"NEW SECTION.  Sec. 1   A new section is added to chapter 43.180 RCW to read as follows:
     The legislature finds that nonprofit organizations that develop affordable housing for low-income households are critical in addressing the growing affordable housing crisis in Washington state. Nonprofit housing developers are mission-driven entities that prioritize the needs and interests of residents over maximizing profits and, therefore, have a vested interest in developing, maintaining, and preserving safe, quality, and affordable housing options for low-income and indigent individuals and families.
     The state also finds, however, that organizational capacity and housing development experience among nonprofit organizations is inconsistent across the state. This inconsistency is reflected in the relative lack of nonprofit housing developers that exist in rural areas of the state.
     The legislature finds that many nonprofit housing developers choose not to develop condominiums and other multiunit residential buildings because private market insurance rates to cover the construction liability insurance required for such projects by many lenders is unaffordable. Construction liability insurance costs are particularly cost prohibitive for nonprofit organizations that, rather than selling or reselling individual units when construction is complete and thereby recouping the cost of the construction insurance, typically retain ownership of units for the purpose of maintaining affordability for low-income or indigent households.
     Given the nonprofit status and focus on serving low-income and indigent households over the long term, nonprofit housing developers are unique and critical to ensuring that low-income and indigent households have the opportunity to obtain and retain stable housing in Washington.
     Therefore, it is the intent of the legislature to establish policies and provide incentives that will increase the number of nonprofit housing developers that create affordable housing opportunities for low-income and indigent households, and which will simultaneously increase the ability of existing nonprofit housing developers to expand housing development programs and to sustain the resulting affordable housing units over the long term.

Sec. 2   RCW 43.180.160 and 1999 c 131 s 2 are each amended to read as follows:
     The total amount of outstanding indebtedness of the commission may not exceed ((three)) five billion dollars at any time. The calculation of outstanding indebtedness shall include the initial principal amount of an issue and shall not include interest that is either currently payable or that accrues as a part of the face amount of an issue payable at maturity or earlier redemption. Outstanding indebtedness shall not include notes or bonds as to which the obligation of the commission has been satisfied and discharged by refunding or for which payment has been provided by reserves or otherwise.

NEW SECTION.  Sec. 3   A new section is added to chapter 43.185 RCW to read as follows:
     (1) The department shall contract with the Washington state housing finance commission to establish a multiunit residential building construction liability revolving fund program to provide supplemental funding for liability claims arising from the construction or rehabilitation of condominium or other multiunit residential buildings, as defined in RCW 64.55.010, that are owned or controlled by nonprofit corporations, as defined in RCW 43.180.300, for developing affordable housing for low-income households. The revolving fund program shall include the following elements:
     (a) Criteria for the eligibility of multiunit residential projects and project owners for participation in the revolving fund program;
     (b) Provisions governing the scope of coverage and other policies and operating procedures for the revolving fund program;
     (c) Establishment of premiums to be paid by project owners to ensure the viability of the revolving fund program and that all costs incurred by the commission in administering the revolving fund program will be paid or reimbursed as provided in subsection (3) of this section;
     (d) Provisions for the reimbursement of premiums to the extent not required for the orderly and cost-effective administration of the revolving fund program;
     (e) Establishment of procedures for the investigation, defense, and payment of claims and the recoupment of claim payments made and costs associated with respect to participating projects from the project owners over time; and
     (f) Any other elements necessary and desirable to implement the revolving fund program in order to provide a cost-effective source of liability funding which is supplemental to insurance and other resources available to project owners.
     (2) The authority to enter into a contract with the commission under this section is contingent on the commission's contribution of one million dollars of commission funds to assist in capitalizing the revolving fund program.
     (3) Any claims against the commission arising from or with respect to the revolving fund program may be paid only from amounts provided by the commission for this purpose, provided by the contract entered into pursuant to this section, or provided by premiums paid under the revolving fund program, and neither the commission, the department, nor the state of Washington shall have any liability with respect to such claims.

NEW SECTION.  Sec. 4   If specific funding for the purposes of section 3 of this act, referencing section 3 of this act by bill or chapter number, is not provided by June 30, 2006, in the capital appropriations act, section 3 of this act is null and void."