REPORT TITLE:
Rent Supplement Prog; Housing


DESCRIPTION:
Requires assisted housing development owner to give one year
notice to tenants if owner is going to terminate a subsidy
contract or mortgage prepayment; gives tenants or nonprofit
organization opportunity to purchase the development if owner of
development has not given notice to sell prior to July 1, 1999;
sets the income limits for participants in the state rent
supplement program; sets the tenant's annual payment; amends the
definition of qualified tenant; appropriates funds for the
program. (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        1018
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 2
TWENTIETH LEGISLATURE, 1999                                S.D. 1
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO THE HOUSING AND COMMUNITY DEVELOPMENT CORPORATION OF
   HAWAII.



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

 1                              PART I.
 
 2      SECTION 1.  The legislature finds that in Hawaii, there are
 
 3 currently more than three thousand units of affordable housing in
 
 4 fifty projects which are assisted by the United States Department
 
 5 of Housing and Urban Development (HUD) project based Section 8
 
 6 program.  The residents of each of these dwelling units have low
 
 7 incomes, so they pay thirty per cent of their income as rent, and
 
 8 HUD contributes the remainder of their rent to the landlord.
 
 9      It is estimated that HUD contributes more than $20,000,000
 
10 annually to rents, and to the Hawaii economy, for the three
 
11 thousand families that live in the assisted dwelling units.  This
 
12 income to the State, and the stability it provides for the
 
13 families which rely upon it, are essential to the struggling
 
14 economies where these projects are located.
 
15      The legislature further finds that the private landlords who
 
16 own these projects will be under increasing pressure to convert
 
17 this affordable housing to market rate housing as HUD's programs
 
18 have changed to lower the amount of rent the owners receive from
 
19 HUD.  If these owners elect not to continue receiving HUD
 

 
Page 2                                                     1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 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      Therefore, the purpose of this Part is to protect the
 
 7 low-income tenants residing in HUD project based Section 8
 
 8 housing from conversion of their affordable housing to market
 
 9 rate housing.
 
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
 
14                       Preservation Program
 
15      §201G-  Definitions.  As used in this subpart, unless the
 
16 context otherwise requires:
 
17      "Affected tenant" means a tenant household residing in an
 
18 assisted housing development which at the time the notice is
 
19 provided, benefits from the government assistance.
 
20      "Assisted housing development" or "development" means a
 
21 multifamily rental housing development that receives governmental
 
22 assistance under any of the following federal programs:
 
23      (1)  New construction, substantial rehabilitation, moderate
 

 
Page 3                                                     1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

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

 
Page 4                                                     1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1 very low, or moderate income.  Additionally, local nonprofit
 
 2 organizations should have a board that has a broad representation
 
 3 of the community, members that are community based, and a proven
 
 4 track record of local community service.
 
 5      "Low or moderate income" means having an income between
 
 6 fifty and eighty per cent of the area median income as defined by
 
 7 the federal Department of Housing and Urban Development.
 
 8      "Owner" means an individual, corporation, limited liability
 
 9 company, association, partnership, joint venture, or business
 
10 entity that holds title to an assisted housing development.
 
11      "Profit-motivated organizations and individuals" means
 
12 individuals or two or more persons that carry on a business for
 
13 profit.
 
14      "Regional or national organization" means not-for-profit
 
15 charitable corporations organized on a multicounty, state, or
 
16 multistate basis that have as their principal purpose the
 
17 ownership, development, or management of housing or community
 
18 development projects for persons and families of low or moderate
 
19 income and very low income.
 
20      "Regional or national public agencies" means multicounty,
 
21 state, or multistate agencies that are authorized to own,
 
22 develop, or manage housing or community development projects for
 
23 persons and families of low or moderate income and very low
 

 
Page 5                                                     1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1 income.
 
 2      "Tenant" means a tenant, subtenant, lessee, sublessee, or
 
 3 other person legally in possession or occupying the assisted
 
 4 housing development.
 
 5      "Tenant association" means a group of tenants who have
 
 6 formed a nonprofit corporation, cooperative corporation, or other
 
 7 entity or organization or a local nonprofit regional, or national
 
 8 organization whose purpose includes the acquisition of an
 
 9 assisted housing development and which represents the interest of
 
10 at least a majority of the tenants in the assisted housing
 
11 development.
 
12      "Use restriction" means any federal, state, or local
 
13 statute, regulation, ordinance, or contract which, as a condition
 
14 of receipt of any housing assistance, including a rental subsidy,
 
15 mortgage subsidy, or mortgage insurance to an assisted housing
 
16 development: 
 
17      (1)  Establishes maximum limitations on tenant incomes a
 
18           condition of eligibility for occupancy of the units
 
19           within a development;
 
20      (2)  Imposes any restrictions on the maximum rents that
 
21           could be charged for any of the units within a
 
22           development; or 
 
23      (3)  Requires that rents for any of the units within a
 

 
Page 6                                                     1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1           development be reviewed by any governmental body or
 
 2           agency before the rents are implemented.
 
 3      "Very low income" means having an income less than fifty per
 
 4 cent of the area median income as defined by the federal
 
 5 Department of Housing and Urban Development.
 
 6      §201G-  Notice requirement.(a)  At least one year prior
 
 7 to the anticipated date of termination of a subsidy contract or
 
 8 mortgage prepayment on an assisted housing development, the owner
 
 9 proposing the termination or prepayment of governmental
 
10 assistance shall provide a notice of the change to each affected
 
11 tenant household residing in the assisted housing development at
 
12 the time the notice is provided.
 
13      The notice shall contain:
 
14      (1)  The anticipated date of the termination or prepayment
 
15           of the programs contained in the definition of
 
16           "assisted housing development in section 201G-    ;
 
17      (2)  The anticipated rent increase subsequent to the date of
 
18           the prepayment or termination of the program;
 
19      (3)  A statement that a copy of the notice will be sent to
 
20           the corporation and the county where the assisted
 
21           housing development is located;
 
22      (4)  A statement of the possibility that the housing may
 
23           remain in the federal program after the date of subsidy
 

 
Page 7                                                     1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1           termination or prepayment under certain circumstances;
 
 2           and
 
 3      (5)  The telephone number of the corporation's office which
 
 4           can be contacted to request additional written
 
 5           information.  
 
 6 The same notice also shall be filed at the same time with the
 
 7 corporation, the county where the property is located, and the
 
 8 state legislature.
 
 9      (b)  The notice to the appropriate county shall also
 
10 contain:
 
11      (1)  Total number of affected tenants in the project;
 
12      (2)  Number of units that are government assisted;
 
13      (3)  Number of units that are not government assisted;
 
14      (4)  Number of bedrooms in each unit that is government
 
15           assisted;
 
16      (5)  Ages, income, and ethnic or racial categories of the
 
17           affected tenants;
 
18      (6)  A brief description of the owner's plan for the
 
19           project, including any timetables or deadlines for
 
20           actions to be taken and specific governmental approvals
 
21           that are required to be obtained;
 
22      (7)  The reason the owner seeks to terminate the subsidy
 
23           contract or prepay the mortgage; and 
 

 
Page 8                                                     1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1      (8)  A list of any contracts the owner has made or is making
 
 2           with other governmental agencies or other interested
 
 3           parties in connection with the notice.
 
 4 The information contained in the notice under this subsection
 
 5 shall be based on reasonably available existing tenant written
 
 6 records and shall not require the owner to obtain or acquire
 
 7 additional information that is not contained in the existing
 
 8 tenant records.  The owner shall not be held liable for any
 
 9 inaccuracies contained in the tenant records or from other
 
10 sources.
 
11      (c)  For purposes of this section, service of the notice
 
12 shall be made by first-class mail postage prepaid.
 
13      (d)  This section may be enforced either at law or in equity
 
14 by any person or entity entitled to receive notice under this
 
15 section who is adversely affected by an owner's failure to comply
 
16 with this section.
 
17      (e)  This section shall not diminish any responsibility for
 
18 notification under federal law.
 
19      §201G-    Right to purchase.(a)  An owner of an assisted
 
20 housing development who has not, prior to July 1, 1999, given
 
21 notice of intent to terminate a subsidy contract or prepay the
 
22 mortgage pursuant to section 201G-    , shall not sell, or
 
23 otherwise dispose of the development in a manner which would
 

 
Page 9                                                     1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1 result in either:
 
 2      (1)  A discontinuance of its use as an assisted housing
 
 3           development; or
 
 4      (2)  The termination of any low-income use restrictions
 
 5           which apply to the development, 
 
 6 unless the owner or its agent proposing the removal of government
 
 7 assistance shall first have provided each of the entities, listed
 
 8 in subsection (b), an opportunity to purchase the development at
 
 9 a price and upon terms which represent a bona fide intention to
 
10 sell, in compliance with subsection (f).
 
11      (b)  The entities to whom an opportunity to purchase shall
 
12 first be provided include the following:
 
13      (1)  The tenant association of the development;
 
14      (2)  Local nonprofit organizations and public agencies; and
 
15      (3)  Regional or national nonprofit organizations and
 
16           regional or national public agencies.
 
17      (c)  For the purpose of this section, to qualify as a
 
18 purchaser of an assisted housing development, an entity listed in
 
19 subsection (b) shall:
 
20      (1)  Be capable of managing the housing and related
 
21           facilities for their remaining useful life, either by
 
22           itself or through a management agent;
 
23      (2)  Agree to obligate itself and any successors in interest
 

 
Page 10                                                    1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1           to maintain the affordability of the assisted housing
 
 2           development for persons and families of low or moderate
 
 3           income and very low income for either a fifty-five year
 
 4           period from the date that the purchaser took legal
 
 5           possession of the housing or the remaining term of the
 
 6           existing federal government assistance, whichever is
 
 7           greater.  The development shall be continuously
 
 8           occupied in the approximate percentages that those
 
 9           persons and families occupied that development on the
 
10           date the owner gave notice of intent or the approximate
 
11           percentages specified in existing use restrictions,
 
12           whichever is higher.  This obligation shall be recorded
 
13           prior to the close of escrow in the bureau of
 
14           conveyances and shall contain a legal description of
 
15           the property, indexed to the name of the owner as
 
16           grantor; and
 
17      (3)  If a local nonprofit organization or public agency,
 
18           have no member among its officers or directorate with a
 
19           financial interest in assisted housing developments
 
20           that have terminated a subsidy contract or prepaid
 
21           mortgage on the development.
 
22      (d)  If an assisted housing development is not economically
 
23 feasible, a purchaser shall be entitled to remove one or more
 

 
Page 11                                                    1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1 units from the rent and occupancy requirements as is necessary
 
 2 for the development to become economically feasible; provided
 
 3 that once the development is again economically feasible, the
 
 4 purchaser shall designate the next available units as low income
 
 5 units up to the original number of those units.  For the purpose
 
 6 of this subsection, "economically feasible" means the
 
 7 development's revenue equals or exceeds the development's
 
 8 operating expenses, excluding any return on investment.
 
 9      (e)  If an owner decides to sell or otherwise dispose of the
 
10 assisted housing development pursuant to subsection (a), at least
 
11 one year prior to the anticipated date of termination of a
 
12 subsidy contract or mortgage prepayment of a development which
 
13 would result in either: 
 
14      (1)  A discontinuance of its use as an assisted housing
 
15           development; or
 
16      (2)  The termination of any low income use restrictions
 
17           which apply to the development;
 
18 the owner shall first give notice of the owner's bona fide
 
19 intention to sell, or otherwise dispose of the development to
 
20 each qualified entity on the list provided to the owner by the
 
21 corporation, in accordance with subsection (o), as well as to
 
22 those qualified entities which directly contact the owner.  
 
23      The notice shall conform to the requirements of subsection
 

 
Page 12                                                    1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1 (f) and shall be sent to the entities by registered or certified
 
 2 mail, return receipt requested.  The owner shall also post a copy
 
 3 of the notice in a conspicuous place in the common area of the
 
 4 development.
 
 5      If the owner already has a bona fide offer to purchase from
 
 6 a qualified entity at the time the owner decides to sell, or
 
 7 otherwise dispose of the development, the owner shall not be
 
 8 required to comply with this subsection.
 
 9      (f)  The initial notice of a bona fide intention to sell
 
10 shall contain all of the following:
 
11      (1)  The sale price, terms of assumable financing, if any,
 
12           terms of the subsidy contract, if any, and proposed
 
13           improvements to the property to be made by the owner in
 
14           connection with the sale, if any;
 
15      (2)  A statement that each of the type of entities listed in
 
16           subsection (b) has the right to purchase the
 
17           development under this section in the order and
 
18           according to the priorities established in subsection
 
19           (g);
 
20      (3)  A statement that the owner will make available to each
 
21           of the type of entities listed in subsection (b)
 
22           within fifteen business days of receiving a request
 
23           therefor, itemized lists of monthly operating expenses,
 

 
Page 13                                                    1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1           capital improvements as determined by the owner made
 
 2           within each of the two preceding calendar years, the
 
 3           amount of project reserves, and copies of the two most
 
 4           recent financial and physical inspection reports on the
 
 5           development, if any, filed with the federal, state, or
 
 6           local agencies;
 
 7      (4)  A statement that the owner will make available to each
 
 8           of the entities listed in subsection (b), within
 
 9           fifteen business days of a request therefor, the most
 
10           recent rent roll listing the rent paid for each unit
 
11           and the subsidy, if any, paid by a governmental agency
 
12           as of the date the notice of intent was made pursuant
 
13           to, section 201G-    and a statement of the vacancy
 
14           rate at the development for each of the two preceding
 
15           calendar years; and
 
16      (5)  A statement that the owner has satisfied all notice
 
17           requirements pursuant to section 201G-    (a).
 
18      (g)  If a qualified entity elects to purchase an assisted
 
19 housing development, it shall make a bona fide offer to purchase
 
20 the development within one-hundred-eighty days from the date of
 
21 an owner's bona fide intention to sell.  
 
22      A qualified entity's bona fide offer to purchase shall
 
23 identify whether it is a tenant association, nonprofit
 

 
Page 14                                                    1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1 organization, public agency, or for-profit organization or
 
 2 individual and shall certify, under penalty of perjury, that it
 
 3 is qualified pursuant to subsection (c). 
 
 4      During the first one-hundred-twenty days from the date of an
 
 5 owner's bona fide notice of intention to sell, an owner shall
 
 6 only accept a bona fide offer to purchase from the tenant
 
 7 association.  If at the end of the first one-hundred-twenty day
 
 8 period no purchase agreement has been executed, the owner may
 
 9 accept a bona fide offer to purchase from any qualified entity
 
10 specified in subsection (b) during the remaining sixty days.
 
11      (h)  If at the end of the one-hundred-eighty day period no
 
12 purchase agreement has been executed and a person or entity other
 
13 than those entities listed in subsection (b) has offered to
 
14 purchase, or otherwise acquire the development, and the owner of
 
15 the development has complied with this section and section
 
16 201G-    , the owner may accept a bona fide offer to purchase
 
17 from this person or entity.
 
18      (i)  When a bona fide offer to purchase has been made to an
 
19 owner in response to a bona fide intention to sell, and the offer
 
20 is accepted, a purchase agreement shall be executed.
 
21      (j)  Either the owner or the qualified entity may request
 
22 that the fair market value of the property, as a development, be
 
23 determined by an independent appraiser qualified to perform
 

 
Page 15                                                    1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1 multifamily housing appraisals, who shall be selected and paid by
 
 2 the requesting party.  
 
 3      All appraisers shall possess qualifications equivalent to
 
 4 those required by the Members of the Appraisers Institute.  This
 
 5 appraisal shall be nonbinding on either party with respect to the
 
 6 sales price of the development offered in the bona fide intention
 
 7 to sell, the bona fide offer to purchase, or the acceptance or
 
 8 rejection of either.
 
 9      (k)  During the one-hundred-eighty day period following the
 
10 initial one-hundred-eighty day period required pursuant to
 
11 subsection (g), an owner may accept an offer from a person or an
 
12 entity that does not qualify under subsection (c); provided that
 
13 the acceptance does not conflict with applicable federal laws
 
14 governing who may purchase an assisted housing development. 
 
15      This acceptance shall be made subject to the owner providing
 
16 each qualified entity that made a bona fide offer to purchase the
 
17 first opportunity to purchase the development at the same terms
 
18 and conditions as the pending offer to purchase sent by
 
19 registered or certified mail, return receipt requested.  
 
20      The qualified entity shall have fifteen days from the date
 
21 the notice is mailed to submit a bona fide offer to purchase and
 
22 that offer shall be accepted by the owner.  The owner shall not
 
23 be required to comply with this subsection if the person or the
 

 
Page 16                                                    1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1 entity making the offer during this time period agrees to
 
 2 maintain the development for persons and families of low and
 
 3 moderate income and very low income, in accordance with
 
 4 subsection (c)(2).
 
 5      (l)  This section shall not apply to any of the following:
 
 6      (1)  A government taking by eminent domain or negotiated
 
 7           purchase; 
 
 8      (2)  A forced sale pursuant to a foreclosure; or
 
 9      (3)  A transfer by gift, devise, or operation of law.
 
10      (m)  An owner, at any time during the one-year period
 
11 subsequent to giving notice of the bona fide intention to sell in
 
12 accordance with subsection (e), may decide not to sell, or
 
13 otherwise dispose of the development and may withdraw the notice
 
14 of intention to sell.  However, at any time that the owner again
 
15 decides to sell, or otherwise dispose of the development, this
 
16 section shall apply.
 
17      (n)  Prior to the close of escrow, an owner selling,
 
18 leasing, or otherwise disposing of a development to a purchaser
 
19 who does not qualify under subsection (c) shall certify under
 
20 penalty of perjury that the owner has complied with all
 
21 provisions of this section and section 201G-     .
 
22      This certification shall be recorded in the bureau of
 
23 conveyances and shall contain a legal description of the property
 

 
Page 17                                                    1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1 and be indexed to the name of the owner as grantor.
 
 2 Additionally, the certification may be relied upon by good faith
 
 3 purchasers and encumbrancers for value and without notice of a
 
 4 failure to comply with this section.
 
 5      Any person or entity acting solely in the capacity of an
 
 6 escrow agent for the transfer of real property subject to this
 
 7 section shall not be liable for any failure to comply with this
 
 8 section unless the escrow agent either had actual knowledge of
 
 9 the requirements of this section or acted contrary to written
 
10 escrow instructions concerning this section.
 
11      (o)  The corporation shall undertake the following
 
12 responsibilities and duties:
 
13      (1)  Publish a form by April 1, 2000, containing a summary
 
14           of rights and obligations under this section and make
 
15           that information available to owners of assisted
 
16           housing developments as well as to tenant associations,
 
17           local nonprofit organizations, regional or national
 
18           nonprofit organizations, public agencies, and other
 
19           entities with an interest in preserving the State's
 
20           subsidized housing; and
 
21      (2)  Compile, maintain, and update a list of entities in
 
22           subsection (b) that have either contacted the
 
23           corporation with an expressed interest in purchasing a
 

 
Page 18                                                    1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1           development in the subject area or have been identified
 
 2           by the corporation as potentially having an interest in
 
 3           participating in a right of first refusal program.  The
 
 4           corporation shall publicize the existence of the list
 
 5           statewide.  The initial list shall be developed by
 
 6           February 1, 2000.  Within five working days of the date
 
 7           of receipt of a notice of intent under section
 
 8           201G-    , the corporation shall send the list by
 
 9           registered or certified mail to the owner proposing the
 
10           termination or removal of government assistance.
 
11      (p)  This section may be enforced either in law or in equity
 
12 by any qualified entity entitled to exercise the right of first
 
13 refusal under this section, that has been adversely affected by
 
14 an owner's failure to comply with this section.
 
15      (q)  It is the intent of the legislature that this section
 
16 is in addition to, but not preemptive of, applicable federal laws
 
17 governing the sale, or other disposition of a development which
 
18 would result in either:
 
19      (1)  A discontinuance of its use as an assisted housing
 
20           development; or
 
21      (2)  The termination of any low income use restrictions
 
22           which apply to the development.
 
23      §201G-   Other powers.  Nothing in this subpart shall
 

 
Page 19                                                    1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1 enlarge or diminish in any way, any power which a county,
 
 2 affected tenant, or owner may have, independent of this section."
 
 3                             PART II.
 
 4      SECTION 3.  The purpose of this Part is to amend the
 
 5 qualifications for housing and rental assistance by, among other
 
 6 things:
 
 7      (1)  Lowering from low and moderate to very low the maximum
 
 8           income a person may have and still qualify for
 
 9           participation in the state rent supplement program
 
10           (program);
 
11      (2)  Increasing the amount of supplemental rent paid by the
 
12           housing and community development corporation from one-
 
13           fifth to leave       per cent of a qualified tenant's
 
14           income; and
 
15      (3)  Amending the definition of "qualified tenant" under the
 
16           program to enable eligible single persons who are not
 
17           elderly or disabled to participate in the program.
 
18      SECTION 4.  Section 201G-128, Hawaii Revised Statutes, is
 
19 amended to read as follows:
 
20      "§201G-128  Exception of current owners in corporation
 
21 projects.  The corporation may allow a person who is a current
 
22 owner of a multifamily dwelling unit in a project sponsored by
 
23 the corporation to apply for the purchase of a larger dwelling
 

 
Page 20                                                    1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1 unit in a project sponsored by the corporation if the applicant's
 
 2 current family size exceeds the permissible family size for the
 
 3 applicant's current dwelling unit, as determined by prevailing
 
 4 county building or housing codes.  The applicant shall be
 
 5 required to sell the applicant's current dwelling unit back to
 
 6 the corporation.  Notwithstanding any law to the contrary, any
 
 7 applicant, as it pertains to for-sale housing, shall be a
 
 8 "qualified resident" who:
 
 9      (1)  Is a citizen of the United States or a resident alien;
 
10      (2)  Is at least eighteen years of age;
 
11      (3)  Is domiciled in the State and shall physically reside
 
12           in the dwelling unit purchased under this chapter;
 
13      (4)  In the case of purchase of real property in fee simple
 
14           or leasehold, has a gross income sufficient to qualify
 
15           for the loan to finance the purchase; and
 
16      (5)  Except for the applicant's current residence, meets the
 
17           following qualifications:
 
18           (A)  Is a person who either oneself or together with
 
19                spouse[,] or household member does not own a
 
20                majority interest in fee simple or leasehold lands
 
21                suitable for dwelling purposes[,] or a majority
 
22                interest in lands under any trust agreement or
 
23                other fiduciary arrangement in which another
 

 
Page 21                                                    1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1                person holds the legal title to such land; and
 
 2           (B)  Is a person whose spouse or household member does
 
 3                not own a majority interest in fee simple or
 
 4                leasehold lands suitable for dwelling purposes or
 
 5                a majority interest in lands under any trust
 
 6                agreement or other fiduciary arrangement in which
 
 7                another person holds the legal title to such land,
 
 8                except when husband and wife are living apart
 
 9                under a decree of separation from bed and board
 
10                issued by the family court pursuant to section
 
11                580-71."
 
12      SECTION 5.  Section 201G-232, Hawaii Revised Statutes, is
 
13 amended to read as follows:
 
14      "[[]§201G-232[]]  Housing owner defined.  As used in this
 
15 subpart, the term "housing owner" means:
 
16      (1)  A private nonprofit corporation or other private
 
17           nonprofit legal entity, a limited dividend corporation
 
18           or other limited dividend legal entity, or a
 
19           cooperative housing corporation, which is a mortgagor
 
20           under sections 202, 207, 213, 221(d)(3), 221(d)(5), or
 
21           231 of the National Housing Act, as amended, or which
 
22           conforms to the standards of those sections but which
 
23           is not a mortgagor under those sections or any other
 

 
Page 22                                                    1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1           private mortgagor under the National Housing Act, as
 
 2           amended, for very-low, low-, or moderate-income family
 
 3           housing, regulated or supervised under federal or state
 
 4           laws or by political subdivisions of the State, or
 
 5           agencies thereof, as to rents, charges, capital
 
 6           structure, rate of return, and methods of operation,
 
 7           from the time of issuance of the building permit for
 
 8           the project; and
 
 9      (2)  Any other owner of a standard housing unit or units
 
10           deemed qualified by the corporation."
 
11      SECTION 6.  Section 201G-233, Hawaii Revised Statutes, is
 
12 amended to read as follows:
 
13      "[[]§201G-233[]]  Qualified tenant defined.  As used in this
 
14 subpart, the term "qualified tenant" means[:
 
15      (1)  Any single person who has attained the age of sixty-two
 
16           or who is unable to engage in any substantial gainful
 
17           activity by reason of any medically determinable
 
18           physical or mental impairment; or
 
19      (2)  Any family;
 
20 provided that the] any single person or family[, pursuant to
 
21 criteria and procedures established by the corporation, has been
 
22 determined to have] with an income [which would qualify the
 
23 tenant for occupancy in housing provided by section 221(d)(3) of
 

 
Page 23                                                    1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1 the National Housing Act, as amended, or to have a lesser
 
 2 income;] that does not exceed the very low income limit as
 
 3 determined by the United States Department of Housing and Urban
 
 4 Development; [and] provided [further] that the qualified tenant's
 
 5 primary place of residence shall be in the State of Hawaii or
 
 6 that the qualified tenant intends to make the State of Hawaii
 
 7 [their] the qualified tenant's primary place of residence.  The
 
 8 terms "qualified tenant" and "tenant" include a member of a
 
 9 cooperative who satisfies the foregoing requirements and who,
 
10 upon resale of the member's membership to the cooperative, will
 
11 not be reimbursed for more than fifty per cent of any equity
 
12 increment accumulated through payments under this subpart.  With
 
13 respect to members of a cooperative, the terms "rental" and
 
14 "rental charges" mean the charges under the occupancy agreements
 
15 between the members and the cooperative.  The term "qualified
 
16 tenant" shall not include any person receiving money payments for
 
17 public assistance from the department of human services; provided
 
18 that the term "public assistance" shall exclude aid provided
 
19 through the federal Supplemental Security Income Program."
 
20      SECTION 7.  Section 201G-234, Hawaii Revised Statutes, is
 
21 amended to read as follows:
 
22      "[[]§201G-234[]]  Relationship of annual payment to rental
 
23 and income.  The amount of the annual payment with respect to any
 

 
Page 24                                                    1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1 dwelling unit shall not exceed the amount by which the fair
 
 2 market rental for such a unit exceeds [one-fifth]       of the
 
 3 tenant's income as determined by the corporation pursuant to
 
 4 procedures and [regulations established] rules adopted by it."
 
 5      SECTION 8.  Section 201G-235, Hawaii Revised Statutes, is
 
 6 amended by amending subsection (d) to read as follows:
 
 7      "(d)  No payments shall be made under this subpart except to
 
 8 the extent that tenants selected under this subpart have been
 
 9 selected according to the following priorities:
 
10      (1)  First priority shall be given to those who have:
 
11           (A)  An income above the maximum amount allowed for
 
12                continued occupancy in housing provided for in
 
13                [part II.A;] subparts A and B of part II;
 
14           (B)  Been tenants of public housing under [part II.A;]
 
15                subparts A and B of part II;
 
16           (C)  Recently vacated or are vacating housing in
 
17                subparagraph (A) or (B) because of exceeding the
 
18                maximum income allowable for continued occupancy;
 
19                and
 
20           (D)  An urgent housing need;
 
21           and
 
22      (2)  Second priority shall be given to all other eligible
 
23           persons under this subpart who have an urgent [housing
 

 
Page 25                                                    1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1           need.] need for housing."
 
 2      SECTION 9.  Section 201G-234, Hawaii Revised Statutes, to
 
 3 the contrary notwithstanding, the amount by which the fair market
 
 4 rental for a dwelling unit may exceed the tenant's income as
 
 5 determined by the corporation under section 201G-234, Hawaii
 
 6 Revised Statutes, which is one-fifth on June 30, 1999, may be
 
 7 changed by rules of the corporation adopted under chapter 91,
 
 8 Hawaii Revised Statutes, to       per cent on July 1, 1999, and
 
 9 may be increased to       per cent on July 1, 2000.  This section
 
10 shall apply to participants in the rent supplement program under
 
11 chapter 201G, Hawaii Revised Statutes, on June 30, 1999.
 
12      SECTION 10.  New participants to the rent supplement program
 
13 after June 30, 1999, shall be required to comply with section
 
14 201G-234, Hawaii Revised Statutes.
 
15      SECTION 11.  There is appropriated out of the general
 
16 revenues of the State of Hawaii the sum of $        , or so much
 
17 thereof as may be necessary for fiscal year 1999-2000 and the
 
18 same sum or so much thereof as may be necessary for fiscal year
 
19 2000-2001 for the rent supplement program.
 
20      The sums appropriated shall be expended by the housing and
 
21 community development corporation of Hawaii for the purposes of
 
22 this Act.
 
23      SECTION 12.  Statutory material to be repealed is bracketed.
 

 
Page 26                                                    1018
                                     H.B. NO.           H.D. 2
                                                        S.D. 1
                                                        

 
 1 New statutory material is underscored.
 
 2      SECTION 13.  This Act shall take effect upon approval;
 
 3 provided that sections 9 and 10 shall take effect on June 30,
 
 4 1999; and provided that sections 7 and 11 shall take effect on
 
 5 July 1, 1999.