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LRB-5357/1
EKL:amn&skw
2019 - 2020 LEGISLATURE
February 6, 2020 - Introduced by Senators Bernier and Olsen, cosponsored by
Representatives Summerfield, Nygren, Dittrich, Petryk, Plumer,
Skowronski, Tusler, VanderMeer and Spiros. Referred to Committee on
Agriculture, Revenue and Financial Institutions.
SB786,1,4 1An Act to amend 76.67 (2); and to create 71.07 (8f), 71.10 (4) (fd), 71.28 (8f),
271.30 (3) (cu), 71.47 (8f), 71.49 (1) (cu), 76.6395 and 234.46 of the statutes;
3relating to: state workforce housing income and franchise tax credit and
4requiring the exercise of rule-making authority.
Analysis by the Legislative Reference Bureau
This bill creates a state workforce housing tax credit program that is
administered by the Wisconsin Housing and Economic Development Authority.
Under the bill, WHEDA may certify a person to claim a nonrefundable credit
to offset income and franchise taxes if all of the following conditions are satisfied:
1. The person has an ownership interest in a qualified housing development.
Under the bill, a “qualified housing development” is a residential rental property
development located in Wisconsin if at least 25 percent of the rental units are
occupied by individuals whose income is at least 61 percent but not more than 100
percent of area median income and the rents for such units do not exceed 30 percent
of area median income.
2. The tax credit is necessary for the financial feasibility of the development.
3. The qualified housing development is the subject of a recorded restrictive
covenant requiring that the development be maintained and operated as a qualified
housing development for at least ten years.
4. The tax credit certification is issued in accordance with a qualified allocation
plan established by WHEDA.

The bill requires that WHEDA give preference to qualified housing
developments located in a city, village, or town of fewer than 150,000 residents. The
bill caps at $42,000,000 the amount of credits WHEDA may issue each year,
including all amounts each person is eligible to claim for each year of the credit.
However, the bill raises that cap for each year by an amount equal to all unallocated
credits from prior years and all previously allocated credits that have been revoked,
cancelled, or otherwise recovered by WHEDA.
The bill also requires that WHEDA submit an annual report to the legislature
concerning the program's progress.
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:
SB786,1 1Section 1 . 71.07 (8f) of the statutes is created to read:
SB786,2,22 71.07 (8f) State workforce housing credit. (a) Definitions. In this subsection:
SB786,2,63 1. “Allocation certificate” means a statement issued by the authority certifying
4that a qualified housing development is eligible for a credit under this subsection and
5specifying the amount of the credit that the owners of the development may claim
6for each taxable year of the credit period.
SB786,2,87 2. “Area median gross income” has the meaning as used for purposes of 26 USC
842
.
SB786,2,109 3. “Authority” means the Wisconsin Housing and Economic Development
10Authority.
SB786,2,1211 4. “Claimant” means a person who has an ownership interest in a qualified
12housing development and who files a claim under this subsection.
SB786,2,1413 5. “Compliance period” means the 10-year period beginning with the first
14taxable year of the credit period.
SB786,3,315 6. “Credit period” means the 6-year period beginning with the taxable year in
16which a qualified housing development is placed in service. For purposes of this

1subdivision, if a qualified housing development consists of more than one building,
2the qualified housing development is placed in service in the taxable year in which
3the last building is placed in service.
SB786,3,144 7. “Qualified basis” means the amount equal to the applicable fraction of the
5adjusted basis of the qualified housing development as of the close of the first taxable
6year of the credit period. The applicable fraction is the smaller of a fraction whose
7numerator is the number of qualified units in the qualified housing development and
8denominator is the total number of residential rental units in the qualified housing
9development or a fraction whose numerator is the total floor space of the qualified
10units in the qualified housing development and denominator is the total floor space
11of all the residential rental units in the qualified housing development. In
12calculating the applicable fraction, the number of qualified units and residential
13rental units and the amount of floor space shall be determined as of the close of the
14taxable year.
SB786,3,1915 8. “Qualified housing development” means a residential rental property
16development that is located in this state if at least 25 percent of the development's
17residential rental units are rent-restricted units and occupied by individuals whose
18tenant income is at least 61 percent but not more than 100 percent of area median
19gross income.
SB786,3,2220 9. “Qualified unit” means a rent-restricted unit that is occupied by individuals
21whose tenant income is at least 61 percent but not more than 100 percent of area
22median gross income.
SB786,4,223 10. “Rent-restricted unit” means a residential rental unit if the gross rent with
24respect to the unit does not exceed 30 percent of area median gross income,

1determined as if the unit is occupied by one individual in a unit without a separate
2bedroom and 1.5 individuals for each separate bedroom in any other unit.
SB786,4,43 11. “Tenant income” means the income determined under 26 USC 142 (d) (2)
4(B) of individuals occupying a residential rental unit.
SB786,4,95 (b) Filing claims. Subject to the limitations provided in this subsection and in
6s. 234.46, for taxable years beginning after December 31, 2019, a claimant may claim
7as a credit against the taxes imposed under s. 71.02, up to the amount of the tax, the
8amount allocated to the claimant by the authority under s. 234.46 for each taxable
9year within the credit period.
SB786,4,1210 (c) Limitations. 1. No person may claim the credit under par. (b) unless the
11claimant includes with the claimant's return a copy of the allocation certificate
12issued for the qualified housing development.
SB786,5,613 2. A partnership, limited liability company, or tax-option corporation may not
14claim the credit under this subsection. The partners of a partnership, members of
15a limited liability company, or shareholders in a tax-option corporation may claim
16the credit under this subsection based on eligible costs incurred by the partnership,
17limited liability company, or tax-option corporation. The partnership, limited
18liability company, or tax-option corporation shall calculate the amount of the credit
19that may be claimed by each partner, member, or shareholder and shall provide that
20information to each of them. Credits computed by a partnership or limited liability
21company may be claimed in proportion to the ownership interests of the partners or
22members or allocated to partners or members as provided in a written agreement
23among the partners or members that is entered into no later than the last day of the
24taxable year of the partnership or limited liability company for which the credit is
25claimed. Any partner or member who claims the credit as allocated by a written

1agreement shall provide a copy of the agreement with the tax return on which the
2credit is claimed. For shareholders of a tax-option corporation, the credit may be
3allocated in proportion to the ownership interest of each shareholder. A person
4claiming the credit as provided under this subdivision is solely responsible for any
5tax liability arising from a dispute with the department related to claiming the
6credit.
SB786,5,157 (d) Recapture. 1. As of the last day of any taxable year during the compliance
8period, if the qualified basis of a qualified housing development with respect to a
9claimant is less than the qualified basis as of the last day of the previous taxable year,
10the amount of the claimant's tax liability under this subchapter shall be increased
11by an amount equal to the excess of the aggregate credit claimed under this
12subsection in prior taxable years over the aggregate credit that would be claimed in
13those years if the full credit amount allocated to the claimant for the credit period
14was claimed ratably over 10 years, plus interest at the overpayment rate established
15under 26 USC 6621.
SB786,5,2116 2. Subdivision 1. does not apply if the reduction in qualified basis for the
17taxable year is by reason of a casualty loss if the loss is restored by reconstruction
18or replacement within a reasonable period; a minimal change in floor space; or a
19disposition of an interest in the qualified housing development if it is reasonably
20expected that the development will continue to be operated as a qualified housing
21development for the remainder of the compliance period.
SB786,5,2422 3. In the event that the recapture of a credit is required in a taxable year, the
23taxpayer shall include the recaptured amount on the return submitted for the
24taxable year in which the recapture event is identified.
SB786,5,2525 4. The department shall promulgate rules to implement this paragraph.
SB786,6,2
1(e) Administration. Section 71.28 (4) (e) to (h), as it applies to the credit under
2s. 71.28 (4), applies to the credit under this subsection.
SB786,2 3Section 2 . 71.10 (4) (fd) of the statutes is created to read:
SB786,6,44 71.10 (4) (fd) State workforce housing credit under s. 71.07 (8f).
SB786,3 5Section 3 . 71.28 (8f) of the statutes is created to read:
SB786,6,66 71.28 (8f) State workforce housing credit. (a) Definitions. In this subsection:
SB786,6,107 1. “Allocation certificate” means a statement issued by the authority certifying
8that a qualified housing development is eligible for a credit under this subsection and
9specifying the amount of the credit that the owners of the qualified housing
10development may claim for each taxable year of the credit period.
SB786,6,1211 2. “Area median gross income” has the meaning as used for purposes of 26 USC
1242
.
SB786,6,1413 3. “Authority” means the Wisconsin Housing and Economic Development
14Authority.
SB786,6,1615 4. “Claimant” means a person who has an ownership interest in a qualified
16housing development and who files a claim under this subsection.
SB786,6,1817 5. “Compliance period” means the 10-year period beginning with the first
18taxable year of the credit period.
SB786,6,2319 6. “Credit period” means the 6-year period beginning with the taxable year in
20which a qualified housing development is placed in service. For purposes of this
21subdivision, if a qualified housing development consists of more than one building,
22the qualified housing development is placed in service in the taxable year in which
23the last building is placed in service.
SB786,7,924 7. “Qualified basis” means the amount equal to the applicable fraction of the
25adjusted basis of the qualified housing development as of the close of the first taxable

1year of the credit period. The applicable fraction is the smaller of a fraction whose
2numerator is the number of qualified units in the qualified housing development and
3denominator is the total number of residential rental units in the qualified housing
4development or a fraction whose numerator is the total floor space of the qualified
5units in the qualified housing development and denominator is the total floor space
6of all the residential rental units in the qualified housing development. In
7calculating the applicable fraction, the number of qualified units and residential
8rental units and the amount of floor space shall be determined as of the close of the
9taxable year.
SB786,7,1310 8. “Qualified housing development” means a residential rental property
11development located in this state if at least 25 percent of the residential rental units
12are rent-restricted units and occupied by individuals whose tenant income is at least
1361 percent but not more than 100 percent of area median gross income.
SB786,7,1614 9. “Qualified unit” means a rent-restricted unit that is occupied by individuals
15whose tenant income is at least 61 percent but not more than 100 percent of area
16median gross income.
SB786,7,2017 10. “Rent-restricted unit” means a residential rental unit if the gross rent with
18respect to the unit does not exceed 30 percent of area median gross income,
19determined as if the unit is occupied by one individual in a unit without a separate
20bedroom and 1.5 individuals for each separate bedroom in any other unit.
SB786,7,2221 11. “Tenant income” means the income determined under 26 USC 142 (d) (2)
22(B) of individuals occupying a residential rental unit.
SB786,8,223 (b) Filing claims. Subject to the limitations provided in this subsection and in
24s. 234.46, for taxable years beginning after December 31, 2019, a claimant may claim
25as a credit against the taxes imposed under s. 71.23, up to the amount of the tax, the

1amount allocated to the claimant by the authority under s. 234.46 for each taxable
2year within the credit period.
SB786,8,53 (c) Limitations. 1. No person may claim the credit under par. (b) unless the
4claimant includes with the claimant's return a copy of the allocation certificate
5issued for the qualified housing development.
SB786,8,246 2. A partnership, limited liability company, or tax-option corporation may not
7claim the credit under this subsection. The partners of a partnership, members of
8a limited liability company, or shareholders in a tax-option corporation may claim
9the credit under this subsection based on eligible costs incurred by the partnership,
10limited liability company, or tax-option corporation. The partnership, limited
11liability company, or tax-option corporation shall calculate the amount of the credit
12that may be claimed by each partner, member, or shareholder and shall provide that
13information to each of them. Credits computed by a partnership or limited liability
14company may be claimed in proportion to the ownership interests of the partners or
15members or allocated to partners or members as provided in a written agreement
16among the partners or members that is entered into no later than the last day of the
17taxable year of the partnership or limited liability company for which the credit is
18claimed. Any partner or member who claims the credit as allocated by a written
19agreement shall provide a copy of the agreement with the tax return on which the
20credit is claimed. For shareholders of a tax-option corporation, the credit may be
21allocated in proportion to the ownership interest of each shareholder. A person
22claiming the credit as provided under this subdivision is solely responsible for any
23tax liability arising from a dispute with the department related to claiming the
24credit.
SB786,9,9
1(d) Recapture. 1. As of the last day of any taxable year during the compliance
2period, if the qualified basis of a qualified housing development with respect to a
3claimant is less than the qualified basis as of the last day of the previous taxable year,
4the amount of the claimant's tax liability under this subchapter shall be increased
5by an amount equal to the excess of the aggregate credit claimed under this
6subsection in prior taxable years over the aggregate credit that would be claimed in
7those years if the full credit amount allocated to the claimant for the credit period
8was claimed ratably over 10 years, plus interest at the overpayment rate established
9under 26 USC 6621.
SB786,9,1510 2. Subdivision 1. does not apply if the reduction in qualified basis for the
11taxable year is by reason of a casualty loss if the loss is restored by reconstruction
12or replacement within a reasonable period; a minimal change in floor space; or the
13disposition of an interest in the qualified housing development if it is reasonably
14expected that the development will continue to be operated as a qualified housing
15development for the remainder of the compliance period.
SB786,9,1816 3. In the event that the recapture of a credit is required in a taxable year, the
17taxpayer shall include the recaptured amount on the return submitted for the
18taxable year in which the recapture event is identified.
SB786,9,1919 4. The department shall promulgate rules to implement this paragraph.
SB786,9,2120 (e) Administration. Subsection (4) (e) to (h), as it applies to the credit under
21sub. (4), applies to the credit under this subsection.
SB786,4 22Section 4 . 71.30 (3) (cu) of the statutes is created to read:
SB786,9,2323 71.30 (3) (cu) State workforce housing credit under s. 71.28 (8f).
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