HB2579

SECTION 1. Chapter 201H, Hawaii Revised Statutes, is amended by adding a new part to be appropriately designated and to read as follows:

"Part . ADULT RESIDENTIAL CARE HOME and

long-term care facility repair and renovation

LOAN GUARANTEE PROGRAM

§201H-A Adult residential care home and long-term care facility repair and renovation loan guarantee program; office; loan guarantee; limitations; rules. (a) There is established the adult residential care home and long-term care facility repair and renovation loan guarantee office, which shall be placed within the Hawaii housing finance and development administration for administrative purposes only. The office shall administer the adult residential care home and long-term care facility repair and renovation loan guarantee program.

(b) Subject to availability of funds, the office shall guarantee loans to assist eligible applicants, as determined in section 201H‑B, who are owners and intend to repair or renovate their homes or facilities. The office shall guarantee loans up to ninety per cent of the principal balance of a loan made to an eligible applicant by a private lender who is unable to otherwise lend the eligible applicant sufficient funds at reasonable rates; provided that at no time shall the aggregate amount of the State's liability, contingent or otherwise, on loans guaranteed under this section exceed $ based on a reserve level established at twenty-five per cent of the loan guarantee amount.

(1) The conditions under which the State may become a co-guarantor or a subordinate guarantor to a loan guarantee offered by a federal government program; and

(2) The specific types of loans that may be guaranteed under this program, consistent with paragraph (1).

(d) Interest charged on a guaranteed loan made under this section shall be determined by the office based upon the market rate of interest charged by the private lender for a similar type of loan unless waived by the office.

(e) When the application for a guaranteed loan has been approved by the office, the office shall issue to the lender a guaranty for that percentage of the loan on which it guarantees payment of principal and interest. The lender shall collect all payments from the borrower and otherwise service the loan.

(f) In return for the office's guarantee, the lender shall remit a one-time fee of two per cent on the principal amount of the guaranteed portion of the loan, at the time the loan is booked, except for the following:

(1) On loans of $ or less with a maturity exceeding twelve months, a reduced fee of one per cent; and

(2) On loans with a maturity of twelve months or less, a reduced fee of one per cent shall be paid.

This fee may be paid by the borrower as a cost for the loan.

(g) When any installment of principal and interest has been due for sixty days and has not been paid by the borrower, the office shall issue, on request of the lender, a check for the percentage of the overdue payment guaranteed, thereby acquiring a division of interest in the collateral pledged by the borrower in proportion to the amount of the payment. The office shall be reimbursed for any amounts so paid plus the applicable interest rate, where payment is collected from the borrower.

(h) Under conditions specified in rules adopted by the office, the lender may request that a portion or all of the guaranteed percentage of the principal balance of the loan be converted to a participating share held by the office.

(i) If the lender deems that foreclosure proceedings are necessary to collect moneys due from the borrower, it shall notify the office. Within thirty days of the notification, the office may elect to request an assignment of the loan on payment in full to the lender of the principal balance and interest due. Foreclosure proceedings shall be held in abeyance in the interim.

(j) The lender may reduce the percentage of the principal balance guaranteed under this section at any time.

(k) The office shall adopt rules in accordance with chapter 91 to implement the adult residential care home and long-term care facility repair and renovation loan guarantee program, including calculation of the reserve amount.

201H-B Eligibility; application. (a) Any owner of an adult residential care home or long-term care facility who intends to repair or renovate the home or facility and whose construction plans for repair and renovation have been approved by the director of health pursuant to section 321‑ shall be deemed an eligible applicant who may apply for a loan guarantee to carry out the home repair and renovation.

(b) An applicant for a loan guarantee shall submit an application to the office on a form to be provided by the office.

§201H-C Adult residential care home and long-term care facility repair and renovation loan guarantee revolving fund; restrictions; lien. (a) There is created in the state treasury the adult residential care home and long-term care facility repair and renovation loan guarantee revolving fund to be administered by the office. The fund shall accept for deposit payments on loans, appropriations, and other moneys to implement the purposes of this part.

(b) Moneys from the fund shall be expended for loan guarantees for adult residential care home and long-term care facility repair and renovations subject to the following restrictions:

(1) The office may fix necessary charges or fees that may be related to each loan guarantee; and

(2) All loan guarantees shall be periodically reviewed to ensure compliance with this subsection.

(c) If the loan recipient defaults, the office may place a lien on the owner's property being repaired or renovated that is the subject of the loan guarantee.

§201H-D Definitions. For the purposes of this part only, unless the context clearly requires otherwise:

"Adult residential care home" includes:

(1) Type I and type II adult residential care homes licensed under section 321‑15.6;

(2) Licensed developmental disabilities domiciliary homes as defined under section 321‑15.9;

(3) Community care foster family homes as defined under section 346‑331; and

(4) Certified adult foster homes as defined under section 321‑11.2.

"Long-term care facility" has the meaning as that term is defined in section 349‑21(f)."

SECTION 2. Chapter 321, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§321- Adult residential care home and long-term care facility repair and renovation loan guarantee certification. Upon request by an applicant for an adult residential care home and long-term care facility repair and renovation loan guarantee under part of chapter 201H, the director shall review an applicant's construction plans to repair or renovate the applicant's adult residential care home or long-term care facility. If the director determines that the plans meet the department's licensing standards, the director shall provide a simple one-page certification to the applicant for submittal to the adult residential care home and long-term care facility repair and renovation loan guarantee office."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2008-2009 for deposit into the adult residential care home and long-term care facility repair and renovation loan guarantee revolving fund.

SECTION 4. There is appropriated out of the adult residential care home and long-term care facility repair and renovation loan guarantee revolving fund the sum of $ or so much thereof as may be necessary for fiscal year 2009 to be expended by the adult residential care home and long-term care facility repair and renovation loan guarantee office for the purposes of this Act.

SECTION 5. In codifying the new sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 6. New statutory material is underscored.

SECTION 7. This Act shall take effect upon its approval, except that sections 3 and 4 shall take effect on July 1, 2008.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2579
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII