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Frequently Asked Questions (FAQs)
A compiled list of questions on the Bipartisan Housing Legislation Package and the four loan programs it supports. Answers will be posted to this webpage as quickly as possible. If you have a question that is not addressed below, please complete our inquiry form.
New questions added as of April 17th, 2024
General
Q: If a project starts construction before a loan application is submitted or during the application review process, does that impact the eligibility or likelihood of the project being selected?
A: The intent of the new products is to increase housing supply, which might not happen without low-cost loans. Using a WHEDA loan to replace a primary loan provided by another lender is not allowed. However, WHEDA loans may be used for projects where construction has started but the primary loan has not yet closed.
Q: A TIF cannot have been claimed by the property previously, but can new tax incentives be used in the capital stack for the new loan products?
A: A TIF cannot be a part of the capital stack for a Vacancy-to-Vitality loan or a Restore Main Street loan.
Q: Does a project need to have all of its financing secured at the time of application or closing?
A: All financing sources need to be secured at the time of application.
Q: How often will WHEDA have application rounds for the Vacancy-to-Vitality and Main Street loan programs?
A: For the Vacancy-to-Vitality and Main Street loan programs, WHEDA will offer two application rounds per year.
Q: Can a project applying for the new loan products include proceeds from a new TIF agreement?
A: No. A project that has TIF as a source of funding is not eligible to apply for Vacancy-to-Vitality or Restore Main Street.
Q: How ready does a project need to be to apply for a loan?
A: The project needs to be zoned with residential use as a permitted use or a conditional use, all other development funding must be secured, and all permits (aside from final building permits) and approvals must be obtained. In addition, the local unit of government must have reduced the cost of the eligible project by voluntarily revising ordinances or regulations applicable to the project on or after January 1, 2023. View the loan term sheets for all eligibility requirements.
Q: What will happen to these funds once they are paid back? Is it a permanent revolving loan fund?
A: This funding source is a revolving loan fund. Any funds not deployed during the first seven years are to be returned to the Department of Administration.
Q: Will there be any set-asides for the Restore Main Street and Vacancy-to-Vitality loan programs?
A: Yes. Both programs will have a 30% Small Community Set-Aside. For Vacancy-to-Vitality, there is an additional 25% Senior Set-Aside. A property that is in a Small Community and Senior will count as both set-asides for Vacancy-to-Vitality.
Q: How much money is allocated for each new loan program?
A: $275 million has been allocated to the Infrastructure Access loan, $100 million to the Restore Main Street loan, $100 million to the Vacancy-to-Vitality loan, and $50 million to the Home Repair and Rehab loan.
Q: When will the loan applications be ready?
A: Applications will be available as quickly as possible after the loan program parameters and terms have been finalized. Each program will have its own application cycle and review periods. Review the loan program information and anticipated timeline for each loan program here. Sign up to receive email updates on the four loan programs here.
Q: I'm a developer interested in the loan products to develop workforce housing. How do I get started?
A: Developers interested in using these loan programs to advance workforce housing can begin by identifying and collaborating with the eligible city, village, town, or county willing to make changes that reduce housing development costs. As part of the application process, developers will need to provide certifications from the relevant governmental unit documenting the amount of money the project saved as a result of such changes.
Q: My project is using affordable housing funds from a one-year extension on a now-closed TID. Would it be eligible?
A: If the TID is not ACTIVE and the project is not receiving a benefit anymore, the project would be eligible. An extension of the benefit would make the project ineligible while it’s still receiving the benefit, per statute.
Q. From a Sources and Uses framework, would a developer be required to have bank participation – or could they decide to fund the project gap via their own equity? Could the WHEDA loan be disbursed 100% at closing?
A: The legislation doesn’t require a primary lender, just that other sources have been secured and the maximum loan amount requirements are met. A senior loan is not needed - “first mortgage” is only used in the guarantee conditional, and no other reference in the Act to another lender.
- If there is no other lender, and the draw required at closing (typically the acquisition price) exceeds the amount of our loan, it could be fully disbursed at closing (our loan can be the first proceeds in). We would still want an escrow agent involved in any construction draws to ensure construction liens are getting cleared even if there is no senior lender.
- From the legislation –
- The owner has secured the necessary financial resources for the total cost of the housing rehabilitation project not to be covered by a loan from the authority under this subsection.
Q. Alternatively, what if the developer opted for a construction loan – would the WHEDA draws need to be synced with the construction loan draws or could they be timed differently?
A: We’ll work with a construction escrow agent or title company on the draw process. A senior loan is not needed, so bank participation is not required. If a senior lender would prefer to have our proceeds go in first, that would work for WHEDA because it simplifies our draw process -likely to be one draw, or at least fewer. Nothing requires our loan proceeds to go out pari-passu with the senior lender.
Municipality
Reference the municipality guide sheet to learn more about the critical role cities, towns, and villages play with this new loan program.
Q: My community made zoning changes to reduce costs before Jan 1. 2023, does this mean that we do not qualify for these loans?
A: Changes made prior to Jan 1, 2023, would not qualify; however, your community may make other changes that reduce costs after this date to ensure projects in your community qualify for future application rounds of the new loan products.
Q: As a municipality, we are working on a comprehensive plan update and a housing cycle before the next loan application cycle. When will WHEDA offer the next application cycle(s) in 2024?
A: WHEDA is planning to do two funding cycles per year, for Vacancy-to-Vitality and Restore Main Street and is expecting the next round of applications to be due mid-2024.
Q: My community last updated its comprehensive plan prior to 5 years ago, does this mean that no projects in our community will qualify for this loan?
A: When your community's comprehensive plan, including an updated housing element, is updated, projects within your community can apply for the funding resources offered through the housing legislation package.
Q: Legislation spells out eligibility requirements for updated comprehensive plans and the housing component of those plans. How do municipalities know if they comply?
A: WHEDA plans to get self-attestation from municipalities on both compliance with the updated comprehensive plan requirement and the housing component. We will then compare against the spreadsheet that DOA prepares showing updated plans. If what the community tells us doesn’t match the spreadsheet, we will connect the community to DOA so that DOA can update their information.
Q: Our local unit of government is proposing an amendment to our impact fee waiver ordinance. This amendment allows a waiver or reduction in impact fees for “low-cost housing.” Would this amendment qualify for projects applying for these loans in our community?
A: Yes, if the impact fee waiver ordinance is passed on or after January 1, 2023, a project applies for a loan, and the housing project benefits by a quantified savings. The application will require an explanation and demonstration of the savings amount.
Q: Our local unit of government is contracting with a consulting firm to rewrite our zoning code. This initiative is kicking off December 2023 and will be completed mid-2025. Would these zoning code changes qualify for this funding?
A: When the zoning code changes are completed and savings can be demonstrated, this will meet the loan eligibility requirement.
Q: I'm an eligible city, village, town, or county interested in using the new loan products to entice the development of workforce housing. How do I get started?
A: Governmental units interested in using these loan programs must do both of the following: (a) confirm that it has updated the housing element of its comprehensive plan within the 5 years immediately preceding the date of the loan application (b) make changes to ordinances or regulations to decrease the costs for new workforce housing developments after January 1, 2023.
Vacancy-to-Vitality Loan (Act 18)
Q: For Vacancy-to-Vitality, what percent of units need to be affordable?
A: 100% of units need to be affordable to be eligible for a Vacancy-to-Vitality loan. Please refer to the loan term sheet for affordability requirements.
Q: For Vacancy-to-Vitality, are full permits required for the application or just at closing?
A: All permits are required at the time of application.
Q: Is it possible to combine a Vacancy-to-Vitality loan with housing tax credits?
A: Yes. However, projects applying for the 2024 housing tax credit application cycle will not be able to apply for the first Vacancy-to-Vitality application round. They will not meet the Eligible Project definition at the time of application for the first round as credit awards will not yet been made.
Q: Is a vacant school eligible for Vacancy-to-Vitality?
A: Yes. A vacant school is eligible for Vacancy-to-Vitality because a school is a non-residential property. To be an eligible project it must still meet the additional eligible project criteria in the Award Plan.
Q: Is vacant land eligible for the Vacancy-to-Vitality loan program?
A: No. Vacant land is not eligible for the Vacancy-to-Vitality loan program.
Infrastructure Access Loan (Act 14)
Q: If Infrastructure Access Loan applications are due in April 2024, will pending applications for WHEDA competitive Housing Tax Credits be eligible to apply?
A: At this time, we will accept an application with a Housing Tax Credit application in progress. We reserve the right to change this in future rounds if they get more competitive.
Q: Can you please define public infrastructure, particularly because it includes infrastructure typically covered by the developer?
A: The statute defines infrastructure as the “portion of the installation, replacement, upgrade or improvement of public or private infrastructure in rural areas if transferred to public use.” The following is a list of infrastructure items that qualify:
- Water distribution system
- Water treatment plant
- Wastewater treatment plant
- Sanitary sewer system
- Storm sewer system
- Stormwater retention pond
- Lift or pump station
- Street, road, alley, or bridge
- Curb, gutter, or sidewalk
- Traffic device
- Street light
- Electric or gas distribution line
Q: If a development has received a commitment of TIF, but has not yet received any financial assistance from increments that have been generated, would that development still qualify?
A: If a project applying for the new loan products includes proceeds from a new TIF agreement, it would be ineligible. If the TIF is not active and the project is not receiving a benefit anymore, the project would be eligible.
Q: Can a municipality apply for the Infrastructure Access Loan in partnership with the developer, and act as a passthrough with those funds to the developer?
A: The municipality is responsible for repayment to WHEDA and will remain the borrower. Municipalities may need to partner with developers and others to build the public infrastructure connected to the eligible project in a “pass-through” funding arrangement; however, liability for repayment cannot be passed on to another entity.
Q: What is the period after the loan award that the developer must complete the project?
A: Closing of the loan must happen within 180 days. Generally, projects should be completed within two years after closing. However, we will work with the senior lender as needed to ensure that our timeline is not hindering the deal.
Q: Can the New Loan products be stacked on top of each other?
A: Yes.
Compliance
Q: How are qualifying rents calculated?
A: Qualifying rents are calculated using HUD’s income limits. Developers can access customized rent and income data for use in their applications by going to HUD’s website and requesting an access token to HUD’s fair market rent dataset.
Q: If a renter earns 100% of AMI in year 1, receives a promotion, and then earns above 100% of AMI the following year, will this renter be evicted?
A: Recertification of income is not required. There will be no impact to a renter for increased income.