PRINTER'S NO. 2804
No. 2131 Session of 1989
INTRODUCED BY ITKIN, HARPER, CESSAR, THOMAS, EVANS, KUKOVICH,
ACOSTA, PRESTON, WAMBACH, ROEBUCK, ROBINSON, MURPHY,
VAN HORNE, BISHOP, JAMES, HOWLETT, GIGLIOTTI, McNALLY,
BORTNER, LAUGHLIN, DOMBROWSKI, TRELLO, CAWLEY, COWELL, FEE,
PETRONE, DeLUCA, GAMBLE, D. W. SNYDER, BLAUM, McHALE, STUBAN,
BATTISTO, PRESSMANN, RITTER, STABACK, STISH, JOHNSON,
HALUSKA, KONDRICH, FARMER, MICHLOVIC, PISTELLA, OLIVER,
DONATUCCI, WILLIAMS, LINTON, HAYDEN, JOSEPHS, CARN, MAIALE,
MAYERNIK, KOSINSKI, HUGHES, RICHARDSON, RIEGER, COHEN, MELIO,
VEON, MARKOSEK, COLAIZZO, FREEMAN, TIGUE, JAROLIN, LEVDANSKY,
MRKONIC, KAISER, B. D. CLARK, OLASZ, TRICH, BELFANTI, COLE,
PESCI, MAINE, MORRIS, CAPPABIANCA, RYBAK, GRUPPO, FOX AND
JADLOWIEC, NOVEMBER 29, 1989
REFERRED TO COMMITTEE ON URBAN AFFAIRS, NOVEMBER 29, 1989
AN ACT
1 Creating programs to provide loans and grants to renovate
2 blighted buildings, to convert obsolete buildings, to build
3 infill housing, to build low-cost rental housing and to
4 modernize public housing; providing for the powers and duties
5 of the Department of Community Affairs regarding the
6 programs; and providing for the use of a portion of the
7 realty transfer tax to fund the programs.
8 The General Assembly of the Commonwealth of Pennsylvania
9 hereby enacts as follows:
10 Section 1. Short title.
11 This act shall be known and may be cited as the Housing
12 Initiative Law.
13 Section 2. Findings and declaration of policy.
14 (a) Findings.--The General Assembly finds and declares as
15 follows:
1 (1) Many households live at the poverty income level or
2 below, and such households need financial assistance to
3 ensure their ability to pay for decent housing.
4 (2) Homelessness caused by inability to afford housing
5 has been the experience of thousands of this Commonwealth's
6 residents, and it is growing.
7 (3) Many households are living in overcrowded housing
8 and need a larger housing unit to accommodate their families.
9 (4) Substandard housing units need to be rehabilitated
10 or replaced.
11 (5) The median price of a home has increased
12 substantially faster than the median household income,
13 contributing to the growing problem of housing affordability.
14 (6) Median gross rents have increased at a greater rate
15 than the increase in household income.
16 (b) Declaration of policy.--It is declared to be the policy
17 of this Commonwealth to promote the health, safety and welfare
18 of its inhabitants by providing for State assistance to provide
19 affordable housing for the renovation of blighted buildings, the
20 conversion of obsolete buildings, the construction of single-
21 family and multifamily housing and the modernization of public
22 housing.
23 Section 3. Definitions.
24 The following words and phrases when used in this act shall
25 have the meanings given to them in this section unless the
26 context clearly indicates otherwise:
27 "DCA." The Department of Community Affairs of the
28 Commonwealth.
29 "Deferred loan." A loan secured by a mortgage, the payment
30 of which is due only upon the sale, devise or other transfer of
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1 the property described in the mortgage.
2 "Housing and redevelopment assistance program funds." Funds
3 distributed by DCA pursuant to the act of May 20, 1949
4 (P.L.1633, No.493), known as the Housing and Redevelopment
5 Assistance Law.
6 "Housing authority." A housing authority created pursuant to
7 the act of May 28, 1937 (P.L.955, No.265), known as the Housing
8 Authorities Law.
9 "Local governments and their instrumentalities." A county,
10 city, borough, incorporated town or township and a redevelopment
11 authority created pursuant to the act of May 24, 1945 (P.L.991,
12 No.385), known as the Urban Redevelopment Law.
13 "Low-income and moderate-income households." Families and
14 persons who cannot afford to pay, without the assistance of this
15 act, the costs charged by private enterprise, for decent, safe
16 and sanitary housing. The income limits for admission of
17 families and persons to the programs set forth in this act shall
18 be the limits established pursuant to rules and regulations of
19 DCA.
20 "Median area income." The median income for the locality as
21 defined annually by the United States Department of Housing and
22 Urban Development.
23 "Total development costs." The sum total of all costs
24 incurred in the development of a project which are approved by
25 DCA as reasonable and necessary. These costs shall include, but
26 are not necessarily limited to the following:
27 (1) The cost of land acquisition and any buildings
28 thereon.
29 (2) The cost of site preparation, demolition and
30 development.
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1 (3) Architect, engineer and legal fees paid or payable
2 in connection with the planning, execution and financing of
3 the project.
4 (4) The cost of necessary studies, surveys, plans and
5 permits.
6 (5) Insurance, interest, financing, tax and assessment
7 costs and other operating and carrying costs during
8 construction.
9 (6) The cost of construction, reconstruction, fixtures
10 and equipment related to the real property.
11 (7) The cost of land improvements.
12 (8) Necessary expenses in connection with initial
13 occupancy of the project.
14 (9) A reasonable profit or fee to the builder and
15 developer.
16 (10) An allowance established by DCA for working capital
17 and contingency reserves, and reserved for any anticipated
18 operating deficits during the first two years of occupancy.
19 (11) The cost of such other items, including tenant
20 relocation, as DCA determines to be reasonable and necessary
21 for the development of the project, less any and all net
22 rents and other net revenues received as a result of
23 operating real and personal property on the project site
24 during construction.
25 All costs shall be subject to approval and audit by the agency.
26 DCA may adopt rules and regulations specifying in detail the
27 types and categories of costs which shall be allowable if
28 actually incurred in the construction or reconstruction of a
29 project.
30 Section 4. Affordable Homeownership Program.
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1 (a) Purpose.--The Affordable Homeownership Program will deal
2 directly with the problem facing many of this Commonwealth's
3 residents who are attempting to buy their first home. This
4 program will provide subsidies in the form of deferred mortgage
5 loans to eligible households in approved areas and to projects.
6 (b) Eligible properties.--An eligible property under this
7 program must be a permanent structure used for year-round
8 residential use. Eligible properties may include single units of
9 newly constructed housing or newly rehabilitated units which
10 have been previously unoccupied. For the purpose of this
11 program, single-family units, cooperatives, townhomes and
12 condominiums shall be considered as types of eligible units. All
13 such units shall be eligible only if the owner establishes and
14 maintains the unit as his principal residence.
15 (c) Eligible borrowers.--The determination of eligible
16 households under this program shall be established by DCA based
17 upon household incomes that are no greater than 115% of the
18 median area income. Households with incomes of 80% of the median
19 area income shall be eligible and receive a priority in the
20 criteria of selection developed by DCA. DCA may exceed the 115%
21 of median limit in areas of extreme economic distress or high
22 cost, but only to the extent that these households comprise less
23 than 50% of the application.
24 (d) Loan terms and conditions.--The subsidy limit under this
25 program shall be 33% of total development cost, except in cases
26 of low-income households, where the limit shall be 50%. The loan
27 to the homebuyer shall be deferred and is due upon sale, devise
28 or other transfer of the property. Grants of up to $5,000 per
29 housing unit will be available to make handicapped accessibility
30 improvements.
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1 (e) Administration.--DCA shall be responsible for the
2 overall administration of the program.
3 (f) Allocation of funds.--Funds appropriated for this
4 program shall be distributed on a competitive basis to local
5 governments and their instrumentalities, which shall administer
6 the program locally. Funds shall be available to localities
7 based upon criteria developed by DCA. The application process
8 and the distribution of funds shall be accomplished in the same
9 manner that Housing and Redevelopment Assistance Program Funds
10 are distributed.
11 (g) Administration.--Up to 20% of the available program
12 funding shall be administered directly by DCA. DCA, however, may
13 delegate, assign or subcontract the implementation activity to
14 another department, agency or instrumentality. The funds shall
15 be awarded on a project-by-project basis, based upon an
16 application, review and selection process established by DCA, or
17 its designee.
18 (h) Repayment of program funds.--Any program funds repaid to
19 the locality, or to DCA or its designee, shall be returned to
20 the program account and shall be used to make additional loans.
21 Section 5. Home Improvement Loan Program.
22 (a) Purpose.--The Home Improvement Loan Program will provide
23 home improvement loans at affordable interest rates to low-
24 income and moderate-income homeowners. Loans or grants for
25 emergency repairs is also a component of this program.
26 (b) Eligible activities.--Eligible costs for funds under
27 this program include interest rate subsidies, front-end-write-
28 down grants, emergency grants and administrative costs
29 associated directly with program implementation.
30 (c) Eligible borrowers.--Eligibility under this program
19890H2131B2804 - 6 -
1 shall be limited to households whose incomes are 80% or less of
2 median area income. DCA may waive this limitation if the
3 applicant provides sufficient documentation that funds will be
4 utilized for a targeted area of economic distress, and in such
5 case, assistance may be provided to improve the units of
6 homeowners with incomes in excess of 80% of the median area
7 income.
8 (d) Loan-terms and conditions.--
9 (1) Maximum home improvement loans or grants shall be
10 $15,000.
11 (2) Maximum emergency loans or grants shall be $5,000.
12 (e) Administration.--DCA shall be responsible for the
13 overall administration of this program.
14 (f) Allocation of funds.--The funds appropriated for the
15 program shall be distributed on a competitive basis to local
16 governments and their instrumentalities, which shall administer
17 the program locally. The funds shall be available to localities
18 based upon criteria developed by DCA. The application process
19 and the distribution of the funds shall be accomplished in the
20 same manner that Housing and Redevelopment Assistance Program
21 funds are distributed.
22 (g) Administration.--Up to 20% of the available program
23 funding shall be administered directly by DCA. DCA, however, may
24 delegate, assign or subcontract the implementation activity to
25 another department, agency or instrumentality. The funds shall
26 be awarded on a project-by-project basis, based upon an
27 application, review and selection process established by DCA or
28 its designee.
29 (h) Repayment of funds.--Any program funds repaid to the
30 locality, or to DCA or its designee, shall be returned to the
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1 program account and shall be used to make additional loans or
2 grants.
3 Section 6. Rental Housing Production Program.
4 (a) Purpose.--The Rental Housing Production Program is
5 designed to stimulate the production of affordable housing and
6 to stimulate the rehabilitation of existing rental housing
7 throughout this Commonwealth. The program provides a flexible
8 source of funding for the acquisition, construction and
9 rehabilitation of housing for low-income and moderate-income
10 households.
11 (b) Eligible activities.--Funds available under this program
12 can be used for the acquisition of property, site preparation
13 and development, rehabilitation costs and new construction
14 costs; architectural, engineering and other development-related
15 costs. In addition, program funds can be used as matching funds
16 for other Federal, State or local needs. The funds can also be
17 used for capital write down or mortgage assistance, or for
18 creation of sinking fund accounts or assisted rental payment
19 accounts.
20 (c) Eligible borrowers.--Eligible borrowers shall include
21 any for-profit developers, nonprofit housing organization and
22 housing cooperatives.
23 (d) Loan terms and conditions.--Funds shall be provided to
24 the borrowers in the form of grants, deferred loans or
25 amortizing loans depending on the type and nature of the
26 project. Grants shall be available to defray the costs of making
27 units accessible to handicapped persons. Either deferred loans
28 or amortizing loans shall be used, depending on the percentage
29 of low-income or very-low-income households to be served. The
30 loan rates and terms for program funds shall be tied to the
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1 number of low-income units to be provided. For each project, a
2 minimum of 51% of a project's units must be served for
3 households earning less than 80% of the median income in the
4 project jurisdiction.
5 (e) Administration.--DCA shall be responsible for the
6 overall administration of this program.
7 (f) Allocation of funds.--Funds appropriated for this
8 program shall be distributed on a competitive bases to local
9 governments and their instrumentalities, which shall administer
10 the program locally. The funds shall be available to localities
11 based upon criteria developed by DCA. The funds may be used for
12 total development costs. The application process and the
13 distribution of funds shall be accomplished in the same manner
14 that Housing and Redevelopment Assistance Program funds are
15 distributed. Up to 20% of the available program funding shall be
16 administered directly by DCA. The department, however, may
17 delegate, assign or subcontract implementation activity to
18 another department, agency or instrumentality. The funds shall
19 be awarded on a project-by-project basis, based upon an
20 application, review and selection process established by DCA, or
21 its designee.
22 (g) Repayment of funds.--Any program funds repaid to the
23 locality, or to DCA or its designee, shall be returned to the
24 program account and shall be used to make additional loans and
25 grants.
26 Section 7. Public Housing Modernization Program.
27 (a) Purpose.--The Public Housing Modernization Program is
28 designed to provide adequate funding to modernize and
29 rehabilitate existing public housing facilities and to construct
30 new public housing facilities.
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1 (b) Eligible activities.--Fifty percent of the funds
2 available under this program shall be used to finance the
3 rehabilitation and modernization of existing public housing
4 facilities, including energy conservation activities, and the
5 correction of building code deficiencies. The remaining 50% of
6 funding shall be used to finance capital improvement programs.
7 The project application shall be subject to review and
8 concurrence by local tenant management organizations.
9 (c) Eligible borrowers.--All housing authorities in this
10 Commonwealth are eligible to participate in this program. The
11 application shall be subject to review and concurrence by the
12 local municipality.
13 (d) Loan terms and conditions.--Funds provided to housing
14 authorities under this program shall be in the form of a grant.
15 Funds provided for modernization activities must be used in
16 conjunction with matching Federal funds. The requirement for
17 matching Federal funds may be waived for housing authorities
18 with less than 5,000 units.
19 (e) Administration.--DCA shall be responsible for the
20 overall administration of this program.
21 (f) Allocation of funds.--The funds for this program shall
22 be awarded to housing authorities on a competitive basis after
23 an application, review and selection process established by DCA.
24 Section 8. Nonprofit Organization Technical Assistance and
25 Operating Assistance Program.
26 (a) Purpose.--The Nonprofit Organization Technical
27 Assistance and Operating Assistance Program is designed to
28 increase the number and the capacity of nonprofit housing
29 organizations. This program is targeted to organizations that
30 are engaged in housing development and housing services which
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1 meet the needs of low-income and moderate-income households.
2 (b) Eligible activities.--Funds provided under this program
3 may be used by nonprofit organizations for operating expenses
4 and as working capital for project developments. Eligible
5 operating expenses shall include such terms as staff salaries
6 and related costs, equipment purchase or leasing, office space
7 rental and professional services. Working capital expenses shall
8 include items such as the direct staff and administrative costs
9 attributable to a particular housing development project, as
10 well as total development costs.
11 (c) Eligible borrowers.--Organizations eligible to receive
12 assistance under this program shall include any Pennsylvania-
13 based nonprofit corporation or entity that is authorized to
14 provide housing or housing-related services. Community-wide, or
15 neighborhood-based organizations, as well as housing
16 cooperatives, shall be eligible.
17 (d) Loan and grant terms and conditions.--Of the funds
18 appropriated for this program, 50% of the available funds shall
19 be allocated for operating expenses and 50% shall be allocated
20 for use as working capital expenses. Funds provided for
21 operating expenses shall be in the form of grants. Grants shall
22 be limited to 50% of the total operating expenses of an
23 organization. Working capital funds shall be provided in the
24 form of loans to the nonprofit organizations. The loan shall be
25 provided as an advance of funds for a particular housing
26 development project. The loans shall be provided at no interest
27 and shall be payable upon the closing or completion of the
28 housing development.
29 (e) Administration.--DCA shall be responsible for the
30 overall administration of this program.
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1 (f) Allocation of funds.--Funds allocated for this program
2 shall be awarded to nonprofit organizations on a competitive
3 basis after an application, review and selection process
4 established by DCA.
5 (g) Repayment of funds.--Any program funds repaid to the
6 locality, or to DCA or its designee, shall be returned to the
7 program account and shall be used to make additional grants or
8 loans.
9 Section 9. Housing Initiative Fund.
10 Fifteen percent of the revenues generated by the tax imposed
11 under Article XI-C of the act of March 4, 1971 (P.L.6, No.2),
12 known as the Tax Reform Code of 1971, shall be placed in a
13 separate fund in the State Treasury to be known as the Housing
14 Initiative Fund. The moneys in the Housing Initiative Fund shall
15 be used by the Department of Community Affairs to carry out the
16 provisions of this act.
17 Section 10. Appropriation.
18 The following sums from the House Initiative Fund are hereby
19 appropriated to the Department of Community Affairs to carry out
20 the provisions of this act:
21 (1) For the Affordable Homeownership Program.. 8,000,000
22 (2) For the Home Improvement Loan Program..... 5,000,000
23 (3) For the Rental Housing Production Program. 10,000,000
24 (4) For the Public Housing Modernization
25 Program........................................... 5,000,000
26 (5) For the Nonprofit Organization Technical
27 Assistance and Operating Assistance Program....... 3,000,000
28 Section 11. Repeals.
29 All acts and parts of acts are repealed insofar as they are
30 inconsistent with this act.
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1 Section 12. Effective date.
2 This act shall take effect in 30 days.
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