BILL REQ. #:  H-4828.2 

READ FIRST TIME 2/7/06.   

     AN ACT Relating to increasing nonprofit housing development capacity; amending RCW 43.180.160; and adding new sections to chapter 43.180 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

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)) four 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 43.180 RCW to read as follows:
     The commission is authorized 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, which are owned or controlled by nonprofit corporations, as defined in RCW 43.180.300.
     In establishing this revolving fund program, and in addition to its authority under this chapter, the commission is authorized to:
     (1) Establish criteria for the eligibility of multiunit residential projects and project owners for participation in the revolving fund program;
     (2) Establish the scope of coverage and other policies and operating procedures for the revolving fund program;
     (3) Establish 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 from amounts on deposit in the special account of the commission authorized in this section;
     (4) Provide for the reimbursement of premiums to the extent not required for the orderly and cost-effective administration of the revolving fund program;
     (5) Establish procedures for the investigation, defense, and payment of claims and the recoupment of claim payments made and costs associated with respect to projects from the owners of such projects over time; and
     (6) Do all things 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.
     The commission is authorized to establish a special account to be known as the multiunit residential building construction liability account, separate and apart from other funds and accounts of the commission, to fund the revolving fund program. The commission will participate in the capitalization of the account with a one-time transfer of one million dollars of commission funds. All receipts from appropriations and transfers made in accordance with this act, as well as premiums collected by the commission and awards received by the commission with respect to projects, shall be deposited into this account. The commission shall invest in the account in a prudent manner for the purposes of the revolving fund program. Investment earnings in the account shall be deposited to the account. The commission exclusively shall use the account to pay all administrative costs of the revolving fund program and to pay liability claims arising from a multiunit residential building covered by the revolving fund program. Any claims against the commission or the fund arising from or with respect to the revolving fund program may only be paid from amounts in the account, and neither the commission nor the state of Washington shall have any liability with respect to such claims.

NEW SECTION.  Sec. 4   A new section is added to chapter 43.180 RCW to read as follows:
     The state treasurer shall transfer from the housing trust fund account into the multiunit residential building construction liability account up to one million dollars of the funds appropriated for the development of a self-insurance risk pool for nonprofit housing developers. Upon transfer of such funds the department of community, trade, and economic development's responsibility to create a similar revolving fund ends.