SENATE BILL REPORT

E2SHB 164

BYHouse Committee on Ways & Means/Appropriations (originally sponsored by Representatives Locke, Niemi, Allen, Fisch, Brekke, O'Brien, Nutley, Belcher, Wang, Jacobsen, Lux, Nelson and Dellwo)

Providing funding for the Washington housing trust fund.

House Committe on Housing

Rereferred House Committee on Ways & Means/Appropriations

Senate Committee on Commerce & Labor

Senate Hearing Date(s):March 31, 1987; April 2, 1987; April 3, 1987

Majority Report:  Do pass as amended.

      Signed by Senators Warnke, Chairman; Smitherman, Vice Chairman; Vognild, West, Williams, Wojahn.

Senate Staff:Dave Cheal (786-7576)

                  April 6, 1987

AS REPORTED BY COMMITTEE ON COMMERCE & LABOR, APRIL 3, 1987

BACKGROUND:

Major cutbacks in federal housing programs have reduced the ability of state and local governments to address the housing needs of low income citizens as well as special needs groups.  In 1985 legislation was passed that created the Washington housing trust fund to assist in meeting the basic housing needs of low- and very low-income citizens, citizens in rural areas and citizens with special housing needs.  The 1985 legislation did not fund sources for the housing trust fund.

Current law requires real estate brokers to keep client funds, in a separate real estate fund account prior to the closing of a real estate sale or transaction.  These accounts must be maintained in a recognized Washington state depository authorized to receive funds and kept separate from the broker's funds.  All funds collected from the client must be deposited not later than the first banking day following receipt.

The 1985 legislation authorizes the Department of Community Development to develop rules for the award and distribution of funds through the housing trust fund.

SUMMARY:

Funding for the Washington housing trust fund is provided by amending the statute that relates to real estate transactions.

The real estate broker's separate real estate fund account to keep client funds, prior to closing of a real estate sale or transaction, must be interest-bearing and accessible for immediate withdrawals or transfers.

Funds that are nominal or short term are deposited into a pooled interest-bearing escrow account.  A nominal or short term deposit is defined as an account that would not produce a positive net interest income minus reasonable transaction fees of the financial institution.  Interest from the pooled nominal or short term deposits are paid to the state treasurer for deposit into the housing trust fund.  Interest from real estate earnest money deposits that are not nominal or short term, minus reasonable transaction fees, are paid to the client.

A low income housing assistance advisory committee is appointed to advise the director of community development on housing needs and program operation.  The committee is comprised of representatives from apartment owners, realtors, mortgage lenders or servicing institutions, private nonprofit housing assistance programs, tenant associations and public housing assistance groups.

The Department of Community Development will consider recommendations from counties and cities affected by grant making decisions of the housing trust fund.  The Department also prepares annual reports on the income, grants and operating expenses of the housing trust fund.  The reports are submitted to the appropriate standing committees in the House of Representatives and the Senate.

Fiscal Note:      available

Effective Date:This bill takes effect on January 1, 1988.

SUMMARY OF PROPOSED SENATE AMENDMENT:

The amendment creates the brokers' trust account board with the duty of reviewing grant and loan applications placed before it for final review by the director of the Department of Community Development.  This procedure applies only to projects to be funded by aggregated interest on brokers' trust accounts.

Seventy-five percent of the aggregated interest on brokers' trust accounts is directed to the housing trust fund and 25 percent to the real estate commission account.  This account is used for real estate licensee education.  The trust account board serves in an advisory capacity to the real estate commission with regard to licensee education.

Certain housing related social services are deleted as activities for funding from the housing trust fund.

Revenue from unclaimed lottery prizes is directed to the housing trust fund.

Technical changes are made to the method for transferring funds from the Treasurer to the Department of Community Development.

There is an appropriation of $12 million from the housing trust fund to the Department of Community Development.

Senate Committee - Testified: Kurt Creager, King County Department of Community Development; Mike Kucharzac, Pierce County Housing Authority; Sereta Brownelle, King County Division of Human Services; Arnold Livingston, Senior Citizens Lobby; Mary Murphy, League of Women Voters; Ed Murphy, Washington Association of Realtors; Ron Clark, Washington Association of Manufactured Housing