REPORT TITLE:
Affordable Housing


DESCRIPTION:
Requires assisted housing development owners to give one year's
notice to tenants if the owner intends to terminate a subsidy
contract.  Gives tenants or nonprofit organizations opportunities
to purchase the development if the owner of the development has
not given notice to sell prior to July 1, 2000.  Establishes
additional requirements for the HCDCH for section 8 assisted
housing subsidies.  (SB2021 SD2)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2021
THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   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 fifty projects that are assisted by the United States Department
 
 4 of Housing and Urban Development (HUD) project-based section 8
 
 5 program.  Because the residents of each of these dwelling units
 
 6 have a low household income, they pay thirty per cent of their
 
 7 income as rent, and the HUD project contributes the remainder of
 
 8 their rent to the landlord.
 
 9      It is estimated that the HUD project contributes more than
 
10 $20,000,000 annually to rent and to the Hawaii economy for the
 
11 three thousand families that live in the assisted dwelling units.
 
12 This income to the State and the stability it provides for the
 
13 families that rely upon it are essential to the struggling
 
14 economies where these projects are located.
 
15      The legislature finds that the private landlords who own
 
16 these projects will be under increasing pressure to convert this
 
17 affordable housing to market rate housing as HUD's programs have
 
18 changed to lower the amount of rent the owners receive from the
 
19 HUD project.  If these owners elect not to continue receiving HUD
 

 
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 1 subsidies, then the State stands to lose up to $20,000,000
 
 2 annually in federal housing support.  In addition, the lives of
 
 3 the tenants of these projects and the long-term stock of
 
 4 affordable housing in Hawaii would be seriously hurt by these
 
 5 conversions.
 
 6      The purpose of this Act is to provide protection to
 
 7 residents of housing assisted by HUD who are at risk of losing
 
 8 their housing subsidy due to changes in the HUD project-based
 
 9 section 8 program.
 
10      SECTION 2.  Chapter 201G, Hawaii Revised Statutes, is
 
11 amended by adding a new subpart to part III to be appropriately
 
12 designated and to read as follows:
 
13   "  . FEDERALLY ASSISTED RENTAL HOUSING PRESERVATION PROGRAM
 
14      §201G-A  Definitions.  As used in this subpart, unless the
 
15 context otherwise requires:
 
16      "Affected tenant" means a tenant household residing in an
 
17 assisted housing development that, at the time the notice is
 
18 provided, benefits from the government assistance.
 
19      "Assisted housing development" or "development" means a
 
20 multifamily rental housing development that receives assistance
 
21 under any of the following federal programs:
 
22      (1)  New construction, substantial rehabilitation, moderate
 
23           rehabilitation, property disposition, and loan
 

 
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 1           management set-aside programs under section 8 of the
 
 2           United States Housing Act of 1937, as amended (42
 
 3           U.S.C. 1437f);
 
 4      (2)  The following programs under the following sections of
 
 5           the National Housing Act:
 
 6           (A)  Section 213 (12 U.S.C. 1715e);
 
 7           (B)  The Below-Market-Interest-Rate Program under
 
 8                section 221(d)(3)(12 U.S.C. 1715l(d)(3) and (5));
 
 9           (C)  Section 236 (12 U.S.C. 1715z-1); and
 
10           (D)  Section 202 (12 U.S.C. 1701q);
 
11      (3)  Programs for rent supplement assistance under section
 
12           101 of the Housing and Urban Development Act of 1965,
 
13           as amended (Public Law 89-117); and
 
14      (4)  Programs under section 515 of the Housing Act of 1949,
 
15           as amended (42 U.S.C. 1485).
 
16      "Local nonprofit organization" means a not-for-profit
 
17 corporation organized pursuant to chapter 415B, whose principal
 
18 purpose is ownership, development, or management of housing or
 
19 community development projects for person and families of low or
 
20 moderate income and very low income.  Additionally, local
 
21 nonprofit organizations shall have a board of directors that is
 
22 broadly representative of the community, members that are
 
23 community based, and a proven track record of local community
 

 
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 1 service.
 
 2      "Low or moderate income" means having an income between
 
 3 fifty and eighty per cent of the area median income as defined by
 
 4 the federal Department of Housing and Urban Development.
 
 5      "Owner" means an individual, corporation, limited liability
 
 6 company, association, partnership, joint venture, or business
 
 7 entity that holds title to an assisted housing development.
 
 8      "Regional or national organization" means not-for-profit
 
 9 charitable corporations organized on a multicounty, state, or
 
10 multistate basis that have as their principal purpose the
 
11 ownership, development, or management of housing or community
 
12 development projects for persons and families of low or moderate
 
13 income and very low income.
 
14      "Regional or national public agencies" means multicounty,
 
15 state, or multistate agencies that are authorized to own,
 
16 develop, or manage housing or community development projects for
 
17 persons and families of low or moderate income and very low
 
18 income.
 
19      "Tenant" means a tenant, subtenant, lessee, sublessee, or
 
20 other person legally in possession or occupying the assisted
 
21 housing development.
 
22      "Tenant association" means a group of tenants that has
 
23 formed a nonprofit corporation, cooperative corporation, or other
 

 
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 1 entity or organization or a local nonprofit organization, or a
 
 2 regional or national nonprofit organization whose purpose
 
 3 includes the acquisition of an assisted housing development and
 
 4 that represents the interest of at least a majority of the
 
 5 tenants in the assisted housing development.
 
 6      "Use restriction" means any federal, state, or local
 
 7 statute, regulation, ordinance, or contract which, as a condition
 
 8 of receipt of any housing assistance, including a rental subsidy,
 
 9 mortgage subsidy, or mortgage insurance to an assisted housing
 
10 development: 
 
11      (1)  Establishes maximum limitations on tenant incomes as a
 
12           condition of eligibility for occupancy of the units
 
13           within a development;
 
14      (2)  Imposes any restrictions on the maximum rents that can
 
15           be charged for any of the units within a development;
 
16           or 
 
17      (3)  Requires that rents for any of the units within a
 
18           development be reviewed by any governmental body or
 
19           agency before the rents are implemented.
 
20      "Very low income" means having an income less than fifty per
 
21 cent of the area median income as defined by the federal
 
22 Department of Housing and Urban Development.
 
23      §201G-B  Right to purchase.(a)  When an owner of an
 

 
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 1 assisted housing development gives notice of intent to terminate
 
 2 a subsidy contract or prepay the mortgage, the housing and
 
 3 community development corporation of Hawaii shall:
 
 4      (1)  Issue a letter expressing the desire to purchase the
 
 5           property, which shall be construed as a "threat of
 
 6           condemnation";
 
 7      (2)  Communicate with the federal Department of Housing and
 
 8           Urban Development to maintain section 8 subsidies;
 
 9      (3)  Use its staff and other resources to form a tenant
 
10           association, and assist the tenant association to apply
 
11           to the proper agencies for nonprofit status;
 
12      (4)  Have an appraisal conducted on the target property in
 
13           order to make an offer to purchase; and
 
14      (5)  Issue multi-family housing bonds and make a
 
15           corresponding appropriation to purchase the property
 
16           and perform any necessary renovations.
 
17      (b)  The entities to whom an opportunity to purchase shall
 
18 first be provided include the following:
 
19      (1)  The tenant association of the development; and
 
20      (2)  Local nonprofit organizations and public agencies which
 
21           shall:
 
22           (A)  Be capable of managing the housing and related
 
23                facilities for their remaining useful life, either
 

 
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 1                by itself or through a management agent;
 
 2           (B)  Agree to obligate itself and any successors in
 
 3                interest to maintain the affordability of the
 
 4                assisted housing development for persons and
 
 5                families of low or moderate income and very low
 
 6                income for either a fifty-five year period from
 
 7                the date that the purchaser took legal possession
 
 8                of the housing or the remaining term of the
 
 9                existing federal government assistance, whichever
 
10                is greater.  The development shall be continuously
 
11                occupied in the approximate percentages that those
 
12                persons and families occupied that development on
 
13                the date the owner gave notice of intent or the
 
14                approximate percentages specified in existing use
 
15                restrictions, whichever is higher.  This
 
16                obligation shall be recorded prior to the close of
 
17                escrow in the bureau of conveyances and shall
 
18                contain a legal description of the property,
 
19                indexed to the name of the owner as grantor; and
 
20           (C)  Have no member among its officers or directorate
 
21                with a financial interest in assisted housing
 
22                developments that have terminated a subsidy
 
23                contract or prepaid mortgage on the development,
 

 
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 1                if it is a local nonprofit organization or public
 
 2                agency.
 
 3      (c)  It is the intent of the legislature that this section
 
 4 is in addition to, but not preemptive of, applicable federal laws
 
 5 governing the sale or other disposition of a development which
 
 6 would result in either:
 
 7      (1)  A discontinuance of its use as an assisted housing
 
 8           development; or
 
 9      (2)  The termination of any low-income use restrictions
 
10           which apply to the development.
 
11      §201G-C  Future and existing developments.  In performing
 
12 its duties under section 201G-B, the housing and community
 
13 development corporation of Hawaii shall not become involved in
 
14 any future developments of new rental housing projects; provided
 
15 that existing subsidized rental housing is sufficient to meet
 
16 existing demand, and shall devote its efforts primarily to the
 
17 preservation of existing government subsidized rental housing
 
18 projects and secondarily to the funding of rental housing
 
19 development by nonprofit housing organizations.
 
20      §201G-D  Other powers.  Nothing in this subpart shall
 
21 enlarge or diminish in any way, any power which a county,
 
22 affected tenant, or owner may have, independent of this chapter."
 
23      SECTION 3.  In codifying the new sections added by section 2
 

 
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 1 of this Act, the revisor of statutes shall substitute appropriate
 
 2 section numbers for the letters used in designating the new
 
 3 sections in this Act.
 
 4      SECTION 4.  This Act shall take effect upon its approval.