AN ACT Relating to the housing trust fund; amending RCW 18.85.310, 59.18.270, and 63.29.230; and adding a new chapter to Title 43 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. The legislature finds that current economic conditions, federal housing policies and declining resources at the federal, state, and local level adversely affect the ability of low and very low-income persons to obtain safe, decent, and affordable housing.

The legislature further finds that members of over one hundred twenty thousand households live in housing units which are overcrowded, lack plumbing, are otherwise threatening to health and safety, and have rents and utility payments which exceed thirty percent of their income.

The legislature further finds that minorities, rural households, and migrant farm workers require housing assistance at a rate which significantly exceeds their proportion of the general population.

The legislature further finds that one of the most dramatic housing needs is that of persons needing special housing-related services, such as the mentally ill, recovering alcoholics, frail elderly persons, and single parents. These services include medical assistance, counseling, chore services, and child care.

The legislature further finds that housing assistance programs in the past have often failed to help those in greatest need.

The legislature declares that it is in the public interest to establish a continuously renewable resource known as a housing trust fund to assist low and very low-income citizens in meeting their basic housing needs, and that the needs of very low-income citizens should be given priority.

NEW SECTION. Sec. 2. There is hereby created a fund in the office of the treasurer known as the Washington housing trust fund. The treasurer shall serve as the trustee thereof and shall make disbursements therefrom as directed by this chapter. The housing trust fund shall include revenue from the sources established by this chapter, appropriations by the legislature, private contributions, and all other sources.

NEW SECTION. Sec. 3. "Department" means the department of community development. "Director" means the director of the department of community development.

NEW SECTION. Sec. 4. The treasurer shall transfer to the department upon the request of the director such funds as may be immediately necessary to implement the purposes of this chapter. Such transfers shall be made from the housing trust fund established by section 2 of this act.

NEW SECTION. Sec. 5. The treasurer, as trustee, shall invest housing trust fund revenues in investment instruments as part of the portfolio it manages for state funds.

NEW SECTION. Sec. 6. (1) The department shall use funds from the housing trust fund to finance in whole or in part any loans or grant projects that will provide housing for persons and families with special housing needs and with incomes at or below fifty percent of the median family income for the county or standard metropolitan statistical area where the project is located. Not less than thirty percent of such funds used in any given biennium shall be for the benefit of projects located in rural areas as defined in 63 Stat. 432, 42 U.S.C. Sec. 1471 et seq.

(2) Activities eligible for assistance include, but are not limited to:

(a) New construction, rehabilitation, or acquisition of low and very low-income housing units;

(b) Rent subsidies in new construction or rehabilitated multifamily units;

(c) Matching funds for social services directly related to providing housing for special-need tenants in assisted projects;

(d) Technical assistance, design and finance services and consultation, and administrative costs for eligible nonprofit community or neighborhood-based organizations;

(e) Administrative costs for housing assistance groups or organizations when such grant or loan will substantially increase the recipient's access to housing funds other than those available under this chapter;

(f) Shelters and related services for the homeless;

(g) Mortgage subsidies for new construction or rehabilitation of eligible multifamily units;

(h) Mortgage insurance guarantee or payments for eligible projects; and

(i) Acquisition of housing units for the purpose of preservation as low-income or very low-income housing.

NEW SECTION. Sec. 7. Organizations that may receive assistance from the department under this chapter are local governments, local housing authorities, nonprofit community or neighborhood-based organizations, and regional or state-wide nonprofit housing assistance organizations.

NEW SECTION. Sec. 8. (1) During each calendar year in which funds are available for use by the department from the housing trust fund, as prescribed in section 2 of this act, the department shall announce to all known interested parties, and through major media throughout the state, a grant and loan application period of at least ninety days' duration. This announcement shall be made as often as the director deems appropriate for proper utilization of resources, but at least twice annually. The department shall then promptly grant as many applications as will utilize available funds less appropriate administrative costs of the department, not to exceed five percent of annual revenues to the fund.

(2) The department shall give first priority to applications for projects and activities which utilitize existing privately owned housing stock. Such projects and activities shall be evaluated under subsection (3) of this section. Second priority shall be given to activities and projects which utilize existing publicly owned housing stock. Such projects and activities shall be evaluated under subsection (3) of this section.

(3) The department shall give preference for applications based on the following criteria:

(a) The degree of leveraging of other funds that will occur;

(b) Recipient contributions to total project costs, including allied contributions from other sources such as professional, craft and trade services, and lender interest rate subsidies;

(d) Projects that encourage ownership, management, and other project-related responsibility opportunities;

(e) Projects that demonstrate a strong probability of serving the original target group or income level for a period of at least fifteen years;

(f) The applicant has the demonstrated ability, stability and resources to implement the project;

(g) Projects which demonstrate serving the greatest need; and

(h) Projects that provide housing for persons and families with the lowest incomes.

NEW SECTION. Sec. 9. (1) The department may use moneys from the housing trust fund to provide preconstruction technical assistance to eligible recipients seeking to construct, rehabilitate, or finance housing-related services for very low and low-income persons. The department shall emphasize providing preconstruction technical assistance services to rural areas and small cities and towns. The department may contract with nonprofit organizations to provide this technical assistance. The department may contract for any of the following services:

(a) Financial planning and packaging for housing projects, including alternative ownership programs, such as limited equity partnerships and syndications;

(b) Project design, architectural planning, and siting;

(d) Securing matching resources for project development;

(e) Maximizing local government contributions to project development in the form of land donations, infrastructure improvements, waivers of development fees, locally and state-managed funds, zoning variances, or creative local planning;

(f) Coordination with local planning, economic development, and environmental, social service, and recreational activities;

(g) Construction and materials management; and

(h) Project maintenance and management.

(2) The department shall publish requests for proposals which specify contract performance standards, award criteria, and contractor requirements. In evaluating proposals, the department shall consider the ability of the contractor to provide technical assistance to low and very low-income persons and to persons with special housing needs.

NEW SECTION. Sec. 10. The director shall monitor the activities of recipients of grants and loans under this chapter to determine compliance with the terms and conditions set forth in its application or stated by the department in connection with the grant or loan.

NEW SECTION. Sec. 11. The department shall have the authority to promulgate rules pursuant to chapter 34.04 RCW, regarding the grant and loan process, and the substance of eligible projects, consistent with this chapter.

NEW SECTION. Sec. 12. The director shall promptly appoint a low income housing assistance advisory committee composed of a representative from each of the following groups: Apartment owners, mobile home park owners, realtors, mortgage lending or servicing institutions, private nonprofit housing assistance programs, and public housing assistance programs. The advisory group shall advise the director on housing needs in this state, operational aspects of the grant and loan program or revenue collection programs established by this chapter, and implementation of the policy and goals of this chapter.

Sec. 13. Section 19, chapter 222, Laws of 1951 as last amended by section 44, chapter 52, Laws of 1957 and RCW 18.85.310 are each amended to read as follows:

(1) Every licensed real estate broker shall keep adequate records of all real estate transactions handled by or through him. The records shall include, but are not limited to, a copy of the earnest money receipt, and an itemization of the broker's receipts and disbursements with each transaction. These records and all other records hereinafter specified shall be open to inspection by the director or his authorized representatives.

(2) Every real estate broker shall also deliver or cause to be delivered to all parties signing the same, at the time of signing, conformed copies of all earnest money receipts, listing agreements and all other like or similar instruments signed by the parties, including the closing statement.

(3) Every real estate broker shall also keep separate real estate fund accounts in a recognized Washington state depositary authorized to receive funds in which shall be kept separate and apart and physically segregated from licensee broker's own funds, all funds or moneys of clients which are being held by such licensee broker pending the closing of a real estate sale or transaction, or which have been collected for said client and are being held for disbursement for or to said client and such funds shall be deposited not later than the first banking day following receipt thereof.

(4) Separate accounts comprised of clients funds required to be maintained under this section shall be interest-bearing accounts from which withdrawals or transfers can be made without delay, subject only to the notice period which the depository institution is required to reserve by law or regulation.

(5) Every real estate broker shall maintain a pooled interest-bearing escrow account for deposit of client funds that are nominal in amount or expected to be held for a short period of time. The interest accruing on this account, net of any reasonable transaction costs, shall be paid to the state treasurer for deposit in the Washington housing trust fund created by section 2 of this 1986 act. An agent may, but shall not be required to, notify the client of the intended use of such funds.

(6) All client funds shall be deposited in the account specified in subsection (5) of this section unless they are deposited in:

(a) A separate interest-bearing trust account for the particular client or client's matter on which the interest will be paid to the client; or

(b) A pooled interest-bearing trust account with subaccounting that will provide for computation of interest earned by each client's funds and the payment thereof to the client.

(7) In determining whether to use the account specified in subsection (5) of this section or an account specified in subsection (6) of this section, an agent shall consider only whether the funds to be invested could be utilized to provide a positive net return to the client, as determined by taking into consideration the following factors:

(a) The amount of interest that the funds would earn during the period they are expected to be deposited;

(b) The cost of establishing and administering the account, including the cost of the real estate broker's services; and

(8) As to accounts created under subsection (5) of this section, agents shall direct the depository institution to: (a) Remit interest or dividends, net of any reasonable service charges or fees, on the average monthly balance in the account, or as otherwise computed in accordance with an institution's standard accounting practice, at least quarterly, to the state treasurer for deposit in the housing trust fund created by section 2 of this 1986 act; and (b) transmit to the director a statement showing the name of the person or entity for whom the remittance is spent, the rate of interest applied, and the amount of service charges deducted, if any, and the account balance(s) of the period in which the report is made, with a copy of such statement to be transmitted to the depositing person or firm.

The director shall forward a copy of these reports to the department of licensing to aid in the enforcement of the requirements of this section.

The director shall prepare an annual report to the legislature that summarizes the housing trust fund's income, grants and operating expenses, implementation of its program and any problems arising in the administration thereof.

The provisions of this section shall not relieve any real estate broker from any obligation with respect to the safekeeping of clients' funds.

Any violation by a real estate broker of any of the provisions of this section, or RCW 18.85.230, shall be grounds for revocation of the licenses issued to the broker.

Sec. 14. Section 27, chapter 207, Laws of 1973 1st ex. sess. as amended by section 1, chapter 233, Laws of 1975 1st ex. sess. and RCW 59.18.270 are each amended to read as follows:

All moneys paid to the landlord by the tenant as a deposit as security for performance of the tenant's obligations in a lease or rental agreement shall promptly be deposited by the landlord in a trust account, maintained by the landlord for the purpose of holding such security deposits for tenants of the landlord, in a bank, savings and loan association, mutual savings bank, or licensed escrow agent located in Washington. ((~~Unless otherwise agreed in writing, the landlord shall be entitled to receipt of interest paid on such trust account deposits.~~)) In the case of landlords who maintain ten or fewer residential rental units within the state the landlord shall be entitled to receipt of the interest paid on such trust account deposits unless otherwise agreed in writing. All other landlords shall direct the depository institution to pay the interest on such trust accounts to the state treasurer to be placed in the housing trust fund established by section 2 of this 1986 act. The landlord shall provide the tenant with a written receipt for the deposit and shall provide written notice of the name and address and location of the depository and any subsequent change thereof. If during a tenancy the status of landlord is transferred to another, any sums in the deposit trust account affected by such transfer shall simultaneously be transferred to an equivalent trust account of the successor landlord, and the successor landlord shall promptly notify the tenant of the transfer and of the name, address and location of the new depository. The tenant's claim to any moneys paid under this section shall be prior to that of any creditor of the landlord, including a trustee in bankruptcy or receiver, even if such moneys are commingled.

Sec. 15. Section 23, chapter 179, Laws of 1983 and RCW 63.29.230 are each amended to read as follows:

(1) Except as otherwise provided by this section, the department shall promptly deposit in the ((~~general~~)) housing trust fund ((~~of this state~~)) created by section 2 of this 1986 act all funds received under this chapter, including the proceeds from the sale of abandoned property under RCW 63.29.220. The department shall retain in a separate trust fund an amount not less than two hundred fifty thousand dollars from which prompt payment of claims duly allowed must be made by the department. Before making the deposit, the department shall record the name and last known address of each person appearing from the holders' reports to be entitled to the property and the name and last known address of each insured person or annuitant and beneficiary and with respect to each policy or contract listed in the report of an insurance company its number, and the name of the company. The record must be available for public inspection at all reasonable business hours.

(2) The department of revenue may pay from the trust fund provided in subsection (1) of this section any costs of administering this chapter.

NEW SECTION. Sec. 16. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 17. Sections 1 through 12 of this act shall constitute a new chapter in Title 43 RCW.