FINAL BILL REPORT

HB 2051

                                  C 188 L 89

BYRepresentative Locke

Minimizing the involuntary displacement of tenants in federally assisted housing.

House Committe on Housing

Senate Committee on Economic Development & Labor

SYNOPSIS AS ENACTED

BACKGROUND:

In the 1970s the federal government developed a variety of programs to assist in the construction or rehabilitation of rental housing that would be available to lower income persons at affordable rents.  The programs administered by the U.S. Department of Housing and Urban Development (HUD), and the U.S. Department of Agriculture's Farmers Home Administration (FmHA) provided: (a) direct low-interest rate loans to public and private developers; or (b) insurance on mortgages made by private financial institutions to public or private developers; or (c) rental subsidies to tenants.

The contracts for many of these programs have provisions that allow owners of the multifamily housing development to terminate or prepay the subsidy after a specified time.  With the termination or prepayment of the subsidy, the obligation to remain in the specific program is eliminated.  Many of the multifamily housing developments assisted in the 1970s have or are reaching the specified time when the owner can terminate or prepay the mortgage or subsidy, thereby being relieved of the program's rent obligation.

In response to this problem, the federal Housing and Community Development Act of 1987 requires owners of federally assisted multifamily housing developments to provide a "notice of intent" to prepay and "plan of action" to the federal government and appropriate state and local governmental bodies.  The federal provisions are scheduled to expire November 1, 1989.

The existing Landlord-Tenant Act does not require owners of a multifamily rental housing development, constructed or rehabilitated through a HUD or FmHA subsidy program, to provide special notice to the tenants or local governing bodies prior to termination or prepayment of the federal subsidy.

SUMMARY:

The Landlord-Tenant Act is revised to require owners of federally assisted multifamily rental housing developments to provide a written notification prior to the termination or prepayment of the federal assistance.  The notification to tenants and governmental bodies must be made 12 months before termination or prepayment of federal assistance provided through the Department of Housing and Urban Development or Department of Agriculture's Farmers Home Administration.  The owner is not prohibited from terminating a rental assistance contract or prepaying the federally assisted mortgage or loan.

The 12 month advance notice must be sent to each tenant, the clerk of the local governing body where the housing development is located, and the state Department of Community Development.  The tenant notification must state:  (a) the date of the proposed termination or prepayment; and (b) impact of the termination or prepayment upon the tenant.  The governmental body notification must state:  (a) the number of tenants in the affected housing development; (b) the number and size of units that receive federal assistance; (c) the family size and estimated income of the tenants affected by the termination or prepayment; (d) the projected rent increases; and (e) the anticipated termination or prepayment date.

During the 12 month notification period, the owner of the affected housing development may not:  (a) evict or demand possession of the unit; (b) increase the rent of the unit; or (c) change the terms of the rental agreement of a federally assisted housing unit unless authorized by the federal assistance applicable to the project.

The owner of the federally assisted multifamily rental housing development is liable for damages suffered by tenants, plus reasonable attorney fees, as a result of not providing proper notification to tenants and governmental bodies.

The Department of Community Development is required to prepare an annual report on the preservation and loss of federally assisted housing in the state.  The report is to include recommendations for the preservation of federally assisted housing and for minimizing involuntary displacement.  The report and recommendations are to be submitted to the appropriate committees of the Legislature.

VOTES ON FINAL PASSAGE:

      House 94   0

      Senate    43     3

EFFECTIVE:April 27, 1989