HOUSE BILL REPORT
E2SHB 164
BYHouse Committee on Ways & Means/Appropriations (originally sponsored by Representatives Locke, Niemi, Allen, Fisch, Brekke, O'Brien, Nutley, Belcher, Wang, Jacobsen, Lux, Nelson and Dellwo)
Providing funding for the Washington housing trust fund.
House Committe on Housing
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. (5)
Signed by Representatives Nutley, Chair; Leonard, Vice Chair; Armstrong, Ebersole and Todd.
Minority Report: Do not pass. (4)
Signed by Representatives Barnes, Padden, Sanders and J. Williams.
House Staff:Kenny Pittman (786-7392)
Rereferred House Committee on Ways & Means/Appropriations
Majority Report: The second substitute be substituted therefor and the second substitute bill do pass. (14)
Signed by Representatives Representatives Locke, Chair; Allen, Belcher, Brekke, Bristow, Ebersole, Grimm, Hine, McMullen, Niemi, Peery, Sayan, H. Sommers and Sprenkle.
Minority Report: Do not pass. (4)
Signed by Representatives Representatives Fuhrman, Holland, Silver and B. Williams.
House Staff: Susan Kavanaugh (786-7145)
AS PASSED HOUSE MARCH 20, 1987
BACKGROUND:
Major cutbacks in federal housing programs have reduced the ability of state and local governments to address the housing needs of low income citizens as well as special needs groups. In 1985, legislation was passed that created the Washington housing trust fund to assist in meeting the basic housing needs of low- and very low-income citizens, citizens in rural areas and citizens with special housing needs. The 1985 legislation did not fund sources for the housing trust fund.
Current law requires real estate brokers to keep client funds, in a separate real estate fund account prior to the closing of a real estate sale or transaction. These accounts must be maintained in a recognized Washington state depository authorized to receive funds and kept separate from the broker's funds. All funds collected from the client must be deposited not later than the first banking day following receipt.
The 1985 legislation authorizes the Department of Community Development to develop rules for the award and distribution of funds through the housing trust fund.
SUMMARY:
Funding for the Washington housing trust fund is provided by amending the statute that relates to real estate transactions.
The real estate broker's separate real estate fund account to keep client funds, prior to closing of a real estate sale or transaction, must be interest-bearing and accessible for immediate withdrawals or transfers.
Funds that are nominal or short term are deposited into a pooled interest-bearing escrow account. A nominal or short term deposit is defined as an account that would not produce a positive net interest income minus reasonable transaction fees of the financial institution. Interest from the pooled nominal or short term deposits are paid to the state treasurer for deposit into the housing trust fund. Interest from real estate earnest money deposits that are not nominal or short term, minus reasonable transaction fees, are paid to the client.
A low income housing assistance advisory committee is appointed to advise the director of community development on housing needs and program operation. The committee is comprised of representatives from apartment owners, realtors, mortgage lenders or servicing institutions, private nonprofit housing assistance programs, tenant associations and public housing assistance groups.
The Department of Community Development will consider recommendations from counties and cities affected by grant making decisions of the housing trust fund. The department also prepares annual reports on the income, grants and operating expenses of the housing trust fund. The reports are submitted to the appropriate standing committees in the House of Representatives and the Senate.
EFFECT OF SENATE AMENDMENT(S): The interest earned from property management trust accounts is exempt from placement into the housing trust fund.
The funding of housing related social services is removed as an eligible activity of the housing trust fund.
The Broker's Trust Account Board is created as part of the housing trust fund. The board consists of seven members, six appointed by the governor and one appointed by the Real Estate Commission. Three members appointed by the governor must be real estate brokers or salespersons and the other three members must represent private nonprofit housing assistance programs and any statewide association of public housing authorities.
The board shall review loan and grant applications for funding through the housing trust fund presented by the director of Community Development. The board's approval authority is limited to eligible activities of the housing trust fund and to the amount of revenue provided through the interest on broker earnest money accounts. The board also serves in an advisory capacity to the Real Estate Commission with regard to licensee education programs.
The state treasurer shall divide the revenue received from the brokers' nominal or short term trust accounts so that the housing trust fund receives 75 percent and the Real Estate Commission account receives 25 percent.
A provision to allow deposits into the housing trust fund was added to the state lottery account.
Twelve million dollars, or so much thereof as shall be necessary to implement the purposes of the housing trust fund, is appropriated from the housing trust fund to the Department of Community Development for the biennium ending June 30, 1989.
Fiscal Note: Requested February 24, 1987.
Effective Date:This bill takes effect on January 1, 1988.
House Committee ‑ Testified For: (Housing) Representative Gary Locke; Sandy Watson, City of Seattle; Jane Noland, Seattle City Council; Barbara Clark, Director, Legal Foundation of Washington; Steve Fredrickson, Staff Attorney, Evergreen Legal Services; Larry Ruff, Business Administrator, Spokane Salvation Army; Maureen Howard, Washington State Coalition for the Homeless; John T. O'Brien, Seattle Tenants Union; Pat Kennedy, Seattle Tenants Union; Karen Kushner, Realtor; Jean Lough, President, Alliance for Mentally Ill of Washington State; Phil Hoge, Office of Rural and Farmworker Housing; Kurt Creager, King County Department of Community Development; Sue Taoka, Washington Association of Economic Development; Claire Demler, Common Ground; Mike Sivia, Association of Washington Housing Authorities; Reverend David Bloom, Church Council of Greater Seattle; Bill Ware, Downtown Human Services Council, Seattle; Jeff Collard, Yakima County Coalition for the Homeless; John Jensen, Executive Director, Mobile Home Owners Association of America; Norm McLoughlin, Kitsap County Community Development Department; Michael Midkiff, Crisis Housing Assistance Program, Spokane Salvation Army; and Kathy Carpenter.
Substitute: (Ways & Means/Appropriations) None Presented.
House Committee - Testified Against: (Housing) Carroll Duval, Apartment Operators Association; Deward Johnson, Executive Director, Washington Apartment Association; Ed Murphy, Washington Association of Realtors; Nancy DeLorenzo, Washington Apartment Association; and Mark Triplett, Seattle Master Builders.
Substitute: (Ways & Means/Appropriations) None Presented.
House Committee - Testimony For: (Housing) The Washington housing trust fund is needed to respond to cutbacks in Federal housing funds for low income persons. The housing trust fund assists the state in responding to the growing housing needs of the homeless, large families, disabled, tribal households, elderly, single head of household families and farmworkers. The housing trust fund will also allow local jurisdictions the ability to design programs to meet their needs. This "Block Grant" approach is a unique feature of the program. Funding of the trust fund is not from limited state resources and is renewable.
Substitute: (Ways & Means/Appropriations) None Presented.
House Committee - Testimony Against: (Housing) The objectives of the housing trust fund are good. The concern is that a specific industry is being singled out and "taxed" to address a problem. The interest from tenant security deposits is used to offset operating costs by the apartment owners. By requiring that this interest go to the housing trust fund, this removes income available to the apartment owners for operation. This bill is a tax against the revenue of the apartment owners.
Substitute: (Ways & Means/Appropriations) None Presented.
VOTE ON FINAL PASSAGE:
Yeas 51; Nays 43; Absent 3; Excused 1
Voting Nay: Representatives Allen, Amondson, Ballard, Barnes, Baugher, Beck, Betrozoff, Brough, Bumgarner, Cantwell, Chandler, Cooper, Crane, Day, Doty, Ferguson, Fuhrman, Hankins, Hargrove, Heavey, Holland, Jesernig, P. King, R. King, Lewis, May, McLean, Meyers, Miller, Moyer, Nealey, Prince, Rayburn, Sanders, Schoon, Silver, C. Smith, L. Smith, D. Sommers, Walker, B. Williams, J. Williams and S. Wilson
Absent: Representatives Fisch, Scott and Mr. Speaker
Excused: Representative Padden