HOUSE BILL REPORT

HB 1563

BYRepresentatives Wineberry, Beck, Nutley, Leonard and Moyer

Instituting a self-help housing program.

House Committe on Housing

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  (6)

      Signed by Representatives Nutley, Chair; Leonard, Vice Chair; Armstrong, Sanders, Todd, J. Williams and Wineberry.

Minority Report:  Do not pass.  (1)

      Signed by Representative Barnes.

House Staff:Kenny Pittman (786-7392)

AS REPORTED BY COMMITTEE ON HOUSING FEBRUARY 4, 1988

BACKGROUND:

U.S. Department of Agriculture, through the Farmers Home Administration (FmHA) has a program that assists lower income households in obtaining homeownership.  Through the provision of technical assistance and low interest rate loans, groups of households collectively build or rehabilitate their own housing.  The technical assistance is provided through a local nonprofit organization that agrees to train the households in the necessary skills.

The federal regulations require that the FmHA assistance can not be made in areas that are not considered rural (usually a population of less than ten thousand).

The use of self-help housing, as operated by FmHA, has been viewed as a possible approach to homeownership for households in the non-rural areas. Presently, there is no program of technical or financial assistance for low and very low-income households wanting to building their own housing in non-rural areas.

SUMMARY:

SUBSTITUTE BILL:  The Department of Community Development (DCD) is authorized to make grants to nonprofit organizations to provide assistance to low and very low income persons or households who are self-rehabilitators or owner- builders.

The grants may be used for activities that encourage and facilitate the collective rehabilitation or construction of housing using various self-help techniques including, but not limited to: (a) new construction, rehabilitation, or acquisition and rehabilitation of housing for low and very low-income households; (b) land acquisition for new construction; (c) construction mortgage insurance; and (d) technical assistance (such as design, finance and consultation services) and related administrative costs, not to exceed ten percent of the grant award of the nonprofit organization.

DCD is required to select up to five local owner-building and self-help rehabilitation projects for funding.  In selecting the local projects, DCD shall consider: (a) capacity of nonprofit to manage the required activities; (b) financial resources to complete the project; and (c) projects that contain at least eight households.

Priority is given to projects that: (a) are located in areas not eligible for U.S. Farmers Home Administration (FmHA) assistance; and (b) assist the very low- income households.

DCD shall report to the Governor and the legislature on the results of the local self-help housing projects and make recommendations for improvement or continuation.

DCD may adopt rules necessary to carry out the program.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  Related administrative costs of the nonprofit organization cannot exceed ten percent of the grant award.

Appropriation:    $450,000 is appropriated to the Department of Community Development.

Fiscal Note:      Requested January 20, 1988.

Effective Date:The bill takes effect on July 1, 1988.

House Committee ‑ Testified For:    Michael Moriarty, House My People; and Arnold Livingston, Senior Citizens Lobby

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    The collective construction of housing using the labor of the owner and others is already successful in the rural areas on a national level as well as the state.  This work group approach lowers the cost of housing and allows many lower-income persons including seniors, the opportunity of homeownership. Besides the benefit of homeownership this approach builds self-sufficiency and pride in the people.

House Committee - Testimony Against:      None Presented.