FINAL BILL REPORT

SB 6671

                                  C 286 L 88

BYSenator Lee

Specifying funds that may be retained for administration of the housing trust fund.

Senate Committee on Economic Development & Labor

House Committe on Housing

SYNOPSIS AS ENACTED

BACKGROUND:

The Housing Trust Fund, a competitive grant and loan program to be administered by the Department of Community Development, was established in 1986.  Administrative costs are limited to 5 percent of annual revenues to the fund.

In 1987, two funding sources were adopted.  The capital budget contained a $2 million appropriation, and beginning January 1, 1988, interest on real estate broker trust accounts is aggregated statewide and designated for the Housing Trust Fund.  The capital budget appropriation is limited to expenditures for capital construction and arguably may not be used for administrative operating costs.

Other funding sources need to be tapped because these are inadequate to meet the need.

Until such time as the fund builds up to a significant level, the 5 percent limitation will not allow even one additional staff position.

The housing trust fund is funded by interest from real estate broker's deposits of nominal or short-term client funds into pooled interest-bearing escrow accounts.  A nominal or short-term deposit is defined as a deposit which would not produce positive net income if placed into a separate account.  This can be difficult to discern due to uncertainty of factors such as length of deposit while awaiting closing, interest rates available, bank processing and start-up fees.

SUMMARY:

The Department of Community Development is authorized to retain from housing trust fund revenues up to $37,500 for the fiscal year ending June 30, 1988, and $75,000 for the fiscal year ending June 30, 1989.  The 5 percent limitation applies after that date.

A penalty is imposed for delinquent payments of the real estate transfer tax.  There is no penalty currently in law for late payment of the real estate transfer tax unless the Department of Revenue finds that there was an intent to evade payment of the tax.  The penalty created for payments not received by the county treasurer within 30 days of the date due is 5 percent of the amount of the tax.  If the tax is not received within 60 days of the date due, then the penalty is 10 percent of the amount of the tax.  If the tax is not received within 90 days of the date due, then the penalty is 20 percent of the amount of the tax.  These penalties for late payment of the real estate transfer tax which are collected are to be deposited into the housing trust fund.  The penalties may only be collected from the seller and may not become a lien on the property.

Technical amendments are made to how the interest on real estate brokers pooled interest-bearing trust account is paid into the housing trust fund.  A nominal deposit of client funds is defined as a deposit of not more than $5,000.  The interest on the pooled interest-bearing trust account payable to the housing trust fund is the net interest minus service fees or charges imposed by financial institutions on demand deposit accounts.  Parties may agree to deposit funds into the pooled interest-bearing trust account even when it is not required.

VOTES ON FINAL PASSAGE:

      Senate    43     1

      House 95   0 (House amended)

      Senate            (Senate refused to concur)

      House             (House refused to recede)

      Senate    48     0 (Senate concurred)

EFFECTIVE:March 24, 1988