HOUSE BILL REPORT
HB 164
BYRepresentatives 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
Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. (5)
Signed by Representatives Nutley, Chair; Leonard, Vice Chair; Armstrong, Ebersole and Todd.
Minority Report: Do not pass. (4)
Signed by Representatives Barnes, Padden, Sanders and J. Williams.
House Staff:Kenny Pittman (786-7392)
Rereferred House Committee on Ways & Means/Appropriations
Majority Report: The second substitute be substituted therefor and the second substitute bill do pass. (14)
Signed by Representatives Representatives Locke, Chair; Allen, Belcher, Brekke, Bristow, Ebersole, Grimm, Hine, McMullen, Niemi, Peery, Sayan, H. Sommers and Sprenkle.
Minority Report: Do not pass. (4)
Signed by Representatives Representatives Fuhrman, Holland, Silver and B. Williams.
House Staff: Susan Kavanaugh (786-7145)
AS REPORTED BY COMMITTEE ON WAYS & MEANS/APPROPRIATIONS
MARCH 7, 1987
BACKGROUND:
Major cutbacks in federal housing programs have reduced the ability of state and local governments to address the housing needs of low income citizens as well as special needs groups. In 1985, legislation was passed that created the Washington housing trust fund to assist in meeting the basic housing needs of low- and very low-income citizens, citizens in rural areas and citizens with special housing needs. The 1985 legislation did not fund sources for the housing trust fund.
Current law requires real estate brokers to keep client funds, in a separate real estate fund account prior to the 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. All funds collected from the client must be deposited not later than the first banking day following receipt.
The present law requires landlords to promptly deposit all moneys paid by the tenant in a trust fund account as a deposit as security for performance of the tenant's obligations in a lease or rental agreement. The trust account containing the tenant's security deposit must be maintained in a recognized Washington state depository or licensed escrow agent located in Washington. Interest from these accounts is retained by the landlord, unless a written agreement between the landlord and tenant provides for a different disposition.
The 1985 legislation authorizes the Department of Community Development to develop rules for the award and distribution of funds through the housing trust fund.
SUMMARY:
SECOND SUBSTITUTE: Funding for the Washington housing trust fund is provided by amending statutes related to real estate transactions and tenant security deposits.
The real estate broker's separate real estate fund account to keep client funds, prior to closing of a real estate sale or transaction, must be interest-bearing and accessible for immediate withdrawals or transfers.
Funds that are nominal or short term are deposited into a pooled interest-bearing escrow account. These funds are defined as five percent or less of the agreed upon sale price in any transaction or having a scheduled closing of 150 days or less after the date of full agreement between the purchaser and seller. The depository institution pays interest on these accounts, minus reasonable transaction fees, to the state treasurer for deposit into the housing trust fund. Interest from real estate earnest money deposits that are not nominal or short term, minus reasonable transaction fees, are paid to the client.
Unless the buyer or seller decide to have the interest go to the housing trust fund, interest earned on tenant security deposits, by landlords that maintain more than ten residential rental units within the state, is required to be paid to the state treasurer for deposit into the housing trust fund. Again, reasonable bank service charges can be subtracted.
The Department of Community Development will consider recommendations from counties and cities affected by grant making decisions of the housing trust fund. The department also prepares annual reports on the income, grants and operating expenses of the housing trust fund. The reports are submitted to the appropriate standing committees in the House of Representatives and the Senate.
SUBSTITUTE BILL COMPARED TO ORIGINAL: Nominal and short term real estate earnest money deposits are defined as 5 percent or less of the agreed upon sale price in any transaction or a scheduled closing date of the transaction that is equal to or less than 150 days after the date of full agreement between the purchaser and seller.
A purchaser and seller can deposit earnest money deposits that are not nominal or short-term into a pooled interest-bearing escrow account. Interest from this deposit would also be forwarded to the state treasurer for deposit into the housing trust fund.
The Department of Community Development is directed to consider recommendations from counties and cities affected by funding decisions. The submittal of an annual report on the housing trust fund to the appropriate standing committees in the House of Representatives and the Senate is required.
SECOND SUBSTITUTE COMPARED TO FIRST SUBSTITUTE: Unclaimed prizes from the Washington State lottery are deleted as a source of funds for the housing trust fund. Security deposit interest is required to be deposited to the housing trust fund at least every six months.
CHANGES PROPOSED BY COMMITTEE ON WAYS & MEANS/APPROPRIATIONS: Second substitute proposed.
Fiscal Note: Requested February 24, 1987.
Effective Date:This bill takes effect on January 1, 1988.
House Committee ‑ Testified For: (Housing) Representative Gary Locke; Sandy Watson, City of Seattle; Jane Noland, Seattle City Council; Barbara Clark, Director, Legal Foundation of Washington; Steve Fredrickson, Staff Attorney, Evergreen Legal Services; Larry Ruff, Business Administrator, Spokane Salvation Army; Maureen Howard, Washington State Coalition for the Homeless; John T. O'Brien, Seattle Tenants Union; Pat Kennedy, Seattle Tenants Union; Karen Kushner, Realtor; Jean Lough, President, Alliance for Mentally Ill of Washington State; Phil Hoge, Office of Rural and Farmworker Housing; Kurt Creager, King County Department of Community Development; Sue Taoka, Washington Association of Economic Development; Claire Demler, Common Ground; Mike Sivia, Association of Washington Housing Authorities; Reverend David Bloom, Church Council of Greater Seattle; Bill Ware, Downtown Human Services Council, Seattle; Jeff Collard, Yakima County Coalition for the Homeless; John Jensen, Executive Director, Mobile Home Owners Association of America; Norm McLoughlin, Kitsap County Community Development Department; Michael Midkiff, Crisis Housing Assistance Program, Spokane Salvation Army; and Kathy Carpenter.
Substitute: (Ways & Means/Appropriations) None Presented.
House Committee - Testified Against: (Housing) Carroll Duval, Apartment Operators Association; Deward Johnson, Executive Director, Washington Apartment Association; Ed Murphy, Washington Association of Realtors; Nancy DeLorenzo, Washington Apartment Association; and Mark Triplett, Seattle Master Builders.
Substitute: (Ways & Means/Appropriations) None Presented.
House Committee - Testimony For: (Housing) The Washington housing trust fund is needed to respond to cutbacks in Federal housing funds for low income persons. The housing trust fund assists the state in responding to the growing housing needs of the homeless, large families, disabled, tribal households, elderly, single head of household families and farmworkers. The housing trust fund will also allow local jurisdictions the ability to design programs to meet their needs. This "Block Grant" approach is a unique feature of the program. Funding of the trust fund is not from limited state resources and is renewable.
Substitute: (Ways & Means/Appropriations) None Presented.
House Committee - Testimony Against: (Housing) The objectives of the housing trust fund are good. The concern is that a specific industry is being singled out and "taxed" to address a problem. The interest from tenant security deposits is used to offset operating costs by the apartment owners. By requiring that this interest go to the housing trust fund, this removes income available to the apartment owners for operation. This bill is a tax against the revenue of the apartment owners.
Substitute: (Ways & Means/Appropriations) None Presented.