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. (CD1)
2021
THE SENATE S.B. NO. S.D. 2
TWENTIETH LEGISLATURE, 2000 H.D. 1
STATE OF HAWAII C.D. 1
________________________________________________________________
________________________________________________________________
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 �1G-A Definitions. As used in this subpart, unless the
22 context otherwise requires:
23 "Affected tenant" means a tenant household residing in an
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1 assisted housing development that, at the time the notice is
2 provided, benefits from the government assistance.
3 "Assisted housing development" or "development" means a
4 multifamily rental housing development that receives assistance
5 under any of the following federal programs:
6 (1) New construction, substantial rehabilitation, moderate
7 rehabilitation, property disposition, and loan
8 management set-aside programs under section 8 of the
9 United States Housing Act of 1937, as amended (42
10 U.S.C. section 1437f);
11 (2) The following programs under the following sections of
12 the National Housing Act:
13 (A) Section 213 (12 U.S.C. section 1715e);
14 (B) The Below-Market-Interest-Rate Program under
15 section 221(d)(3)(12 U.S.C. section 1715l(d)(3)
16 and (5));
17 (C) Section 236 (12 U.S.C. section 1715z-1); and
18 (D) Section 202 (12 U.S.C. section 1701q);
19 (3) Programs for rent supplement assistance under section
20 101 of the Housing and Urban Development Act of 1965,
21 as amended (Public Law 89-117); and
22 (4) Programs under section 515 of the Housing Act of 1949,
23 as amended (42 U.S.C. section 1485).
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1 "Local nonprofit organization" means a not-for-profit
2 corporation organized pursuant to chapter 415B, whose principal
3 purpose is ownership, development, or management of housing or
4 community development projects for person and families of low or
5 moderate income and very low income. Additionally, a local
6 nonprofit organization shall have a board of directors that is
7 broadly representative of the community, members that are
8 community based, and a proven track record of local community
9 service.
10 "Low or moderate income" means having an income between
11 fifty and eighty per cent of the area median income as defined by
12 the federal Department of Housing and Urban Development.
13 "Owner" means an individual, corporation, limited liability
14 company, association, partnership, joint venture, or business
15 entity that holds title to an assisted housing development.
16 "Regional or national organization" means not-for-profit
17 charitable corporations organized on a multicounty, state, or
18 multistate basis that have as their principal purpose the
19 ownership, development, or management of housing or community
20 development projects for persons and families of low or moderate
21 income and very low income.
22 "Regional or national public agencies" means multicounty,
23 state, or multistate agencies that are authorized to own,
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1 develop, or manage housing or community development projects for
2 persons and families of low or moderate income and very low
3 income.
4 "Tenant" means a tenant, subtenant, lessee, sublessee, or
5 other person legally in possession or occupying an assisted
6 dwelling unit in the assisted housing development.
7 "Tenant association" means a group of tenants that has
8 formed a nonprofit corporation, cooperative corporation, or other
9 entity or organization or a local nonprofit organization, or a
10 regional or national nonprofit organization whose purpose
11 includes the acquisition of an assisted housing development and
12 that represents the interest of at least a majority of the
13 tenants in the assisted housing development.
14 "Use restriction" means any federal, state, or local
15 statute, regulation, ordinance, or contract that, as a condition
16 of receipt of any housing assistance, including a rental subsidy,
17 mortgage subsidy, or mortgage insurance to an assisted housing
18 development:
19 (1) Establishes maximum limitations on tenant incomes as a
20 condition of eligibility for occupancy of the units
21 within a development;
22 (2) Imposes any restrictions on the maximum rents that can
23 be charged for any of the units within a development;
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1 or
2 (3) Requires that rents for any of the units within a
3 development be reviewed by any governmental body or
4 agency before the rents are implemented.
5 "Very low income" means having an income less than fifty per
6 cent of the area median income as defined by the federal
7 Department of Housing and Urban Development.
8 �1G-B Owner's notification. An owner shall provide the
9 corporation with the following:
10 (1) Copies of all HUD-required notification letters
11 regarding the owner's intention to opt out of the
12 section 8 project-based contract including but not
13 limited to:
14 (A) The one-year notification when the owner does not
15 intend to renew the contract; and
16 (B) The one hundred fifty-day notification of intent
17 to prepay or terminate the mortgage held or
18 insured by HUD; and
19 (2) Pertinent and available information, including the
20 physical condition of the project and current market
21 rates.
22 �1G-C Preservation assistance.(a) When an owner of an
23 assisted housing development gives the corporation notice of
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1 intent to terminate a subsidy contract or prepay the mortgage,
2 the corporation shall collaborate with HUD in efforts to
3 encourage the owner to preserve the long-term affordability of
4 the housing project. The corporation shall:
5 (1) Provide the owner and interested nonprofit or for-
6 profit entities with information on government-assisted
7 financing programs to help maintain affordability,
8 including:
9 (A) Tax-exempt revenue bond financing;
10 (B) Low-income tax credits; and
11 (C) Below-market interest rate financing programs;
12 (2) Provide the owner with a list of local, regional, or
13 national nonprofit organizations that may be interested
14 in acquiring the assisted housing development;
15 (3) Encourage the owner to provide the tenant association
16 with an opportunity to purchase the assisted housing
17 development;
18 (4) Issue a letter expressing the desire to purchase the
19 property, which shall be construed as a "threat of
20 condemnation";
21 (5) Communicate with the federal Department of Housing and
22 Urban Development to maintain section 8 subsidies;
23 (6) Use its staff and other resources to form a tenant
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1 association, and assist the tenant association to apply
2 to the proper agencies for nonprofit status;
3 (7) Have an appraisal conducted on the target property in
4 order to make an offer to purchase; and
5 (8) Issue multi-family housing bonds and make a
6 corresponding appropriation to purchase the property
7 and perform any necessary renovations.
8 (b) First opportunity to purchase shall be provided to the
9 tenant association of the development, local nonprofit
10 organizations, and public agencies which shall meet the following
11 criteria:
12 (1) Be capable of managing the housing and related
13 facilities for their remaining useful life, either by
14 itself or through a management agent;
15 (2) Agree to obligate itself and any successors in interest
16 to maintain the affordability of the assisted housing
17 development for persons and families of low or moderate
18 income and very low income for either a minimum thirty-
19 year period from the date that the purchaser took legal
20 possession of the housing project or the remaining term
21 of the existing federal or other source of assistance,
22 whichever is greater. The development shall maintain
23 occupancy in the approximate percentages that those
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1 persons and families occupied that development on the
2 date the owner gave notice of intent or the approximate
3 percentages specified in existing use restrictions,
4 whichever is higher. This obligation shall be recorded
5 prior to the close of escrow in the bureau of
6 conveyances and shall contain a legal description of
7 the property, indexed to the name of the owner as
8 grantor; and
9 (3) Have no member among its officers or directorate with a
10 financial interest in assisted housing developments
11 that have terminated a subsidy contract or prepaid
12 mortgage on the development, if it is a local nonprofit
13 organization or public agency.
14 (c) It is the intent of the legislature that this section
15 is in addition to, but not preemptive of, applicable federal laws
16 governing the sale or other disposition of a development that
17 would result in either:
18 (1) A discontinuance of its use as an assisted housing
19 development; or
20 (2) The termination of any low-income use restrictions that
21 apply to the development.
22 �1G-D Other powers. Nothing in this subpart shall
23 enlarge or diminish in any way, any power that a county, affected
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1 tenant, or owner may have, independent of this chapter."
2 SECTION 3. In codifying the new sections added by section 2
3 of this Act, the revisor of statutes shall substitute appropriate
4 section numbers for the letters used in designating the new
5 sections in this Act.
6 SECTION 4. This Act shall take effect upon its approval.