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.  (SD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2021
THE SENATE                              S.B. NO.           S.D. 1
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 governmental
 
21 assistance 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      "Corporation" means the housing and community development
 
17 corporation of Hawaii.
 
18      "Local nonprofit organization" means not-for-profit
 
19 corporations organized pursuant to chapter 415B, whose principal
 
20 purpose is ownership, development, or management of housing or
 
21 community development projects for person and families of low,
 
22 very low, or moderate income.  Additionally, local nonprofit
 
23 organizations should have a board that is a broad representative
 

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

 
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 1 entity or organization or a local nonprofit regional, or national
 
 2 organization whose purpose includes the acquisition of an
 
 3 assisted housing development and that represents the interest of
 
 4 at least a majority of the tenants in the assisted housing
 
 5 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
 
15           could be charged for any of the units within a
 
16           development; 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
 
24 assisted housing development who gives notice of intent to
 

 
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 1 terminate a subsidy contract or prepay the mortgage.  The housing
 
 2 and community development corporation of Hawaii shall:
 
 3      (1)  Issue a letter expressing the desire to purchase the
 
 4           property, which shall be construed as a "threat of
 
 5           condemnation";
 
 6      (2)  Communicate with the federal department of housing and
 
 7           urban development to maintain section 8 subsidies;
 
 8      (3)  Use its staff and other resources to form a tenants
 
 9           organization, and assist the tenants organization to
 
10           apply to the proper agencies for nonprofit status;
 
11      (4)  Have an appraisal conducted on the target property in
 
12           order to make an offer to purchase;
 
13      (5)  Issue multi-family housing bonds and make a
 
14           corresponding appropriation to purchase the property
 
15           and perform any necessary renovations;
 
16      (6)  Not become involved in any future developments of new
 
17           rental housing projects; provided that existing
 
18           subsidized rental housing is sufficient to meet
 
19           existing demand; and
 
20      (7)  Devote its efforts primarily to the preservation of
 
21           existing government subsidized rental housing projects
 
22           and secondarily to the funding of rental housing
 
23           development by non-profit housing organizations.
 

 
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 1      (b)  The entities to whom an opportunity to purchase shall
 
 2 first be provided include the following:
 
 3      (1)  The tenant association of the development; and
 
 4      (2)  Local nonprofit organizations and public agencies which
 
 5           shall:
 
 6           (A)  Be capable of managing the housing and related
 
 7                facilities for their remaining useful life, either
 
 8                by itself or through a management agent;
 
 9           (B)  Agree to obligate itself and any successors in
 
10                interest to maintain the affordability of the
 
11                assisted housing development for persons and
 
12                families of low or moderate income and very low
 
13                income for either a fifty-five year period from
 
14                the date that the purchaser took legal possession
 
15                of the housing or the remaining term of the
 
16                existing federal government assistance, whichever
 
17                is greater.  The development shall be continuously
 
18                occupied in the approximate percentages that those
 
19                persons and families occupied that development on
 
20                the date the owner gave notice of intent or the
 
21                approximate percentages specified in existing use
 
22                restrictions, whichever is higher.  This
 
23                obligation shall be recorded prior to the close of
 

 
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 1                escrow in the bureau of conveyances and shall
 
 2                contain a legal description of the property,
 
 3                indexed to the name of the owner as grantor; and
 
 4           (C)  Have no member among its officers or directorate
 
 5                with a financial interest in assisted housing
 
 6                developments that have terminated a subsidy
 
 7                contract or prepaid mortgage on the development,
 
 8                if it is a local nonprofit organization or public
 
 9                agency.
 
10      (c)  It is the intent of the legislature that this section
 
11 is in addition to, but not preemptive of, applicable federal laws
 
12 governing the sale or other disposition 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      §201G-C  Other powers.  Nothing in this subpart shall
 
19 enlarge or diminish in any way, any power which a county,
 
20 affected tenant, or owner may have, independent of this chapter."
 
21      SECTION 3.  In codifying the new sections added by section 2
 
22 of this Act, the revisor of statutes shall substitute appropriate
 
23 section numbers for the letters used in designating the new
 
24 sections in this Act.
 

 
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 1      SECTION 4.  This Act shall take effect upon its approval.