FINAL BILL REPORT

2SHB 164

PARTIAL VETO

                                  C 513 L 87

BYHouse Committee on Ways & Means/Appropriations (originally sponsored by Representatives Locke, Niemi, Allen, Fisch, Brekke, O'Brien, Nutley, Belcher, Wang, Jacobsen, Lux, Nelson and Dellwo)

Providing funding for the Washington housing trust fund.

House Committe on Housing

Rereferred House Committee on Ways & Means/Appropriations

Senate Committee on Commerce & Labor

SYNOPSIS AS ENACTED

BACKGROUND:

The Washington Housing Trust Fund was created in 1985 to assist in meeting the basic housing needs of low-income persons, persons in rural areas and persons with special housing needs.  The Department of Community Development was authorized to develop rules for the award and distribution of funds through the Housing Trust Fund.  The Housing Trust Fund was not funded.

Current law requires real estate brokers to keep client funds in a separate non-interest bearing broker earnest money trust account prior to closing of a real estate sale or transaction.  These accounts must be maintained in a recognized Washington state depository authorized to receive funds and kept separate from the broker's funds.  The broker is required to deposit all client funds no later than the first banking day following receipt.

The state Real Estate Commission is required to place funds received from each real estate license fee and each renewal fee from a broker or salesperson in the Real Estate Commission Fund.  One-half of the fees in the Real Estate Commission Fund may be held and used for the sole purpose of inspecting the books, records and operations of the brokers, associate brokers and salespersons.

SUMMARY:

Funding for the Washington Housing Trust Fund is provided from interest earned on nominal or short term deposits in the Broker Earnest Money Trust Account.

A nominal or short term deposit is defined as an account that would not produce a positive net interest income minus reasonable transaction fees of the financial institution.

All real estate brokers are required to deposit client funds in a separate broker earnest money trust account prior to the closing of a real estate sale or transaction. These accounts must be interest-bearing and accessible for immediate withdrawals or transfers.  Property management accounts are exempt from this requirement.

All nominal or short term deposits are deposited into a pooled interest-bearing account.  Interest from the pooled nominal or short term deposits is submitted, at least quarterly, to the state treasurer for deposit in the Housing Trust Fund and the Real Estate Commission Fund.  Interest from deposits in the Broker Earnest Money Trust Account that are not defined as nominal or short term is paid to the client.

The state treasurer must divide the revenue received from the Broker Earnest Money Trust Account so that the Housing Trust Fund receives 75 percent and the Real Estate Commission Account receives 25 percent.

A low-income housing assistance advisory committee is appointed to advise the director of the Department of Community Development on housing needs and program operation.  The committee is comprised of representatives from apartment owners, realtors, mortgage lenders or servicing institutions, private nonprofit housing assistance programs, tenant associations and public housing assistance groups.

The Broker's Trust Account Board is created as part of the Housing Trust Fund.  The board consists of seven members, six appointed by the governor and one appointed by the Real Estate Commission.  Three of the members appointed by the governor must be real estate brokers or salespersons and the other three members must represent private nonprofit housing assistance programs and a statewide association of public housing authorities.

The board will review loan and grant applications for funding through the Housing Trust Fund presented by the director of the Department of Community Development.  The board's approval authority is limited to eligible activities of the Housing Trust Fund and to the amount of revenue provided through the interest on broker earnest money trust accounts.  The board also serves in an advisory capacity to the Real Estate Commission with regard to licensee education programs.

The Department of Community Development will consider funding recommendations from counties and cities affected by decisions to fund projects through the Housing Trust Fund.  The department cannot fund applications for housing- related social service activities through the Housing Trust Fund.

The department will prepare annual reports on the income, grants and operating expenses of the Housing Trust Fund.  The reports are submitted to the legislature.

The Department of Community Development is authorized to expend funds transferred to the Housing Trust Fund Account. The expenditures from the account by the department cannot exceed $12 million for the two-year period ending June 30, 1989.

VOTES ON FINAL PASSAGE:

      House 51  43

      Senate    39    10(Senate amended)

      House 81  12(House concurred)

EFFECTIVE:January 1, 1988

Partial Veto Summary:  Sections that included language to specifically target trust funds toward the homeless, required that technical assistance relate directly to construction or rehabilitation of units and eliminated the use of trust funds as a match for social services directly related to providing housing for special need tenants in assisted projects are vetoed.  The veto also removed the October 1, 1988 effective date for public corporations.  (See VETO MESSAGE)