H-4202              _______________________________________________

 

                                          SUBSTITUTE HOUSE BILL NO. 2536

                        _______________________________________________

 

State of Washington                               51st Legislature                              1990 Regular Session

 

By House Committee on Housing (originally sponsored by Representatives Phillips, Winsley, Todd, Rector, Nutley, Brekke, Anderson, Leonard, Jacobsen, Basich, Locke, Sprenkle and Prentice)

 

 

Read first time 1/31/90.

 

 


AN ACT Relating to federally assisted housing; adding new sections to chapter 59.28 RCW; creating new sections; providing an expiration date; and declaring an emergency.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

 

          NEW SECTION.  Sec. 1.     (1) Any owner who has a controlling interest in any federally assisted housing development shall not sell or transfer title to the property when such transfer would result in the termination of financial assistance designed to make a rental unit affordable to low-income or moderate-income people, without first providing a notice of intent to sell or transfer title to the department of community development and clerk of the city, or county if in an unincorporated area, in which the property is located, by regular and certified mail.  The notice shall be sent before the owner enters into a contract for the sale or transfer of the property.

          (2) The notice of intent to sell or transfer title shall be in a form to be approved by the department of community development and shall contain at least the following information and include the following statements with which the owner must comply:

          (a) The sales price, the terms of assumable or purchase money financing, if any, the terms of the subsidy contract, if any, and the proposed improvements to the development to be made by the owner in connection with the sale, if any;

          (b) A statement that each of the entities that have expressed an interest in bidding on properties under section 2 of this act has the right of first refusal to purchase the federally assisted housing development;

          (c) A statement that the owner will make available to those entities that have expressed an interest on bidding on properties under section 2 of this act, within fifteen days of receiving the request, the regulatory agreement for the development, promissory notes, mortgages or deeds of trust, itemized lists of monthly operating expenses, capital improvements, as determined by the owner, made within each of the two preceding calendar years, the amount of project reserves, and copies of the two most recent financial and physical inspection reports on the development, if any, filed with federal, state, or local agencies;

          (d) A statement that the owner will make available to those entities that have expressed an interest in bidding on properties under section 2 of this act, within fifteen days of a request, the most recent rent roll listing the size and income level of each tenant household, the rent paid by each tenant, the subsidy, if any, paid by a governmental agency as of the date of the notice of intent to sell or transfer the property, and a statement of the vacancy rate at the federally assisted housing development for each of the two preceding calendar years;

          (e) A statement that the owner will authorize the release to those entities that have expressed an interest in bidding on properties under section 2 of this act, within fifteen days of a request, of any information related to the physical and financial condition of the federally assisted housing development held by any federal, state, or local agency; and

          (f) A statement that the owner will permit reasonable access to the federally assisted housing development by each of those entities that have expressed an interest in bidding on properties under section 2 of this act, upon reasonable advance notice, for the purpose of inspection, taking measurements, conducting surveys, or for any other reasonable purpose.

 

          NEW SECTION.  Sec. 2.     (1) The department of community development shall develop and maintain a register of public housing authorities, nonprofit organizations, and cities and counties that have expressed an interest in bidding on properties.

          (2) The department of community development shall, upon receipt of the notice of intent to sell or transfer title required by section 1 of this act, provide written notification to all parties that have expressed an interest in bidding on properties.

 

          NEW SECTION.  Sec. 3.     (1) Any public housing authority, nonprofit organization, or city or county that has expressed an interest in bidding on properties has the right of first refusal to purchase the property.  The interested public housing authority, nonprofit organization, or city or county shall hold the right of first refusal for not more than sixty days from the department of community development's receipt of the notice required in section 1 of this act.  Failure to respond to the notice of right of first refusal in sixty days constitutes a waiver of that right of first refusal by the interested public housing authority, nonprofit organization, or city or county.  By stating in writing its intention to pursue its right of first refusal during the sixty-day period, the interested public housing authority, nonprofit organization, or city or county shall have an additional sixty days, commencing upon the date of the termination of the first right of refusal period, to buy or to produce a buyer for the property.  This additional sixty-day period may be extended by mutual agreement between the interested public housing authority, nonprofit organization, or city or county and the owner of the property.

          (2) Nothing in this section may preclude an owner of a federally assisted housing development from withdrawing the property from the market and revoking the notice required by section 1 of this act at any time before the expiration of the one hundred twenty-day period.  The withdrawal or revocation shall extinguish any right of first refusal held by the interested public housing authority, nonprofit organization, or city or county.

          (3) An interested public housing authority, nonprofit organization, or city or county shall not possess any right of first refusal when a bona fide buyer, by contract with the seller, agrees to maintain the property as low-income or moderate-income housing.  The notice provisions of section 1 of this act shall apply to this subsection.

 

          NEW SECTION.  Sec. 4.     This chapter may be known and cited as the federally assisted housing preservation act.

 

          NEW SECTION.  Sec. 5.     Sections 1 through 4 of this act are each added to chapter 59.28 RCW.

 

          NEW SECTION.  Sec. 6.     The legislature finds that between 1961 and 1980, the federal government agreed to subsidize, and in most cases to insure, the mortgages on about twenty-six thousand units for low and moderate-income families in the state of Washington.

          The legislature further finds that the mortgages allow the owners the option to prepay their mortgage after twenty years and thereby end the restriction that they lease the units to lower-income tenants at controlled rents.

          The legislature further finds that between 1989 and 1995, the state of Washington could lose up to ten thousand existing federally assisted housing units through prepayments of mortgages or loans by owners.

          The legislature declares that it is a public policy of the state to prevent the disappearance of federally assisted housing and that a coordinated program of public and private financing and state tax provisions is needed to assist nonprofit organizations, public housing authorities, tenant associations, and local governments purchase federally assisted housing from owners that intend to sell.  Therefore, the legislature directs the department of community development to conduct the study described in section 7 of this act.

 

          NEW SECTION.  Sec. 7.     (1) The department of community development shall establish the federally assisted housing preservation advisory group to consist of eleven members selected by the department of community development as follows:

          (a) One representative from the federal home loan bank board of Seattle;

          (b) Two representatives of financial institutions that provide development financing;

          (c) One representative of the Washington state housing finance commission;

          (d) One representative of nonprofit housing development organizations;

          (e) One representative of public housing authorities;

          (f) One representative of public-private housing partnership organizations;

          (g) One representative of cities;

          (h) One representative of counties;

          (i) One representative of the department of community development, as an ex officio, nonvoting member;

          (j) One representative selected by the advisory committee to act as chair.

          (2) The chair shall be a nonvoting member, except in the case of ties.

          (3) The director of community development shall appoint the members of the advisory committee within sixty days from the effective date of this section.  The director shall consider obtaining a geographic distribution and balance through the state.

          (4) Staffing shall be provided through the members of the advisory committee.

          (5) The advisory committee shall meet at such times as it is called by the director or by the chair of the advisory committee.

          (6) Members of the advisory committee shall receive no compensation.

          (7) The advisory committee shall conduct a study to determine the most efficient combination of state tax provisions, and direct public and private financing to preserve, to the greatest extent practicable, the continued occupancy of low and moderate-income persons in federally assisted housing that could be converted to other uses.

          (8) In developing the study, the advisory committee shall:

          (a) Conduct a comprehensive examination of initiatives to preserve federally assisted rental housing caused by, but not limited to the prepayment of federally assisted mortgages and the expiration of low and moderate-income use restrictions;

          (b) Determine financial strategies and methods to assist nonprofit organizations, tenant associations, public housing authorities, and local governments in the purchase of federally assisted housing from owners wanting to sell the property;

          (c) Determine appropriate state tax policies that could be used to assist in the preservation of federally assisted housing;

          (d) Take any other action relating to carrying out this section; and

          (e) Provide a written report to the house of representatives housing and revenue committees and the senate economic development and labor and ways and means committees by November 1, 1990, presenting the recommendations of the advisory committee.

          (9) For the purposes of this section and section 6 of this act, "federally assisted housing" means multifamily housing as described in RCW 59.28.020(1).

 

          NEW SECTION.  Sec. 8.     Sections 6 and 7 of this act shall expire January 1, 1991.

 

          NEW SECTION.  Sec. 9.     If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

 

          NEW SECTION.  Sec. 10.    This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.