Getting Money Out the WHEDA Door

Housing affordability is a critical issue in Wisconsin, and the WRA is committed to supporting and working on initiatives that address it. One of the key legislative efforts to tackle this challenge is a bill moving through both houses of the Wisconsin Legislature — Senate Bill 180 (SB 180) and Assembly Bill 194 (AB 194) — which aims to increase housing availability and encourage regulatory reform to reduce housing costs.

During the previous legislative session when Wisconsin lawmakers first introduced the original housing legislation that invested $525 million in workforce housing, the goal was clear: build more homes and make them more affordable by reducing regulatory barriers.

1. 2023 Wis. Act 14 created residential development infrastructure loans. This legislation implemented a loan program at the state level to fund infrastructure — like street, water, sewer and sidewalks — for residential developments. This legislation offered $275 million in funding.
2. 2023 Wis. Act 15 proposed main street residential housing rehab loans. This legislation created a loan program for the repair and rehabilitation of residential rental housing above an existing building with a commercial use on the main floor. This bill offered $100 million in funding.
3. 2023 Wis. Act 18 provided loans for the conversion of vacant commercial space into housing. This legislation provided a new financing tool with a loan program to assist in the development of vacant commercial buildings for new residential workforce housing. 2023 Wis. Act 18 created $100 million in funding.

Despite an investment of $16 million, the original efforts last legislative session produced fewer than 1,000 housing units. This is far below what is needed, as experts estimate that Wisconsin must build 140,000 new housing units by 2030 to meet demand.

The current version of SB 180/AB 194 seeks to correct the course by improving how funds are used and ensuring local governments are serious about reducing regulatory costs. The main objective is to get the money out the door to help address Wisconsin’s housing crisis.

Wisconsin’s housing market has been struggling for years. From 1994 to 2005, the state issued around 30,000 new home permits annually. But in recent years, the numbers have fallen dramatically. In 2024, just 12,837 permits were issued — a slight increase from 2023, but still far below the need.

At the same time, home prices have continued to climb. The median home price in Wisconsin in March 2025 was $310,000, making it the second highest in the Midwest. 

One of the biggest challenges to housing affordability is the cost of regulations. In Wisconsin, costs associated with local regulation are significant

• $88,000 per single-family home.
• 40% of the cost for multifamily housing.

And it takes an average of 14 months before construction even begins as regulatory requirements must be met.

Under SB 180/AB 194, local governments are encouraged to adopt regulatory reforms. These reforms are voluntary but necessary if a community or a developer wants to access the WHEDA funds. Local governments have a great deal of flexibility in how these reforms are achieved.

SB 180/AB 194 aims to improve the initial program by making several key changes:

Local governments must demonstrate that they have made regulatory reforms to lower housing costs for developers to receive funds. Because the WHEDA loan programs last session were designed to encourage local governments to adopt regulatory reforms aimed at reducing housing costs, this bill requires the WHEDA loans be used to: 

• Reduce overall costs: The government revisions to the ordinance or regulation must include revisions made in connection with the project and also apply generally to residential housing within the community. 
• Analyze cost reductions: The cost reduction analysis must include the estimated time or dollar amounts saved by developers and the estimated percentage reduction in housing for each measure. 
• Update the housing element: The government may meet the current requirement of updating the housing element of its comprehensive plan within the last five years, by adopting an ordinance or resolution certifying the housing element provides adequate housing supply meeting existing and forecasted housing demand.  

Because one of the biggest challenges to development is securing financing, the revised bill removes restrictions that previously prevented these loans from being combined with historic tax credits and other financial tools, making it easier for developers to stack funding sources. The capital stack is the structured hierarchy of funding sources used to finance real estate projects. Removing the specific statutory prohibition on these WHEDA funds being used with historic tax credits and in tax incremental districts (TIDs) makes it easier for developers to achieve the capital stack through the combination of loans.

• Encourages rural development: The bill clarifies that the loan may be used in communities with a population over 10,000 for housing developments with 16 or more dwelling units. Additionally, it allows the loan to be used in communities with populations of 10,000 or fewer for residential housing consisting of four or more dwelling units.
• Mixed-use development with residential housing: The bill allows loans to be used for construction projects that convert vacant commercial buildings into new mixed-use developments as long as those developments include residential housing.

The bill adjusts the maximum loan amounts to better reflect the true costs of development, making the program a more effective tool for developers:

• Developer infrastructure loan: Now covers up to 33% of total development costs, including land purchase for residential housing supported by the eligible project.
• Local government infrastructure loan: Now 25% total amount of development costs of residential housing are supported by eligible projects. 
• Main street: Now $50,000 per dwelling unit, or 33% of the total housing rehab project, whichever is less. 
  Commercial conversion: Now 33% of the total project costs related to constructing residential housing.

As this magazine went to press, SB 180/AB 194 had been amended during the committee process. Key changes in the amended version include:

• Limiting the interest rate WHEDA may charge for the three loan programs to no more than 1%.
• Clarifying the real estate condition report to require sellers to disclose if their home is subject to a 10-year deed restriction for owner occupancy.
• Capping the value increase of owner-occupied homes to no more than 5% compounded annually after the developer’s initial sale
• Allowing local governments to look back to 2020 to demonstrate efforts to reduce regulatory costs.

By making it easier for developers to secure funding, reducing unnecessary regulatory costs, and encouraging local governments to plan for future housing needs, the bill provides a comprehensive approach to solving the state’s housing challenges.