HOUSE BILL REPORT

                      HB 2486

                     As Reported By House Committee on:

                                  Housing

                      Capital Facilities and Financing

Title:  An act relating to the Washington housing finance commission.

Brief Description:  Defining further nonprofit facilities eligible for financing by the Washington state housing commission.

Sponsor(s):  Representatives Leonard, Mitchell, Nelson, Ogden, Franklin, Winsley and Wineberry.

Brief History:

   Reported by House Committee on:

Housing, January 24, 1992, DPS;

Capital Facilities and Financing, February 11, 1992, DPS(HO-A CFF).

HOUSE COMMITTEE ON

HOUSING

Majority Report: The substitute bill be substituted therefor and the substitute bill do pass.  Signed by 6 members:  Representatives Nelson, Chair; Franklin, Vice Chair; Mitchell, Ranking Minority Member; Winsley, Assistant Ranking Minority Member; Leonard; and Ogden.

Staff:  Kenny Pittman (786-7392).

Background:  The Washington State Housing Finance Commission (WSHFC) assists in the financing of affordable housing through a variety of programs including the issuance of tax-exempt nonrecourse revenue bonds.  The WSHFC's bonds are repaid from revenues generated by the activity being financed and are not obligations of the state.

In 1990, the Legislature expanded the financing authority of the WSHFC to allow the financing of facilities owned by nonprofit organizations and are used for educational, charitable or literary activities.  The activities of the nonprofit organization must be within the meaning of section 501(c)(3) of the Internal Revenue Code.  However, the WSHFC can not finance projects that are eligible for assistance through the Washington Health Care Facilities Authority (WHCFA).

The WHCFA is authorized to assist in minimizing the capital cost of construction of not for profit health care facilities.  This is accomplished through the issuance of tax-exempt revenue bonds and loans of the proceeds to tax-exempt health care facilities.  Bond proceeds may be used for such purposes as capital construction, refinancing of existing debt, remodeling, or equipment needs.

Summary of Substitute Bill:  The definition of "nonprofit facilities" in the Washington State Housing Finance Commission's (WSHFC) enabling statute is amended to allow the financing of facilities for persons with mental illness and/or developmental disabilities.  The definition does not include facilities that provide hospital-based evaluation and treatment.

Substitute Bill Compared to Original Bill:  The substitute clarifies the type of facilities that can receive financing and that hospital-based evaluation and treatment facilities are not eligible for financing through the Washington State Housing Financing Commission.

Fiscal Note:  Not requested.

Effective Date of Substitute Bill:  Ninety days after adjournment of session in which bill is passed.

Testimony For:  The current law is unclear on which financing authority could provide financing for facilities that provide community-based treatment for persons with mental illness or developmental disabilities.  This bill clarifies the problem and will provide a source of funding for these needed facilities.

Testimony Against:  None.

Witnesses:  Kim Herman, Washington State Housing Finance Commission (pro);  John VanGorkom, Washington Health Care Facilities Authority (pro); and Mark McLaughlin, State Treasurer's Office (pro).

HOUSE COMMITTEE ON

CAPITAL FACILITIES AND FINANCING

Majority Report: The substitute bill by Committee on Housing be substituted therefor and the substitute bill as amended by Committee on Capital Facilities & Financing do pass.  Signed by 15 members:  Representatives H. Sommers, Chair; Rasmussen, Vice Chair; Schmidt, Ranking Minority Member; Neher, Assistant Ranking Minority Member; Beck; Braddock; Brough; Casada; Fraser; Heavey; Jacobsen; Ogden; Peery; Silver; and Wang.

Staff:  Kenny Pittman (786-7392).

Summary of Recommendation of Committee on Capital Facilities and Financing Compared to Recommendation of Committee on Housing:  Language is added to clarify that financing provided to nonprofit corporations, which also receive service contract payments from the state, does not imply an expectation or obligation of continued state funding for the service beyond any existing contract terms.

Fiscal Note:  Not requested.

Effective Date of Substitute Bill as Amended:  Ninety days after adjournment of session in which bill is passed.

Testimony For:  Health care treatment is changing.  It is no longer required to be just in a hospital.  Many health care services can be provided in facilities that have a residential component.  The bill would help clear up the confusion between the Housing Finance Commission and the Health Care Financing Authority on which agency can provide the necessary financing for these facilities.

Testimony Against:  None.

Witnesses:  Kim Herman, Washington State Housing Finance Commission (pro); John VanGorkom, Washington Health Care Facilities Authority (pro); and Thelma Struck, Department of Social and Health Services (pro).