72nd OREGON LEGISLATIVE ASSEMBLY--2003 Regular Session
Enrolled
House Bill 3276
Sponsored by Representative KROPF
CHAPTER ................
AN ACT
Relating to housing; creating new provisions; amending ORS
456.593, 456.615, 456.620, 456.635, 458.625, 458.630 and
458.720; and declaring an emergency.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 456.593 is amended to read:
456.593. (1) Notwithstanding any of the provisions of ORS
456.550 to 456.725 to the contrary:
(a) Of the $2 billion bond authorization under ORS 456.661, the
aggregate principal amount of not to exceed $30 million is to be
made available exclusively for making or participating in making
residential loans for detached single-family homes { + ,
including lots described in ORS 92.840, + } in any city.
(b) The bonds under paragraph (a) of this subsection may be
sold as a part of the Housing and Community Services Department's
overall nongeneral obligation bond issues under ORS 456.550 to
456.725, or separate issues totaling no more than $30 million in
an aggregate principal amount may be sold by the department as
required and requested by a city. The bonds need not be
identified by individual loans or transactions but may include
any number of individual loans or transactions or purposes within
any single issue.
(c) With moneys received under paragraph (b) of this
subsection, the department may purchase, service, sell and make
commitments to purchase, service and sell residential loans,
originated by private lending institutions or any individual or
organization authorized by law to make those loans, for
residential housing for owner-occupied detached single-family
housing { + , including lots described in ORS 92.840, + }located
within an area of a city where the median income is below median
Portland family income to persons whose annual income for the
current and the immediately preceding year does not exceed 105
percent of the prevailing median income for families within that
city. Areas eligible under this paragraph shall be identified by
ordinance of the governing body of that city. That city shall
have sole discretion to designate one or more of those areas, and
the proportionate or approximate actual amount of single-family
residential loans to be made in those areas.
(d) Fees or service charges pursuant to ORS 456.625 (3) shall
be charged or collected in connection with, or for, any loan,
advance, insurance, loan commitments or servicing, by the
department under this section only after consultation with the
city.
Enrolled House Bill 3276 (HB 3276-A) Page 1
(2) As used in this section, unless the context requires
otherwise, 'city' means any city with a population of 300,000 or
more.
SECTION 2. ORS 456.615 is amended to read:
456.615. As used in ORS 456.550 to 456.725, unless the context
requires otherwise:
(1) 'Bonds' means any bonds, notes or other evidence of
indebtedness, including notes or other evidence of indebtedness
issued in anticipation of the issuance of bonds and payable from
the proceeds of bonds issued, issued under ORS 456.515 to
456.725.
(2) 'Capital reserve account' or 'capital reserve accounts'
means one or more of the special trust accounts that may be
established by the Housing and Community Services Department
within the Housing Finance Fund.
(3) 'Housing finance bond declaration' means a written
instrument signed by the Director of the Housing and Community
Services Department and on file with and bearing the certificate
of approval of the State Treasurer, and all housing finance bond
declarations supplemental thereto.
(4) 'Consumer housing cooperative' means a cooperative
corporation formed under ORS chapter 62 and whose articles of
incorporation provide, in addition to the other requirements of
ORS chapter 62, that:
(a) The consumer housing cooperative has been organized
exclusively to provide housing facilities for persons and
families of lower income and such social, recreational,
commercial and communal facilities as may be incidental to such
housing facilities.
(b) All income and earnings of the consumer housing cooperative
shall be used exclusively for consumer housing cooperative
purposes and that no unreasonable part of the net income or net
earnings of the cooperative shall inure to the benefit or profit
of any private individual, firm, corporation, partnership or
association.
(c) The consumer housing cooperative is in no manner controlled
or under the direction of or acting in the substantial interest
of any private individual, firm, corporation, partnership or
association seeking to derive profit or gain therefrom or seeking
to eliminate or minimize losses in any transaction therewith,
except that such limitation shall apply to the members of the
cooperative only to the extent provided by rules of the
department.
(d) The operations of the consumer housing cooperative may be
supervised by the department and that the consumer housing
cooperative shall enter into such agreements with the department
as the department may require to provide regulation by the
department of the planning, development and management of any
housing project undertaken by the cooperative and the disposition
of the property and other interests of the cooperative.
(5) 'Development costs' means the costs that have been approved
by the department as appropriate expenditures and includes, but
is not limited to payments for options to purchase property for
the proposed housing project site, deposits on contracts of
purchase, payments for the purchase of property as approved by
the department, legal, organizational and marketing expenses
including payment of attorney fees, managerial and clerical staff
salaries, office rent and other incidental expenses, payment of
fees for preliminary feasibility studies, advances for planning,
engineering and architectural work; expenses for surveys as to
Enrolled House Bill 3276 (HB 3276-A) Page 2
need and market analyses; and such other expenses incurred by the
qualified housing sponsor as the department may deem necessary
under ORS 456.550 to 456.725.
(6) 'Elderly' means a person or a family whose head of the
household is 58 years of age or older, residing in the state,
whose income is below the level that the department has
determined to be necessary in order to obtain in the open market
decent, safe and sanitary housing, including the costs of
utilities and taxes, for 25 percent of the gross income of the
household.
(7) 'Federally insured security' means an evidence of
indebtedness insured or guaranteed as to repayment of principal
and interest by the United States or an agency or instrumentality
thereof.
(8) 'Housing development' means a development that contains
housing units for persons or families of lower income and such
other incidental elements of residential, commercial,
recreational, industrial, communal or educational facilities as
the department determines improve the quality of the development
as it relates to housing for persons or families of lower income
and the financial feasibility of the development. Not more than
50 percent of the total amount of any financing provided by the
department for a particular development may be used to finance
commercial, recreational, industrial, communal or educational
facilities. Profits from incidental elements shall be applied to
loans due under ORS 456.550 to 456.725.
(9) 'Housing Finance Fund' means the Housing Finance Fund
established in ORS 456.720 (1).
(10) 'Lending institution' means any bank, mortgage banking
company, trust company, savings bank, savings and loan
association, credit union, national banking association, federal
savings and loan association or federal credit unit maintaining
an office in this state, or any insurance company authorized to
do business in this state.
(11) 'Limited dividend housing sponsor' means a corporation,
trust, partnership, association, other entity, or an individual.
Such mortgagor shall be restricted as to distribution of income
and shall be regulated as to rents, charges, rate of return and
methods of operation as the department determines necessary to
carry out the purposes of ORS 456.550 to 456.725.
(12) 'Lower income families or persons' means the elderly and
families and persons, residing in this state, whose income is
below the level that the department has determined to be
necessary in order to obtain in the open market decent, safe and
sanitary housing, including the costs of utilities and taxes, for
25 percent of the gross income of such family or person. The term
may also include other families or persons where the assistance
provided is determined by the director to be incidental to the
accomplishment of the department's programs for lower income
families or persons. The department, in cooperation with affected
local governments, shall determine what constitutes 'decent, safe
and sanitary housing. '
(13) 'Manufactured housing' means a dwelling unit manufactured
off-site having a minimum width of 10 feet and a minimum area of
400 square feet built on a permanent chassis and designed to be
used for permanent residential occupancy whether or not on a
permanent foundation, and that contains permanent eating,
cooking, sleeping and sanitary facilities and meets such
standards as the department determines, by rule, are reasonable
to maintain the quality, safety and durability of the dwelling,
Enrolled House Bill 3276 (HB 3276-A) Page 3
the sanitary requirements of the communities in which they are
located and the security of the loans that the department may
finance for the purchase of the dwellings.
(14) 'Nonprofit housing corporation' means an organization
formed under ORS chapter 65 and whose articles of incorporation
provide, in addition to the other requirements of ORS chapter 65,
that:
(a) The corporation has been organized exclusively to provide
housing facilities for persons and families of lower income and
such other social, recreational, commercial and communal
facilities as may be incidental to such housing facilities.
(b) All the income and earnings of the corporation shall be
used exclusively for corporation purposes and that no part of the
net income or net earnings of the corporation may inure to the
benefit of any private individual, firm, corporation, partnership
or association.
(c) The corporation is in no manner controlled or under the
direction or acting in the substantial interest of any private
individual, firm, partnership or association seeking to derive
profit or gain therefrom or seeking to eliminate or minimize
losses in transactions therewith.
(d) The operations of the corporation may be supervised by the
department and that the corporation shall enter into such
agreements with the department as the department may require to
regulate the planning, development and management of any housing
project undertaken by the corporation and the disposition of the
property and other interests of the corporation.
(15) 'Project cost' or 'costs of the project' means the sum of
all reasonable expenses incurred by a qualified housing sponsor
in undertaking and completing a housing project approved by the
department. 'Project costs' or 'costs of the project ' include
but are not limited to the expenses incurred by a qualified
housing sponsor for:
(a) Studies and surveys;
(b) Plans, specifications, architectural and engineering
services;
(c) Legal, organizational and other special services;
(d) Financing, acquisition, demolition, construction, equipment
and site development of new and rehabilitated housing units;
(e) Movement of existing buildings to new sites; the cost of
acquisition, or estimated fair market value, of land and other
interests in real estate;
(f) Rehabilitation, reconstruction, repair or remodeling of
existing buildings;
(g) Estimated carrying charges during construction and for a
reasonable period thereafter;
(h) Placement of tenants or occupants and relocation services
in connection with the housing project;
(i) Reasonable builder's or sponsor's profit and risk
allowance; and
(j) Development costs not otherwise included in this
subsection.
(16) 'Qualified housing sponsor' includes, subject to the
approval of the department, a consumer housing cooperative, a
limited dividend housing sponsor, a nonprofit housing
corporation, a for-profit housing sponsor including, but not
limited to, an individual operating in compliance with the
criteria adopted by the department under ORS 456.620 (1), a
housing authority created by ORS 456.075, an urban renewal agency
Enrolled House Bill 3276 (HB 3276-A) Page 4
created by ORS 457.035 and any city or county governing body or
agency or department designated by the governing body.
(17) 'Residential housing' means a specific work or improvement
within this state undertaken primarily to provide dwelling
accommodations, including land development and acquisition,
construction or rehabilitation of buildings and improvements
thereto, for residential housing, and such other nonhousing
facilities as may be incidental or appurtenant thereto and as the
department determines improve the quality of the development as
it relates to housing for persons or families of lower income and
the financial feasibility of the development. Not more than 50
percent of the total amount of any financing provided by the
department for a particular development may be used to finance
nonhousing facilities. 'Residential housing' includes, but is not
limited to, a specific work or improvement within this state
undertaken to provide mobile home or manufactured dwelling parks
as defined in ORS 446.003. As used in this subsection, ' land
development' includes, but is not limited to, the improvement of
streets and alleys and the construction of surface drains,
sewers, curbing and sidewalks.
(18) 'Residential loan' means a loan for the acquisition,
construction, improvement or rehabilitation of residential
housing and, if the loan is for acquisition or construction of
residential housing, that is secured by a first lien on real
property located in the state and improved by a newly
constructed, existing or rehabilitated residential structure for
lower income persons or families, or unimproved if the proceeds
of such loan shall be used for the erection of a residential
structure thereon, whether or not such loan is insured or
guaranteed by the United States or any instrumentality or agency
thereof. 'Residential loan' includes an insured or guaranteed
loan for the acquisition of manufactured housing { + or for the
acquisition of a lot described in ORS 92.840 by a manufactured
dwelling park tenant + }. The insured or guaranteed loan need not
be secured by a first mortgage on real property but shall be
secured by a security interest of first priority. ' Residential
loan' also includes a loan for the purchase of a proprietary
lease and related cooperative shares in a housing cooperative
formed under ORS chapter 62 secured by a security interest of
first priority and a pledge or an assignment of proprietary
leases and related cooperative shares.
(19) 'Revolving account' means the Housing and Community
Services Department Revolving Account created in ORS 456.574.
SECTION 3. ORS 456.620 is amended to read:
456.620. In carrying out housing programs, the Housing and
Community Services Department shall:
(1) With the approval of the State Housing Council, adopt
standards for the planning, development and management of housing
projects for which qualified housing sponsors receive all or a
portion of any required financing under ORS 456.550 to 456.725,
for audits and inspections to determine compliance with such
standards and adopt criteria for the approval of qualified
housing sponsors under ORS 456.550 to 456.725.
(2) Adopt criteria for the approval of qualified housing
sponsors in ORS 456.550 to 456.725.
(3) Enter into agreements with qualified housing sponsors to
regulate the planning, development and management of housing
projects constructed with the assistance of the department under
ORS 456.550 to 456.725.
Enrolled House Bill 3276 (HB 3276-A) Page 5
(4) With the approval of the council, establish maximum
household income limits for all or a portion of the units in
housing projects, housing developments or other residential
housing financed in whole or in part by the department. A maximum
of one-third of the units in a housing project, housing
development or other residential housing financed by the
department may be rented to households with an income level
exceeding 120 percent of the median family income level, as
determined by the department. If the income level in any unit
exceeds 120 percent of the median family income, the department
shall, to the extent practicable, require that the project,
development or other housing financed by the department have a
percentage of low income units that is higher than the minimum
percentages established in ORS 456.120 (19) for projects financed
by local housing authorities or income limitations that are lower
than the limits described in ORS 456.120 (19) or a combination
thereof. Income limits for department programs administered on a
statewide basis may be established by reference to the median
family or personal income in the state, or in various regions in
the state, as determined by the department. This subsection does
not restrict the acquisition of manufactured dwelling parks.
(5) With the approval of the council, ensure that financing is
provided in the department's programs for manufactured housing
{ + and for the purchase of lots described in ORS 92.840 by
manufactured dwelling park tenants + }.
SECTION 4. ORS 456.635 is amended to read:
456.635. (1) In order to provide additional permanent financing
for housing for persons and families of lower income { + and for
manufactured dwelling park tenant purchases of lots described in
ORS 92.840 + }, the Housing and Community Services Department may
make commitments to purchase and purchase, insure, service and
sell residential loans held by lending institutions for persons
and families of lower income in this state { + and for
manufactured dwelling park tenant purchases of lots described in
ORS 92.840 + }. The department may purchase from lending
institutions securities backed by residential loans.
(2) Any commitment made by the department subject to subsection
(1) of this section shall be based upon an agreement with the
lending institution that the proceeds received by the lending
institution from the sale of such loans to the department shall
be used by the lending institution only for the financing of
residential housing for persons and families of lower income in
this state, including the financing of newly originated
residential loans, { + or for the financing of loans for the
purchase of lots described in ORS 92.840 by manufactured dwelling
park tenants, + } provided the loans are made after the date of
the department's commitment.
SECTION 5. ORS 458.625 is amended to read:
458.625. (1) The Housing and Community Services Department
{ - shall - } { + may + } disburse the revenue earned from
investment of the principal in the Housing Development and
Guarantee Account to expand this state's supply of housing for
low and very low income families and individuals, including, but
not limited to, housing for persons over 65 years of age,
disabled persons, farmworkers and Native Americans. { - For
purposes of this section and ORS 458.630, 'account' means the
Housing Development and Guarantee Account. - } The State Housing
Council shall have a policy { - of distributing - } { + that
provides for distribution by the department of + } account
investment revenue { + disbursements + } statewide while
Enrolled House Bill 3276 (HB 3276-A) Page 6
concentrating account investment revenue { + disbursements + }
in those areas of the state with the greatest need { + for low
and very low income housing + }, as determined by the council
{ - , for low and very low income housing - } .
(2) { + The department may disburse + } account investment
revenue { + , + }
{ - shall be disbursed as - } { + in the form of + } grants
or loans { - , at the awardee's election, - } { + as
determined by the department, + } for any or all of the following
purposes:
(a) To organizations as defined in ORS 458.610 and to
for-profit business entities to construct new housing or to
acquire or rehabilitate existing structures, or both, for housing
for persons of low or very low income, or both;
(b) To provide nonprofit organizations, as set forth in ORS
458.210 to 458.240, technical assistance or predevelopment costs,
or both. Predevelopment costs include, but are not limited to,
site acquisition, architectural services and project consultants.
Predevelopment costs do not include costs described in paragraph
(c) of this subsection;
(c) For costs to develop nonprofit organizations that show
sufficient evidence of having strong community support and a
strong likelihood of producing low or very low income housing.
{ - No - } Account investment revenue { - shall - } { +
may not + } be used by an organization for its general
operations;
(d) To match public and private moneys available from other
sources for purposes of production of low or very low income
housing; or
(e) For purposes of administration of the account, not to
exceed five percent of the account investment revenue.
(3) The { - council - } { + department + } { - , in
developing policy, - } shall give preference in making grants or
loans { - , at the awardee's election, - } to those entities
that { - would propose to - } { + the department determines
will + }:
(a) Provide the greatest number of low and very low income
housing units constructed, acquired or rehabilitated for the
amount of account investment revenue expended by matching account
investment revenue with other grant, loan or eligible in-kind
contributions;
(b) Ensure the longest use for the units as low or very low
income housing units; or
(c) Include social services to occupants of the proposed
housing, including but not limited to, programs that address home
health care, mental health care, alcohol and drug treatment and
post-treatment care, child care and case management.
(4) { - At least 75 percent of the - } Account investment
revenue derived in any calendar year { - shall - } { +
may + } be used to construct, acquire or rehabilitate housing for
{ + low and + } very low income persons { - . No - } { + but
not + } more than 25 percent of the account investment revenue
derived in any calendar year { - shall - } { + may + } be
used to construct, acquire or rehabilitate housing for low income
households. { + Account investment revenue not disbursed by the
department as grants or loans to construct, acquire or
rehabilitate low or very low income housing may be retained and
credited as account principal. + }
Enrolled House Bill 3276 (HB 3276-A) Page 7
(5) Loans disbursed from account investment revenue shall bear
an interest rate equal to the interest rate paid on United States
Treasury long-term obligations as identified by the department.
{ - (6) Notwithstanding subsections (2), (3) and (5) of this
section, the department shall not disburse account investment
revenue as loans after December 31, 2003. - }
SECTION 6. ORS 458.630, as amended by section 1, chapter 20,
Oregon Laws 2003 (Enrolled House Bill 2169), is amended to read:
458.630. (1)(a) The Housing and Community Services Department
{ - shall - } { + may + } hold and use the principal that is
credited to the Housing Development and Guarantee Account
{ - under ORS 458.620 (3) - } as the Guarantee Fund. The
department { - shall - } { + may + } use the fund
{ - only - } to guarantee repayment of loans made to finance
the construction, development, acquisition or rehabilitation of
low income housing, of the commercial component of a structure
that contains both commercial property and low income housing, or
of both. The department, by rule, shall specify the grounds on
which it may deny loan guarantees for a structure that contains
both commercial and low income housing components. The grounds
for denial specified by the department must include, but need not
be limited to, a commercial component that is excessive in scope
or that is designed for commercial activity of a type
incompatible with residential housing. The State Housing Council
shall review loans that are guaranteed by the fund to ensure that
the loans meet prudent underwriting standards.
(b) A guarantee may not be prepared or construed in such a
manner as to violate the provisions of section 7, Article XI of
the Oregon Constitution.
(2) The department may not issue any loan guarantee under this
section that guarantees the repayment of more than 25 percent of
the original principal balance of any loan.
(3) The department may not issue a loan guarantee if the
guarantee would cause the aggregate dollar total of all loan
guarantees issued by the department under this section to exceed
two times the total amount then in the Guarantee Fund established
under subsection (1) of this section. { + Notwithstanding ORS
458.625, + } whenever { + payouts on loan guarantees cause + }
the fund principal
{ - decreases - } { + to decrease + } by five percent or
more, the interest on the fund shall be deposited only to the
principal account until the { - full - } amount of the fund
principal { + lost due to payouts on loan guarantees + }is
restored.
(4) { - In developing policy - } { + Subject to council
review under subsection (1) of this section, the department shall
give preference + } for loan guarantees under this section { - ,
the council shall give preference - } to loans for the
construction, development, acquisition or rehabilitation of low
income housing, or of structures containing both commercial and
low income housing components, that { - would - } { + the
department determines will + }:
(a) Provide the greatest number of low income housing units
constructed, acquired, developed or rehabilitated for the amount
of guarantee allowed;
(b) Ensure the longest possible use for the units as low income
housing units. Pursuant to this end, the State Housing Council
may adopt a formula that optimizes the interests of the lender
and the developer and the working life of the low income units;
or
Enrolled House Bill 3276 (HB 3276-A) Page 8
(c) Include a program of services for the occupants of the
proposed housing including, but not limited to, programs that
address home health care, mental health services, alcohol and
drug treatment and post-treatment care, child care and case
management.
(5) The council may adopt a policy that gives loan guarantee
preference to loans for low income housing, or structures
containing both commercial and low income housing components, for
which the department has provided a grant, loan, tax credit or
other investment.
SECTION 7. ORS 458.720 is amended to read:
458.720. (1) Pursuant to ORS 286.560 to 286.580 and 348.716,
lottery bonds may be issued to make grants or loans to Oregon
municipalities, businesses and individuals to encourage real
estate developments that promote downtown and community center
areas, provide affordable housing and other infill developments,
and fund projects that promote business opportunities in Oregon's
distressed areas and rural communities.
(2) The use of lottery bond proceeds is authorized based on the
following findings:
(a) The grants and loans made will be used to fund projects
that assist Oregon communities in managing growth, thereby
attracting industry and workers and improving Oregon's labor
market; and
(b) The projects will bring jobs and economic diversity to
Oregon's distressed areas and rural communities.
(3) The aggregate principal amount of lottery bonds issued
pursuant to this section { - shall - } { + may + } not exceed
the sum of $25 million and an additional amount estimated by the
State Treasurer to be necessary to pay bond-related costs.
Lottery bonds issued pursuant to this section shall be issued
only at the request of the Director of the Housing and Community
Services Department.
(4) The net proceeds of lottery bonds issued pursuant to this
section shall be deposited in the Community Development Incentive
Project Fund, which is hereby established in the State Treasury
separate and distinct from the General Fund.
(5) The proceeds of lottery bonds issued pursuant to this
section shall be used only for the purposes set forth in
subsection (1) of this section and for bond-related costs.
(6) Interest earned by the Community Development Incentive
Project Fund shall be credited to the fund { + or to the Housing
Development and Guarantee Account, as determined by the
director + }. In addition to any other moneys specifically
designated by law, the fund shall consist of any amounts
appropriated by the Legislative Assembly and any gifts, grants or
donations.
SECTION 8. { + Notwithstanding any limitation on the purposes
for which moneys deposited in the Housing Development and
Guarantee Account created in ORS 458.620 may be expended, the
amount of $5,530,000 is transferred from the Housing Development
and Guarantee Account to the General Fund to be used for general
governmental purposes. + }
SECTION 9. { + The amendments to ORS 456.593, 456.615,
456.620, 456.635, 458.625, 458.630 and 458.720 by sections 1 to 7
of this 2003 Act become operative on January 1, 2004. + }
SECTION 10. { + This 2003 Act being necessary for the
immediate preservation of the public peace, health and safety, an
emergency is declared to exist, and this 2003 Act takes effect on
its passage. + }
Enrolled House Bill 3276 (HB 3276-A) Page 9
----------
Passed by House July 30, 2003
...........................................................
Chief Clerk of House
...........................................................
Speaker of House
Passed by Senate August 8, 2003
...........................................................
President of Senate
Enrolled House Bill 3276 (HB 3276-A) Page 10
Received by Governor:
......M.,............., 2003
Approved:
......M.,............., 2003
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2003
...........................................................
Secretary of State
Enrolled House Bill 3276 (HB 3276-A) Page 11