HB 2849 — Concerning housing programs administered by the department of commerce.

ENGROSSEDH-4176.2HOUSE SUBSTITUTE HOUSE BILL 2849State of Washington66th Legislature2020 Regular SessionByHouseSessionByRepresentatives Capital Budget (originally sponsored by Representatives Tharinger, DeBolt, Macri, Robinson, Chopp, Harris, Leavitt, Ramel, and Lekanoff)READLekanoffRead FIRSTfirst TIMEtime 02/11/20.AN01/27/20.Referred to Committee on Capital Budget.AN ACT Relating to housing programs administered by the department of commerce;

These services include medical assistance, counseling, chore services, and child care, resulting in a need for a significant investment of ongoing operating funding in addition to the underlying capital investments.The legislature further finds that ((housing assistance programs in the past have often failed to help those in greatest need)) through the housing trust fund program, since 1986 the state has invested more than one billion dollars in order to provide over fifty thousand units of safe and affordable housing to low-income individuals.((Theindividuals.The legislature declares that it is in the public interest to establish((establish))maintain a continuously renewable resource known as the housing trust fund and((and housing assistance programprogram)) to assist low and very low-income citizens in meeting their basic housing needs, and that the needs of very low-income citizens should be given priority and that whenever feasible, assistance should be in the form of loans.))Sec.loans.Sec.

If the department determines that it has not received an adequate number of suitable applications for rural projects during any given funding cycle, the department may allocate unused moneys for projects in nonrural areas of the state.(2) Activities eligible for assistance from the housing trust fund and other legislative appropriations include, but are not limited to:(a) New construction, rehabilitation, or acquisition of ((low and very)) low-income housing units;(b) ((Rent subsidies;(c) Matching funds for social services directly related to providing housing for special-need tenants in assisted projects;(d)))Down payment or closing costs assistance for low-income first-time home buyers;(c) Technical assistance, design and finance services and consultation, and administrative costs for eligible nonprofit community or neighborhood-based organizations;(((e) Administrative costs for housing assistance groups or organizations when such grant or loan will substantially increase the recipient's access to housing funds other than those available under this chapter;(f)))(d) Shelters ((and related services)) for the homeless, including emergency shelters and overnight youth shelters;(((g) Mortgage subsidies, including temporary rental and mortgage payment subsidies to prevent homelessness;(h) Mortgage insurance guarantee or payments for eligible projects;(i) Down payment or closing cost assistance for eligible first-time home buyers;(j)))(e) Acquisition of housing((housing unitsunits))land for the purpose of preservation((preservation asas))developing low-income or((or very low-incomelow-income)) housing;(((k) Projects))(f) Affordable housing projects making housing more accessible to ((families))low-income households with members who have disabilities;

and(((l)))(g) Remodeling and improvements as required to meet building code, licensing requirements, or legal operations to residential properties owned and operated by an entity eligible under RCW 43.185A.040, which were transferred as described in RCW 82.45.010(3)(t) by the parent of a child with developmental disabilities.(3) ((Preference must be given for projects that include an early learning facility.(4))) Legislative appropriations from capital bond proceeds may not be used ((only)) for the costs ((of projects)) authorized under subsection (2)(((a), (i), and (j)))(c) of this section((, and notnot))or for the administrative costs of the department)).(((5)))(4)department.(((5)))(4) Moneys received from repayment of housing trust fund loans that were made from appropriations from capital bond proceeds may be used for all activities necessary for the proper functioning of the housing ((assistance))trust fund program ((except for activities authorized under subsection (2)(b) and (c) of this section))including, but not limited to, providing preservation funding, as provided in section 8 of this act.(((6) Administrative))(5)(a)Administrative))(5) The department may spend up to three percent of the housing trust fund appropriation for administrative costs associated with application, distribution, and project development activities of the department ((may not exceed three percent of the annual funds available for the housing assistance program.

Reappropriations must not be included in the calculation of the annual funds available for determining the administrative costs)).(((7)))(b)costs)). Administrative costs associated with compliance and monitoring activities of the department may not exceed one-quarter of one percent annually of the contracted amount of state investment in the housing ((assistance))trust fund program.(c) In addition to the administrative costs authorized under (a) and (b) of this subsection, the department may spend up to an additional one percent of the housing trust fund appropriation if the following conditions are met:(i) The department submits a spending plan to the office of financial management and the appropriate fiscal committees of the legislature detailing total anticipated administrative costs;

and(ii) The directordepartment ofmay thenot officecharge offees financialunder managementRCW finds43.330.152 thatfor the spending plan exceeds the funding authorized in this subsectionpurpose.(((7)))(6) (5)Administrative andcosts theassociated amountwith certifiedcompliance in RCW 43.185.030 (as recodified by this act) and providesmonitoring writtenactivities authorizationof for the department tomay spendnot upexceed toone-quarter anof additional one percent ofannually the housing trust fund appropriation.(iii) The director of the officecontracted ofamount financial management shall notify the appropriate fiscal committees of thestate legislatureinvestment in writing ten days prior to authorizing additional expenditures under this subsection.(d) The department may not charge fees under RCW 43.330.152 for the housing trust((assistance))trust fund program.Sec.program.

The department may not charge fees under RCW 43.330.152 for this purpose.Sec.

All projects and activities must be evaluated by some or all of the criteria under subsection (5)(((5)))(4) of this section, and similar projects and activities shall be evaluated under the same criteria.(4)criteria.(((5)))(4) The department must use a separate application form for applications to provide homeownership opportunities and evaluate homeownership project applications as allowed under chapter 43.185A RCW.(5) The department must give preference for applications based on some or all of the criteria under this subsection, and similar projects and activities must be evaluated under the same criteria:(a) The degree of leveraging of other funds that will occur;(b) The degree of commitment from programs to provide necessary habilitation and support services for projects focusing on special needs populations;(c) Recipient contributions to total project costs, including allied contributions from other sources such as professional, craft and trade services, and lender interest rate subsidies;(d) Local government project contributions in the form of infrastructure improvements, affordable housing financing, and others;(e) Projects((Projects that encourage ownership, management, and other project-related responsibility opportunities;(f)opportunities;(f))) Projects that demonstrate a strong probability of serving the original target group or income level for a period of at least twenty-five years;(g)years;(((g)))(f) The applicant has the demonstrated ability, stability and resources to implement the project;(h)project;(((h)))(g) Projects which demonstrate serving the greatest need;(i)need;(((i)))(h) Projects that provide housing for persons and families with the lowest incomes;(j)incomes;(((j)))(i) Projects serving special needs populations which ((are under))fulfill statutory ((mandate))mandates to develop community housing;(k)housing;(((k)))(j) Project location and access to employment centers in the region or area;(l)area;(((l)))(k) Projects that provide employment and training opportunities for disadvantaged youth under a youthbuild or youthbuild-type program as defined in RCW 50.72.020;(m)50.72.020;(((m)))(l) Project location and access to available public transportation services;

((and))(n)((and(n)))(m) Projects involving collaborative partnerships between local school districts and either public housing authorities or nonprofit housing providers, that help children of low-income families succeed in school.

To receive this preference, the local school district must provide an opportunity for community members to offer input on the proposed project at the first scheduled school board meeting following submission of the grant application to the department;(o)department;(n) The degree of funding that has already been committed to the project by nonstate entities;

and(p)and(o) Projects that demonstrate a strong readiness to proceed to construction.(5) Preference must be given for projects that include an early learning facility.(6) The department must develop, with advice and input from the affordable housing advisory board established in RCW 43.185B.020, or a subcommittee of the affordable housing advisory board:(a) Additional criteria to evaluate applications for assistance under this chapter;

A new section is added to chapter 43.185A RCW to read as follows:(1)follows:(1)(a) The department may provide project funding in the form of loans or grants.(2)(a) When the department provides a loan for projectsa dedicatingproject atthat leastmeets halfthe ofcriteria their housing units or beds to very low-income households as defined in RCW(b) 43.63A.510,of orthis tosubsection, homelessthe personsdepartment asmust defineddefer inloan RCWpayments 43.185C.010,until orthe toend people in need of permanent supportive housing as defined in RCW 36.70A.030, the departmentproject's must defer all loan payments.term.

Loans subject to deferred payments under this subsectionsection must be payable in full,full includingon accruedthe onesale percentor simpleon interest,change atof theuse end of the project'sproject.(b) loanDeferral term,under on(a) theof sale,this orsubsection onis changerequired ofwhen:(i) useAt least half of the project,housing unlessunits otherwiseare negotiateddedicated withto theserving departmentextremely andlow-income annualhouseholds; loan payments are reinstated.

However,or(ii) ifAt theleast salehalf of the propertyhousing isunits towill thebe originaldedicated projectto sponsorproviding orpermanent tosupportive anhousing entityand inat whichleast thea originalquarter sponsorof hasthe controllinghousing authority,units theare departmentdedicated mayto continueserving theextremely deferral.(b)low-income households.(2)(a) When the department provides a loan for a project that is not subject to deferred payments under (a)subsection (1) of this subsection,section, theannual departmentloan payments must definebe cash-flowno paymentmore than fifty percent of the net cash flow of the project, prorated based on other public funding sources and social impact investments to the project.(b) When a project receives a low-income tax credit, the loan termspayment must start when the low-income housing tax credit investor exits or the project refinances, whichever comes first.(3) For purposes of this section:(a) "Net cash flow" means gross receipts such as rents and conditions.tenant payments, less operating expenses such as insurance, utilities, salaries, management fees, maintenance, debt service, and services provided for permanent supportive housing.(b) "Permanent supportive housing" has the same meaning as defined in RCW 36.70A.030.Sec.

For projects that receive a low-income tax credit, the loan payment must start when the low-income housing tax credit investor exits or the project refinances, whichever comes first, but in no case before the end of the initial low-income housing tax credit fifteen year compliance period.(3) With advice and input from the affordable housing advisory board established in RCW 43.185B.020, the department must develop recommendations for loan terms and conditions for projects not covered by subsection (2)(a) of this section.

The department must submit a report containing these recommendations to the governor and the legislature by December 31, 2020.Sec.