund under s. 234.665 (2) (a) . 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 disbursement 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 principal 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 January 1, 2031.

(c) No moneys in the fund may be invested under s. 234.03 (18) .

(3) Establishment and administration of revolving loan program.

(a) The authority shall establish and administer a commercial-to-housing conversion revolving 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 for a new residential housing development, including demolition, or for construction costs associated with constructing residential housing for an eligible project for a new mixed-use development, including demolition. Any developer may apply to the authority for a loan in accordance with the application process established by the authority under par. (c) , but the authority may not award the loan unless the developer and the eligible governmental unit demonstrate to the satisfaction of the authority in one or more forms prescribed 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 subsection.

2. The developer has secured all applicable federal, state, and local government permits or other approvals for the eligible project.

3. The eligible governmental unit has reduced the cost of residential housing by voluntarily revising zoning ordinances, subdivision 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. The governmental unit’s revisions to the ordinances or regulations shall include revisions that were made in connection with the eligible project and revisions that generally apply to residential housing projects within the governmental unit. For purposes of this subdivision, the governmental unit 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 governmental unit’s governing body that includes the following:

a. Information that clearly shows the estimated time or dollar amount saved by the developer and the estimated percentage reduction in housing costs for each cost reduction measure, including any time saving measure, undertaken by the governmental unit on or after January 1, 2020, that has reduced the cost of residential housing in connection with the eligible project.

b. Information that clearly shows the estimated time or dollar amount reduction and estimated percentage reduction in housing costs for each cost reduction measure, including any time saving measure, undertaken by the governmental unit on or after January 1, 2020, that generally applies to residential housing projects within the governmental unit and that has reduced the cost of residential housing within the governmental unit. These cost and time saving measures may include the cost and time saving measures of the eligible project.

4. The eligible governmental unit is in compliance with the requirements under ss. 66.1001 , 66.10013 , and 66.10014 , to the extent those requirements apply to the governmental unit.

5. If applicable, the eligible governmental unit 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. This condition may be satisfied if, within the 5 years immediately preceding the date of the loan application, the governmental unit adopts an ordinance or resolution certifying that the housing element of its current comprehensive plan provides an adequate housing supply that meets existing and forecasted housing demand in the governmental unit.

(c) The authority shall establish a semiannual application process for the award of loans under this subsection. If in any application cycle there are insufficient moneys available in the commercial-to-housing conversion revolving loan fund to fund all applications that meet the requirements under par. (b) and are otherwise acceptable to the authority, the authority shall prioritize funding loans for eligible projects in eligible governmental units that have reduced the cost of residential housing as described in par. (b) 3. but with respect to the governmental unit as a whole.

(d)

1. The authority may establish an interest rate for any loan awarded under this subsection at or below 1 percent or may charge no interest.

2. No loan awarded under this subsection may exceed 33 percent of the total project costs related to constructing residential housing, including any land purchase.

(e) The authority shall set aside 25 percent of all moneys 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 June 24, 2023, for loans under this subsection for eligible 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 residential housing units supported by the loan.

(f) The authority shall set aside 30 percent of all moneys 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 June 24, 2023, 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 projects 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 residential housing units supported by the loan.

(fm) The authority shall divide the state into regions based on the service jurisdiction as of the effective date of April 10, 2026, of each regional planning commission constituted under s. 66.0309 , with the counties not served by a regional planning commission as of that date constituting collectively one region. The authority shall, to the extent feasible, expend any of the moneys deposited into the fund under sub. (2) (a) 1. in the 2023-25 fiscal biennium that are unencumbered on April 10, 2026, in such a way that no region receives more than 12.5 percent of the total moneys deposited into the fund under sub. (2) (a) 1. in the 2023-25 fiscal biennium in loans awarded under this subsection.

(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 connection 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, except that residential housing constructed in connection with the loan that is intended to be owner-occupied is not required to remain workforce housing or senior housing, as applicable, if the residential housing is sold after the sale to the initial owner-occupier. This restriction shall be recorded against the residential property with the applicable 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 commencing on the date of the loan and concluding 10 years following initial occupancy of all of the rental units constructed in connection with the loan, shall annually submit 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 utilities and their amounts included in the rent. This restriction 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 provided under this subd. 1. c. to confirm that the rental housing continues to meet the housing costs limitation for purposes 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 owner-occupied, for a period of 10 years beginning on the date 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 greater than the original purchase price paid by the initial owner-occupier, increased by no more than 5 percent per year, compounded annually. These restrictions shall be recorded against the residential property with the applicable register of deeds and shall run with the land.

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 remediate the hazardous material or condition as required by and in accordance with local, state, and federal laws or regulations.

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 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 guarantee.