SB 1134: RELATING TO HOUSING.

A BILL FOR AN ACT

relating to housing.

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

     SECTION 1.  The legislature finds that the preservation of subsidized affordable housing is vital to preventing the displacement of local working families in Hawaii.

     The legislature further finds that thousands of subsidized units are scheduled to have their formal commitments expire in the next twenty years.  The Hawaii housing finance and development corporation has two thousand units within its low-income housing tax credit program that are scheduled to expire in coming years, and there are thousands more city, state, and federally assisted affordable rental housing units that are susceptible to falling out of affordability without intervention.

     The legislature also finds that affordable rental housing developments become homes and communities for working people, and when these developments revert to market rate, individuals are displaced and communities are fractured.

     Therefore, the purpose of this Act is to preserve and retain existing affordable housing stock and increase community ownership of permanently affordable housing by:

     (1)  Requiring certain landlords to provide a specified notice to a tenant regarding the tenant's potential right to purchase the property, under certain conditions; and

     (2)  Allowing tenants, families, local governments, affordable housing nonprofits, and community land trusts forty-five days to match or beat the best bona fide offer to buy an eligible affordable housing property.

     SECTION 2.  Chapter 521, Hawaii Revised Statutes, is amended by adding a new section to part IV to be appropriately designated and to read as follows:

     "§521-     Notice of sale; tenant's right to purchase.  (a)  A landlord that is renting an eligible affordable housing property to a tenant shall notify the tenant in writing regarding the tenant's potential right to purchase the property in which the tenant is residing pursuant to section 201H-   .

     (b)  For the purposes of this section, "eligible affordable housing property" has the same meaning as defined in section 201H-   ."

     SECTION 3.  Chapter 201H, Hawaii Revised Statutes, is amended by adding a new section to part II to be appropriately designated and to read as follows:

     "§201H-     Eligible affordable housing property; eligible parties; matching agreement of sale.  (a)  Notwithstanding any law to the contrary, an owner of an eligible affordable housing property that is no longer subject to the requirements of section 42 (with respect to low-income housing credit) of the Internal Revenue Code who intends to sell, convey, or otherwise transfer the eligible affordable housing property shall not enter into a binding agreement of sale for the property until the requirements of this section have been met.

     (b)  An owner of an eligible affordable housing property shall notify in writing the following at least twelve months prior to the property no longer being subject to the requirements of section 42 of the Internal Revenue Code; if the owner intends to sell, convey, or otherwise transfer the property; or both:

     (1)  The executive director;

     (2)  The county councilmember for the district in which the eligible affordable housing property is located;

     (3)  Affordable housing nonprofits and community land trusts; and

     (4)  All tenants of the eligible affordable housing property.

     (c)  The notice pursuant to subsection (b) shall include:

     (1)  The address of the eligible affordable housing property;

     (2)  The name, address, and phone number of the owner;

     (3)  The name, address, phone number, and electronic mail address of the owner's designated contact person; and

     (4)  The date that the property is no longer subject to the requirements of section 42 of the Internal Revenue Code and a statement of intent to sell the property, if applicable.

     (d)  During the forty-five-day period following the notice sent pursuant to subsection (b), the owner shall be prohibited from accepting, considering, or soliciting a purchase offer from anyone except an eligible party.

     (e)  If at any time after the forty-five-day period an owner of an eligible affordable housing property receives a bona fide offer that the owner intends to accept from an entity other than an eligible party, the owner shall provide notice to all eligible parties of all material terms of any such offer.

     (f)  Within sixty days of the mailing date of a notice of a bona fide offer pursuant to subsection (e), any eligible party may submit a matched agreement of sale to the owner.  The owner shall accept any matched agreement of sale that is similar in all material respects to the bona fide offer received; provided that a matched agreement of sale submitted by a tenant shall receive priority over any non-governmental eligible party.

     (g)  Within sixty days of the mailing date, whether electronic or by hard copy, of a matched agreement of sale to the owner, the owner shall accept the matched agreement of sale or enter into good faith negotiations with the person who submitted the matched agreement of sale.

     (h)  If, after ninety days from the mailing date, whether electronic or by hard copy, of the matched agreement of sale the parties have negotiated in good faith, but no eligible party has submitted a matched agreement of sale that is similar in all material respects to a bona fide offer that the owner intends to accept, the owner shall have no further obligations under this section.

     (i)  Any person in violation of this section shall be subject to penalties as determined by the corporation.

     (j)  For the purposes of this section:

     "Eligible affordable housing property" means a property in which the owner has qualified and received low-income housing tax credits pursuant to section 235-110.8.

     "Eligible party" means a state or county housing agency, affordable housing nonprofit, community land trust, or tenant of the eligible affordable housing property."

     SECTION 4.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect upon its approval.

Report Title:

Affordable Housing; Notice; Eligible Parties; Matched Agreement of Sale

Description:

Requires certain landlords to provide a specified notice to a tenant regarding the tenant's potential right to purchase the property, under certain conditions.  Allows tenants, families, local governments, affordable housing nonprofits, and community land trusts forty-five days to match or beat the best bona fide offer to buy an eligible affordable housing property.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.