Rental Housing

Authorizes $          in G.O. Bonds and appropriates this sum to
the Rental Housing Trust Fund and imposes certain requirements.
Establishes the Housing and Community Development Corporation of
Hawaii as a mortgage lender under the Hula Mae program in order
to provide refinancing to Hawaii residents.  (SD2)

THE SENATE                              S.B. NO.           S.D. 2
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            

                     A BILL FOR AN ACT



 1      SECTION 1.  The purpose of this Act is to authorize the
 2 issuance of general obligation bonds and to make an appropriation
 3 to the rental housing trust fund to encourage the development and
 4 availability of low income rental housing throughout the State.
 5 This Act also designates the housing and community development
 6 corporation of Hawaii as a mortgage lender under the Hula Mae
 7 program to provide refinancing of primary residential mortgages.
 8      SECTION 2.  The director of finance is authorized to issue
 9 general obligation bonds in the sum of $          , or so much
10 thereof as may be necessary, and the same sum, or so much thereof
11 as may be necessary is appropriated for fiscal year 2000-2001, to
12 be paid into the rental housing trust fund created in section
13 201G-432, Hawaii Revised Statutes.
14      The sum appropriated shall be expended by the housing and
15 community development corporation of Hawaii for the purpose of
16 this Act.
17      SECTION 3.  (a)  The funds appropriated under section 2
18 shall only be available for projects receiving not more than
19 fifty per cent of the total investment in the project from

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 1 government funding, including rental housing trust fund moneys
 2 and low-income housing tax credits approved by the housing and
 3 community development corporation.
 4      (b)  Consulting fees, architectural and engineering fees
 5 combined for each project, shall not exceed $200,000.
 6      (c)  Each project proposal shall set forth:
 7           (1)  The square footage of each proposed unit;
 8           (2)  The total cost of each unit including the cost of
 9                land; and
10           (3)  The cost of each unit per square foot.
11      SECTION 4.  Chapter 201G, Hawaii Revised Statutes, is
12 amended by adding a new section to part III.B to be appropriately
13 designated and to read as follows:
14      "201G-    Rules; refinancing loan program.  (a)  An
15 eligible borrower shall utilize the financing obtained under this
16 part for the eligible borrower's permanent primary residence.
17      (b)  From time to time, the corporation may submit a
18 verification of owner-occupancy form to the eligible borrower.
19 Failure to respond to this verification in a timely manner may
20 result in an immediate escalation of the interest rate or
21 acceleration of the eligible refinancing loan.
22      (c)  For eligible borrowers who later experience financial

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 1 difficulty and must sell or transfer title to their property, the
 2 corporation may grant a waiver of subsection (a) for a period not
 3 to exceed one year and for reasons set forth in section 201G-129
 4 on a case-by-case basis.
 5      (d)  The corporation shall establish requirements for
 6 property financed by an eligible refinancing loan, and may
 7 consider the location, age, condition, and other characteristics
 8 of the property.  At a minimum, the requirements shall include
 9 that:
10      (1)  The mortgagor's first mortgage payments be current; and
11      (2)  The mortgagor's application for refinancing has been
12           rejected by a private financial institution.
13      (e)  The corporation shall establish restrictions on the
14 terms, maturities, interest rates, collateral, and other
15 requirements for eligible refinancing loans.
16      (f)  The corporation shall restrict eligible refinancing
17 loans to an amount no more than $250,000 per property.
18      (g)  The corporation shall establish restrictions on the
19 transfer of ownership of the properties securing eligible
20 refinancing loans.
21      (h)  All eligible loans made shall comply with applicable
22 state and federal laws.

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 1      (i)  Funds under this section shall not be available to
 2 private financial institutions.
 3      (j)  Not more than fifty per cent of the available funding
 4 for this chapter shall be made available for the refinancing
 5 program."
 6      SECTION 5.  Section 201G-181, Hawaii Revised Statutes, is
 7 amended by adding a new definition to be appropriately inserted
 8 and to read as follows:
 9      ""Eligible refinancing loan" means a loan made to replace an
10 existing obligation on a permanent primary residence."
11      SECTION 6.  Section 201G-181, Hawaii Revised Statutes, is
12 amended by amending the definition of "housing loan programs" to
13 read as follows:
14      ""Housing loan programs" includes all or any part of the
15 loan to lenders program, the purchase of existing loans program,
16 the advance commitments program, the refinancing loan program,
17 and the loan funding programs authorized under this part."
18      SECTION 7.  New statutory material is underscored.
19      SECTION 8.  This Act shall take effect on July 1, 2000.