Background: The Legislature enacted the Homeless Housing and Assistance Act (Act) in 2005, with the goal of reducing homelessness by 50 percent statewide and in each county by 2015. The Department of Commerce (Commerce), with the support of the Interagency Council on Homelessness and the Affordable Housing Advisory Board, is responsible for preparing and publishing a ten-year homeless housing strategic plan with statewide goals and performance measures, and providing biennial progress reports to the Governor and the Legislature. Local areas must also have ten-year plans that are substantially consistent with the state plan.

A $40 surcharge is imposed on recording of certain documents with county auditors for local homeless housing and assistance. The surcharge applies to certain documents relating to real property specified in statute including deeds, mortgages, community property agreements, leases, and other documents related to property ownership, as well as other documents pertaining to real property as determined by Commerce. The surcharge specifically does not apply to assignments or substitutions of previously recorded deeds or trusts, or any documents exempt from a recording fee by state law.

Of the $40 recording surcharge, the county auditor retains 2 percent; 60 percent goes to the county for homeless housing and assistance, of which 6 percent may be used by the county for administrative costs; and the remaining funds are deposited into the Home Security Fund account for homeless housing programs administered by Commerce. Commerce may use 12.5 percent of the funds for administrative fees and the remaining 87.5 percent is used to provide housing and shelter for homeless people and fund the homeless housing grant program.

The document recording surcharge is currently $40 per recorded document, but is scheduled to reduce to $30 in 2015, and to $10 in 2017.

Summary of Bill (Proposed Substitute): The $40 document recording surcharge is extended to July 1, 2016.

Documents exempt from the recording surcharge is clarified and expanded to include (1) any recorded documents otherwise exempt from a recording fee or additional surcharges under state law, (2) marriage licenses issued by the county auditor, and (3) documents recording a state, county, or city lien or satisfaction of lien.

Of the recording surcharge funds used by Commerce, at least 45 percent must be used for private rental housing vouchers. Private rental housing is defined to mean housing owned by a private landlord and does not include housing owned by a nonprofit housing entity or government entity. If the State Auditor finds that Commerce fails to use 45 percent of its funds for private rental vouchers, Commerce must submit a correction action plan to the Office of Financial Management (OFM). OFM must monitor the plan and expenditures. If Commerce does not correct its actions, OFM must reduce Commerce's allotments and expenditures in the same amount. Additionally, the State Auditor must recommend an alternative method distributing funds to ensure that funds are distributed for private rental housing.

Local governments that use recording surcharge funds must communicate with landlords and others to develop an interested landlord list, and before a tenant can be placed in housing using a voucher from surcharge funds, an email must be sent to the interested landlords notifying them that funds are available for private rental housing.

Beginning in 2014, the State Auditor, instead of Commerce, must produce an annual report of the use of surcharge funds and provide a report to the Legislature by December 15. The State Auditor must provide a preliminary report to both Commerce and one landlord representative by November 15 of each year and both Commerce and the landlord representative are allowed to make comments regarding the findings, and these comments must be included in the final report. The State Auditor must conduct a performance audit of the use of document recording surcharge funds for homeless housing assistance. The performance audit is due December 1, 2014.

Commerce must convene a stakeholder group to discuss long-term funding options for homeless housing programs that do not include document recording surcharges. A report of the group is due December 1, 2014.