SB 12 — Requires certain notices before the termination, expiration or ending of a restriction relating to the affordability of certain housing. (BDR 25-372)

(ReprintedSenate withBill amendmentsNo. adopted on April 15, 2021) FIRST REPRINT S.B.

1212–Committee Son ENATEGovernment BAffairs ILLNCHAPTER.......... O.

12–COMMITTEE ON G OVERNMENT A FFAIRS (ON B EHALF OF THE A DVISORY COMMITTEE ON H OUSING ) PREFILED N OVEMBER 18, 2020 ____________ Referred to Committee on Government Affairs SUMMARY—Requires certain notices before the termination, expiration or ending of a restriction relating to the affordability of certain housing.

(BDR 25-372) FISCAL NOTE:

Effect on Local Government:

No.

Effect on the State:

No.

~ EXPLANATION – Matter in bolded italics is new;

matter between brackets [omitted material] is material to be omitted.

Existing federal law establishes a federal income tax credit in an amount equal Under existing federal law, to be eligible for this credit, a certain percentage of the costsresidential ofunits constructingin the project are required to be subject to certain affordability restrictions that set a low-incomelimit housingon project.the income level of occupants of the units and restrict the amount of rent that may be charged to such occupants.

UnderAn existingowner federalof law,property tothat beis eligiblepart forof thisthe credit,low-income ahousing certainproject percentagethat ofwishes to receive the residentialfederal unitslow-income inhousing thetax projectcredit areis required to beenter subjectinto toan certainagreement affordabilitywith a housing credit agency in which the amountowner commits to maintain the affordability restrictions of rentat thatleast may15 beyears chargedfollowing tothe suchcompliance occupants.period.

AnHowever, ownerexisting offederal propertydlawe restrictauthorizes thatan isowner, partafter of the low-income14th housingyear projectof that wishes to receive the federalcompliance low-incomeperiod, housing tax credit is required to enterrequest intothat anthe agreement with a housing credit agency infind whicha thebuyer owner commits to maintainpurchase the affordabilityproperty. restrictions on the property for a compliance period of 15 years and an additional period of time of at least 15 years following the compliance period.

However, existing federal law - *SB12_R1* – 2 – authorizes an owner, after the 14th year of the compliance period, to request that the housing credit agency find a buyer to purchase the property.

(1) impose an administrative penalty upon an owner who fails to provide the - 81st Session (2021) – 2 – required notice;

and (2) prohibit an owner who terminates an affordability housingrestriction taxfrom creditsapplying forto athe periodDivision notfor toan exceedallocation 5 years.tion of federal low-income Section 5 of this bill requires an owner that will voluntarily maintain an affordability restriction on housing aftertax thecredits expirationfor ofa theperiod affordability restriction to provide written notice to the Division not less than 12 months before the expiration of the affordability restriction and, thereafter, submit an annual report to theexceed Division5 foryears. as long as the owner voluntarily maintains the affordability restriction.

Sectionaffordability 5restriction alsoon requireshousing after the ownerexpiration of the affordability restriction to provide written notice atto leastthe Division not less than 12 months before ending the voluntaryexpiration of the affordability restriction toand, thethereafter, county,submit thean city,annual theSectionreport 6to ofthe thisDivision billfor providesas thatlong as the provisionsowner ofvoluntarily thismaintains billthe applyaffordability to:restriction.

Section 5 also requires the owner to provide written notice at least 12 the Division and each tenant.ntary affordability restriction to the county, the city, Section 6 of this bill provides that the provisions of this bill apply to:

EXPLANATION – Matter in bolded italics is new;

matter between brackets [omitted material] is material to be omitted.

“Affordability restriction” means a limit on rent that an owner may charge for occupancy of a dwelling unit in a project or - *SB12_R1* – 3 – a limit on the income of tenants for persons or families seeking to qualify as tenants in a project.

- 81st Session (2021) – 3 – 6.

An owner who intends to terminate an affordability restriction and submit a request to the Division to obtain a qualified contract for the acquisition of a project shall provide written notice to:

(e)and Afuture descriptionrent of the effectstenant;fects of the termination on the lease and(f) futureA rentdescription of the tenant;protections for tenants and resources for relocation set forth in the program pursuant to which the affordability restriction is being terminated;

- *SB12_R1* – 4 – (f) A description of the protections for tenants and resources for relocation set forth in the program pursuant to which the affordability restriction is being terminated;

(a)- The81st programSession pursuant(2021) to– which4 the– owner is terminating the affordability restriction;

which the owner is terminating (b) The number of dwelling units that will be affected by the termination;

5.subsection 1, the owner who intends to terminate the affordability restriction shall hold at least one meeting for tenants of the affected project to discuss the information contained in the written notice and answer any questions regarding the written notice.

After providing the written notice required pursuant to subsection 1, the owner who intends to terminate the affordability restriction shall hold at least one meeting for tenants of the affected project to discuss the information contained in the written notice and answer any questions regarding the written notice.

(b) Impose an administrative fine of not more than $10,000 upon an owner who fails to provide the written notice required - *SB12_R1* – 5 – pursuant to subsection 1.

The Division may use not more than $500 of the money collected from the imposition of the fine to covercov7. the costs of collecting the fine.

7.thThe Division may adopt regulations to carry out the provisions of this section.

The Division may adopt regulations to carry out the provisions of this section.

(b)- The81st Division.Session (2021) – 5 – shall provide written notice to each owner who has an ownership interest in a qualified low-income housing project in this State.

Upon receipt of such notice, the Division shall provide written notice to each owner who has an ownership interest in a qualified low-income housing project in this State.

(a) The program pursuant to which the affordability restriction is expiring;(b) The number of dwelling units affected by the expiration;

(b) The number of dwelling units affected by the expiration;

and (i)4.) TheTThe contactwritten informationnotice ofrequired to be provided to the ownergoverning body of each applicable county and city, the project.Division and each owner who has an ownership interest in a qualified low-income housing project pursuant to subsection 1 must include, without limitation:

- *SB12_R1* – 6 – 4.

The written notice required to be provided to the governing body of each applicable county and city, the Division and each owner who has an ownership interest in a qualified low-income housing project pursuant to subsection 1 must include, without limitation: