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State notifies Two Rivers it will reclaim local housing revolving loan funds
Summary
City officials said the Wisconsin Department of Administration told municipalities it plans to discontinue locally held CDBG-funded housing revolving loan funds and redeploy those dollars toward a state initiative to convert vacant buildings to affordable housing; Two Rivers holds about $2 million in its fund.
City officials said the Wisconsin Department of Administration has notified Two Rivers that it intends to reclaim locally held housing revolving loan funds established under past Small Cities Community Development Block Grants, a move that would redirect those dollars to a statewide initiative to convert vacant buildings into affordable housing.
The notice affects a Two Rivers fund built from program income — loan repayments that had been re-lent locally — with a portfolio the city described as “a little over $2,000,000.” City staff said program-income loans in the fund are typically zero‑interest and fully deferred so long as the original homeowner continues to live in the property; if the borrower dies or sells, the loan is repaid and the money is recycled into new local loans.
City managers told the council the state’s letter said the Department of Administration was concerned that some local funds statewide held large idle balances; the city manager cited a state figure of roughly $22,000,000 sitting across about 215 local revolving funds. The state is proposing to redeploy those dollars to a new program to convert vacant buildings to affordable housing, the notice said.
Why it matters: Two Rivers and other small cities have used local revolving funds to make loans for housing repairs and rehab. City staff told council members they had reached out to MSA Professional Services, which administers Two Rivers’ local program, and to nearby jurisdictions that also use MSA to learn how they would be affected. Staff said the state’s letter was more definitive than prior discussions and caught some local administrators by surprise.
City officials said they will follow the state’s process, attend informational sessions the state is offering in Madison and Wausau (and a virtual option), and coordinate with regional partners. Staff noted that regional housing programs have been the primary channel for new CDBG housing loans in recent years and said redeploying money to regional funds would be a logical outcome if the state’s plan moves forward.
Council members asked staff to track the issue and said they expect further conversations with legislators and regional partners if the state proceeds. City staff emphasized that the funds in question were originally federal Community Development Block Grant dollars administered through the state.
Ending: City staff asked the council and public to “stay tuned” while they gather more detail. The notice prompted no immediate action by the council beyond direction to monitor the state process and report back at future meetings.
