REPORT TITLE:
Affordable Housing


DESCRIPTION:
Provides further protection to residents of housing assisted by
HUD who are at risk of losing their project-based housing
subsidies.  Maintains the inventory of affordable housing units
in the state. (SB2021 HD1)


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2021
THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 2000                                H.D. 1
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO HOUSING.



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

 1      SECTION 1.  The legislature finds that in Hawaii, there are
 
 2 currently more than three thousand units of affordable housing in
 
 3 over ninety projects that are assisted by the United States
 
 4 Department of Housing and Urban Development (HUD) project-based
 
 5 section 8 program.  Because the residents of each of these
 
 6 assisted dwelling units have a low household income, they pay
 
 7 thirty per cent of their income as rent, and HUD contributes the
 
 8 remainder of their rent to the landlord.
 
 9      It is estimated that the HUD section 8 project-based program
 
10 contributes more than $20,000,000 annually to rent and to the
 
11 Hawaii economy for the three thousand families who live in the
 
12 assisted dwelling units.  This income to the State and the
 
13 stability it provides for the families that rely on it are
 
14 essential to the struggling economies where these projects are
 
15 located.
 
16      The legislature finds that private landlords who own these
 
17 projects will be under increasing pressure to convert this
 
18 affordable housing to market rate housing.  Approximately eleven
 
19 housing projects consisting of over six hundred assisted housing
 
20 units have been identified as having the highest risk for
 

 
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 1 conversion.  If the owners of these affordable housing projects
 
 2 elect not to continue receiving HUD project-based subsidies, then
 
 3 HUD will provide affected tenants of assisted dwelling units with
 
 4 housing subsidies under the section 8 tenant-based housing
 
 5 assistance program.  However, the lives of these tenants and the
 
 6 long-term inventory of affordable housing in Hawaii would be
 
 7 negatively impacted by these conversions.  Additionally, there
 
 8 are other affordable housing projects that are assisted under
 
 9 various other federal housing programs that may also be lost from
 
10 the affordable housing stock.
 
11      The purpose of this Act is to:
 
12      (1)  Provide further protection to residents of housing
 
13           assisted by HUD who are at risk of losing their
 
14           project-based housing subsidies; and
 
15      (2)  Maintain the inventory of affordable housing units in
 
16           the state.
 
17      SECTION 2.  Chapter 201G, Hawaii Revised Statutes, is
 
18 amended by adding a new subpart to part II to be appropriately
 
19 designated and to read as follows:
 
20   "  . FEDERALLY ASSISTED RENTAL HOUSING PRESERVATION PROGRAM
 
21      §201G-A  Definitions.  As used in this subpart, unless the
 
22 context otherwise requires:
 

 
 
 
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 1      "Affected tenant" means a tenant household residing in an
 
 2 assisted housing development that, at the time the notice is
 
 3 provided, benefits from the government assistance.
 
 4      "Assisted housing development" or "development" means a
 
 5 multifamily rental housing development that receives assistance
 
 6 under any of the following federal programs:
 
 7      (1)  New construction, substantial rehabilitation, moderate
 
 8           rehabilitation, property disposition, and loan
 
 9           management set-aside programs under section 8 of the
 
10           United States Housing Act of 1937, as amended (42
 
11           U.S.C. section 1437f);
 
12      (2)  The following programs under the following sections of
 
13           the National Housing Act:
 
14           (A)  Section 213 (12 U.S.C. section 1715e);
 
15           (B)  The Below-Market-Interest-Rate Program under
 
16                section 221(d)(3)(12 U.S.C. section 1715l(d)(3)
 
17                and (5));
 
18           (C)  Section 236 (12 U.S.C. section 1715z-1); and
 
19           (D)  Section 202 (12 U.S.C. section 1701q);
 
20      (3)  Programs for rent supplement assistance under section
 
21           101 of the Housing and Urban Development Act of 1965,
 
22           as amended (Public Law 89-117); and
 

 
 
 
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 1      (4)  Programs under section 515 of the Housing Act of 1949,
 
 2           as amended (42 U.S.C. section 1485).
 
 3      "Local nonprofit organization" means a not-for-profit
 
 4 corporation organized pursuant to chapter 415B, whose principal
 
 5 purpose is ownership, development, or management of housing or
 
 6 community development projects for person and families of low or
 
 7 moderate income and very low income.  Additionally, a local
 
 8 nonprofit organization shall have a board of directors that is
 
 9 broadly representative of the community, members that are
 
10 community based, and a proven track record of local community
 
11 service.
 
12      "Low or moderate income" means having an income between
 
13 fifty and eighty per cent of the area median income as defined by
 
14 the federal Department of Housing and Urban Development.
 
15      "Owner" means an individual, corporation, limited liability
 
16 company, association, partnership, joint venture, or business
 
17 entity that holds title to an assisted housing development and
 
18 has the legal right to lease or sublease dwelling units.
 
19      "Regional or national organization" means not-for-profit
 
20 charitable corporations organized on a multicounty, state, or
 
21 multistate basis that have as their principal purpose the
 
22 ownership, development, or management of housing or community
 

 
 
 
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 1 development projects for persons and families of low or moderate
 
 2 income and very low income.
 
 3      "Regional or national public agencies" means multicounty,
 
 4 state, or multistate agencies that are authorized to own,
 
 5 develop, or manage housing or community development projects for
 
 6 persons and families of low or moderate income and very low
 
 7 income.
 
 8      "Tenant" means a tenant, subtenant, lessee, sublessee, or
 
 9 other person legally in possession or occupying an assisted
 
10 dwelling unit in the assisted housing development.
 
11      "Tenant association" means a group of tenants that has
 
12 formed a nonprofit corporation, cooperative corporation, or other
 
13 entity or organization or a local nonprofit organization, or a
 
14 regional or national nonprofit organization whose purpose
 
15 includes the acquisition of an assisted housing development and
 
16 that represents the interest of at least a majority of the
 
17 tenants in the assisted housing development.
 
18      "Use restriction" means any federal, state, or local
 
19 statute, regulation, ordinance, or contract that, as a condition
 
20 of receipt of any housing assistance, including a rental subsidy,
 
21 mortgage subsidy, or mortgage insurance to an assisted housing
 
22 development: 
 

 
 
 
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 1      (1)  Establishes maximum limitations on tenant incomes as a
 
 2           condition of eligibility for occupancy of the units
 
 3           within a development;
 
 4      (2)  Imposes any restrictions on the maximum rents that can
 
 5           be charged for any of the units within a development;
 
 6           or 
 
 7      (3)  Requires that rents for any of the units within a
 
 8           development be reviewed by any governmental body or
 
 9           agency before the rents are implemented.
 
10      "Very low income" means having an income less than fifty per
 
11 cent of the area median income as defined by the federal
 
12 Department of Housing and Urban Development.
 
13      §201G-B  Owner's notification.  An owner shall provide the
 
14 corporation with the following:
 
15      (1)  Copies of all HUD-required notification letters
 
16           regarding the owner's intention to opt out of the
 
17           section 8 project-based contract including but not
 
18           limited to:
 
19           (A)  The one-year notification when the owner does not
 
20                intend to renew the contract; and
 
21           (B)  The one hundred fifty-day notification of intent
 
22                to prepay or terminate the mortgage held or
 
23                insured by HUD;
 
24           and
 

 
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 1      (2)  Pertinent and available information, including the
 
 2           physical condition of the project and current market
 
 3           rates.
 
 4      §201G-C  Preservation assistance.(a)  When an owner of an
 
 5 assisted housing development gives the corporation notice of
 
 6 intent to terminate a subsidy contract or prepay the mortgage,
 
 7 the corporation shall collaborate with HUD in efforts to
 
 8 encourage the owner to preserve the long-term affordability of
 
 9 the housing project.  The corporation shall:
 
10      (1)  Provide the owner and interested nonprofit or for-
 
11           profit entities with information on government-assisted
 
12           financing programs to help maintain affordability,
 
13           including:
 
14           (A)  Tax-exempt revenue bond financing;
 
15           (B)  Low-income tax credits; and
 
16           (C)  Below-market interest rate financing programs;
 
17      (2)  Provide the owner with a list of local, regional, or
 
18           national nonprofit organizations that may be interested
 
19           in acquiring the assisted housing development; and
 
20      (3)  Encourage the owner to provide the tenant association
 
21           with an opportunity to purchase the assisted housing
 
22           development.
 

 
 
 
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 1      (b)  The entities that receive state assistance shall meet
 
 2 the following criteria:
 
 3      (1)  Be capable of managing the housing and related
 
 4           facilities for their remaining useful life, either by
 
 5           itself or through a management agent;
 
 6      (2)  Agree to obligate itself and any successors in interest
 
 7           to maintain the affordability of the assisted housing
 
 8           development for persons and families of low or moderate
 
 9           income and very low income for either a thirty-year
 
10           period from the date that the purchaser took legal
 
11           possession of the housing project or the remaining term
 
12           of the existing federal or other government assistance,
 
13           whichever is greater.  The development shall target
 
14           occupancy in the approximate percentages that those
 
15           persons and families occupied that development on the
 
16           date the owner gave notice of intent or the approximate
 
17           percentages specified in existing use restrictions,
 
18           whichever is higher.  This obligation shall be recorded
 
19           prior to the close of escrow in the bureau of
 
20           conveyances and shall contain a legal description of
 
21           the property, indexed to the name of the owner as
 
22           grantor; and
 

 
 
 
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 1      (3)  Have no member among its officers or directorate with a
 
 2           financial interest in assisted housing developments
 
 3           that have terminated a subsidy contract or prepaid
 
 4           mortgage on the development, if it is a local nonprofit
 
 5           organization or public agency.
 
 6      (c)  It is the intent of the legislature that this section
 
 7 is in addition to, but not preemptive of, applicable federal laws
 
 8 governing the sale or other disposition of a development that
 
 9 would result in either:
 
10      (1)  A discontinuance of its use as an assisted housing
 
11           development; or
 
12      (2)  The termination of any low-income use restrictions that
 
13           apply to the development.
 
14      §201G-D  Other powers.  Nothing in this subpart shall
 
15 enlarge or diminish in any way, any power that a county, affected
 
16 tenant, or owner may have, independent of this chapter."
 
17      SECTION 3.  In codifying the new sections added by section 2
 
18 of this Act, the revisor of statutes shall substitute appropriate
 
19 section numbers for the letters used in designating the new
 
20 sections in this Act.
 
21      SECTION 4.  This Act shall take effect upon its approval.