HOUSE BILL REPORT
HB 1879
BYRepresentatives Locke, Wineberry, Armstrong, Anderson, Hine, Nutley, Leonard and R. King
Establishing procedures for prepayment of federal subsidies on multifamily rental housing developments.
House Committe on Housing
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. (8)
Signed by Representatives Nutley, Chair; Leonard, Vice Chair; Armstrong, Barnes, Sanders, Todd, J. Williams and Wineberry.
House Staff:Kenny Pittman (786-7392)
AS REPORTED BY COMMITTEE ON HOUSING FEBRUARY 4, 1988
BACKGROUND:
In the 1970's, the Federal government developed a variety of programs to assist in the construction or rehabilitation of rental housing that would be available to lower income persons at affordable rents. The programs administered by the U.S. Department of Housing and Urban Development (HUD), and the U.S. Department of Agriculture's Farmers Home Administration (FmHA) provided: (a) direct low-interest rate loans to public and private developers; (b) insurance on mortgages made by private financial institutions to public or private developers; or (c) rental subsidies to tenants.
The contract for many of these programs have provisions that allow owners of the multifamily housing development to terminate or prepay the subsidy after a specified time. With the termination or prepayment of the subsidy, the obligation to remain in the specific program is eliminated.
Many of the multifamily housing developments assisted in the 1970's have or are reaching the specified time when the owner can terminate or prepay the mortgage or subsidy, thereby being relieved of the program's rent obligation. The concern is that local governing bodies need time to respond to the potential loss of affordable housing units and to work with affected tenants to reduce the potential hardship.
The existing Residential Landlord-Tenant Act does not require owners of a multifamily housing development, constructed or rehabilitated through a HUD or FmHA subsidy program, to provide special notice to tenants or local governing bodies prior to termination or prepayment of the federal subsidy.
SUMMARY:
SUBSTITUTE BILL: The Residential Landlord-Tenant Act is revised to require a twelve month advance notice to the tenants and governmental bodies when a multifamily rental housing development assisted through a HUD or FmHA subsidy program, is to be terminated or prepaid by the owner.
PROJECT OWNER REQUIREMENTS
The owner must provide a written notification to the individual tenants, the clerk of the local governing body, and the Washington State Department of Community Development.
1. Tenant Notification - Content
The tenant's notification shall state: (a) the date of the proposed termination or prepayment; and (b) the effects of the proposed termination or prepayment upon the management, tenant policies and tenant's rents.
2. State and Local Governing Body Notification - Content
The state and local government notification shall state: (a) the number of tenants in project; (b) the number and size of units receiving federal assistance; (c) the race, age, family size and estimated incomes of the tenants affected by the termination or prepayment; (d) the projected rent increases; and (e) the anticipated termination or prepayment date.
OTHER REQUIREMENTS
1. Tenant Eviction
During the required notification period the owner of the affected housing may not evict a tenant, or demand possession of any unit except for specified causes which include: (a) failure to pay rent; (b) violation of a obligation of tenancy; (c) nuisance to other occupants or owner; (d) use of unit for illegal purposes; (e) refusal of reasonable access to owner for required repairs; (f) required demolition in response to government order; or (g) for use and occupancy by owner or immediate family.
2. Rent Increases
During the twelve month notification period the owner may not increase the rent, of a dwelling unit in the assisted housing development, above the amount authorized in the contract between the Federal government and the owner.
VIOLATION - PENALTIES
Any party entitled to receive notification of prepayment or termination may bring civil action to enjoin or recover damages, as a result of not providing proper notification of termination or prepayment, of the federal mortgage insurance program on the housing development.
SUBSTITUTE BILL COMPARED TO ORIGINAL: Owners of federal multifamily housing subsidy programs, not originally mentioned in the bill, are now required to provide the twelve month notification of prepayment or termination of subsidy.
Owners are required to provide information on tenant race and age as part of notification to the state and local governing bodies.
The gross misdemeanor provision and limit on liability not exceed two thousand dollars, plus attorney fees, are removed.
Actions available to any party entitled to receive notification of prepayment or termination are strengthened to include bringing civil action to enjoin or recover damages, plus attorney fees.
Fiscal Note: Requested January 29, 1988.
House Committee ‑ Testified For: Gregory Provenzano, Evergreen Legal Services.
House Committee - Testified Against: None Presented.
House Committee - Testimony For: The loss of affordable housing caused by the prepayment or termination of federal subsidies is not just a Seattle problem. Rural areas are also faced with the loss of affordable housing, as owners of multifamily housing projects, that were financed through programs of the Farmers Home Administration, are preparing or terminating their participation in federal subsidy programs. This bill will allow those communities that must face the potential loss of affordable housing time to look for other housing alternatives for the affected tenants.
House Committee - Testimony Against: None Presented.