HOUSE BILL REPORT
EHB 2051
BYRepresentative Locke
Minimizing the involuntary displacement of tenants in federally assisted housing.
House Committe on Housing
Majority Report: Do pass with amendments. (9)
Signed by Representatives Nutley, Chair; Leonard, Vice Chair; Winsley, Ranking Republican Member; Anderson, Ballard, Inslee, Padden, Rector and Todd.
House Staff:Kenny Pittman (786-7392)
AS PASSED HOUSE MARCH 15, 1989
BACKGROUND:
In the 1970's 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; (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 1970's 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 a 12 month advance notice to the tenants and governmental bodies when a multifamily rental housing development assisted through a U.S. Department of Housing and Urban Development or Farmers Home Administration subsidy program, is to be terminated or prepaid by the owner. The owner is not prohibited from terminating a rental assistance contract or prepaying the federally assisted mortgage or loan.
Notification Requirements
The owner must provide a written notification to each tenant, the clerk of the local governing body, and the state Department of Community Development. The notification to the tenant shall state the date of the proposed termination or prepayment and impacts of the termination or prepayment upon the tenant.
The notification to the state and local government shall state: (a) the number of tenants in the project; (b) the number and size of units receiving federal assistance; (c) the family size and estimated incomes of the tenants affected by the termination or prepayment; (d) the projected rent increases; and (e) the anticipated termination or prepayment date.
Other Requirements
During the latter of 12 months after notification to the tenants and governmental bodies or expiration or prepayment of the rental assistance contract or mortgage or loan, the owner of the affected housing 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 program applicable to the project.
The owner is liable for damages suffered by tenants, plus reasonable attorney fees, as a result of not providing proper notification of expiration or prepayment of the rental assistance contract, mortgage or loan.
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 preserving federally assisted housing and for minimizing involuntary displacement. The report and recommendations are to be submitted to the appropriate committees of the Legislature.
Fiscal Note: Requested February 20, 1989.
House Committee ‑ Testified For: Jim McIntire, University of Washington's Institute of Public Policy and Management; Mike Ryherd, Washington Low Income Housing Congress; Greg Provenzano, Evergreen Legal Services; Arnold Livingston, Senior Citizens Lobby; Tim Seth; Washington Apartment Association (with concern).
House Committee - Testified Against: None Presented.
House Committee - Testimony For: The loss of federally assisted housing for low-income persons is a nation-wide problem. Between 4,100 and 7,000 housing units for low-income persons could be lost in Washington. The existing federal law is inadequate to address this problem and is scheduled to expire at the end of the year. The one year notification process required by this bill is needed to allow tenants and governmental bodies a reasonable period to respond to the potential loss of housing. The notification process is fair, but landlords should be allowed to refinance the loan as long as low-income tenants are not displaced.
House Committee - Testimony Against: None Presented.