SENATE BILL REPORT
SB 5769
BYSenators Warnke, Fleming, McDermott, Williams, Bailey and Garrett
Revising housing trust fund provisions.
Senate Committee on Commerce & Labor
Senate Hearing Date(s):February 20, 1987; March 5, 1987
Majority Report: That Substitute Senate Bill No. 5769 be substituted therefor, and the substitute bill do pass.
Signed by Senators Warnke, Chairman; Smitherman, Vice Chairman; Tanner, Vognild, Williams, Wojahn.
Senate Staff:Dave Cheal (786-7576)
March 9, 1987
AS REPORTED BY COMMITTEE ON COMMERCE & LABOR, MARCH 5, 1987
BACKGROUND:
Recognizing the need for state involvement in low income housing assistance due to the rapidly vanishing federal activity in this area, the Legislature enacted the Housing Trust Fund Act in 1986. Two concepts are embodied in this Act: a trust fund free from some of the vagaries of the appropriation process is needed to establish a long term commitment to a need which is fundamental and involves a capital investment; a public-private partnership is required because of the enormity of the need and the traditional heavy involvement of both the public and private sectors in subsidized housing.
The policy concept was adopted in 1986, along with program guides and mechanics, but no funding sources were agreed upon. The Housing Trust Fund concept as it has been debated and adopted in other states and municipalities has involved a combination of renewable market generated sources and public sources of funds.
The state is involved in a significant level of housing assistance to its citizens through the programs of the Washington State Housing Finance Commission. But those programs are inherently geared toward moderate and low income housing needs, rather than the needs of the very low income citizens and special needs populations such as the deinstitutionalized mentally ill, single parent families, farm workers, and the homeless. The Tax Reform Act of 1986 has limited the use of the issuance of tax exempt securities by states and municipalities as a means of mortgage assistance and other housing programs. It is generally agreed that of all public activities limited by the Tax Reform Act, housing is the hardest hit. The Tax Reform Act does provide for tax credits to private investors for projects that are in concert with a state supported program such as the Housing Trust Fund.
SUMMARY:
Two market-based sources are included: interest aggregated statewide on realtor trust accounts, and on tenants' security deposits.
Realtor trust accounts are comprised primarily of earnest money deposits. This system is patterned after the interest on lawyers' trust account program which has been in existence for approximately two years. The provision for aggregating tenants' security deposit interest is limited to landlords who own more than ten residential units within the state.
The third source of funds is unclaimed lottery prizes.
$4,500,000 is appropriated from the Housing Trust Fund to the Department of Community Development, which is charged with administering the program.
Appropriation: $4,500,000 from the Housing Trust Fund to the Department of Community Development
Fiscal Note: requested
EFFECT OF PROPOSED SUBSTITUTE:
An unnecessary definition of low income housing is removed. Language is added to the tenant security deposit section instructing landlords and banks on procedures for transmitting and reporting the funds.
The appropriation from the housing trust fund to the Department of Community Development is increased from $4.5 million to $12 million to coincide with the projected revenue.
Senate Committee - Testified: Peggy Ganson, Apartment Owners Association; Carroll Duval, Apartment Operators Association of Seattle; Kurt Creager, King County; Randy Suko, Washington State Coalition for Homeless; Paul Kraabel, City of Seattle; Larry Ruff, Salvation Army; Mary Coltowne, League of Women Voters; Kim Herman, WSHFC; Paul W. Locke; Claire Demlas, Common Ground; Deward Johnson, John Cate, Hazel Bloss, Washington Apartment Association