PRIOR PRINTER'S NO. 2804 PRINTER'S NO. 2932
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,
JADLOWIEC, BUNT, MICOZZIE, CORRIGAN, COLAFELLA, DALEY AND
CIVERA, NOVEMBER 29, 1989
AS REPORTED FROM COMMITTEE ON URBAN AFFAIRS, HOUSE OF
REPRESENTATIVES, AS AMENDED, DECEMBER 13, 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
1 follows:
2 (1) Many households live at the poverty income level or
3 below, and such households need financial assistance to
4 ensure their ability to pay for decent housing.
5 (2) Homelessness caused by inability to afford housing
6 has been the experience of thousands of this Commonwealth's
7 residents, and it is growing.
8 (3) Many households are living in overcrowded housing
9 and need a larger housing unit to accommodate their families.
10 (4) Substandard housing units need to be rehabilitated
11 or replaced.
12 (5) The median price of a home has increased
13 substantially faster than the median household income,
14 contributing to the growing problem of housing affordability.
15 (6) Median gross rents have increased at a greater rate
16 than the increase in household income.
17 (b) Declaration of policy.--It is declared to be the policy
18 of this Commonwealth to promote the health, safety and welfare
19 of its inhabitants by providing for State assistance to provide
20 affordable housing for the renovation of blighted buildings, the
21 conversion of obsolete buildings, the construction of single-
22 family and multifamily housing and the modernization of public
23 housing.
24 Section 3. Definitions.
25 The following words and phrases when used in this act shall
26 have the meanings given to them in this section unless the
27 context clearly indicates otherwise:
28 "DCA." The Department of Community Affairs of the
29 Commonwealth.
30 "Deferred loan." A loan secured by a mortgage, the payment
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1 of which is due only upon the sale, devise or other transfer of
2 the property described in the mortgage.
3 "Housing and redevelopment assistance program funds." Funds
4 distributed by DCA pursuant to the act of May 20, 1949
5 (P.L.1633, No.493), known as the Housing and Redevelopment
6 Assistance Law.
7 "Housing authority." A housing authority created pursuant to
8 the act of May 28, 1937 (P.L.955, No.265), known as the Housing
9 Authorities Law.
10 "Local governments and their instrumentalities." A county,
11 city, borough, incorporated town or township and a redevelopment
12 authority created pursuant to the act of May 24, 1945 (P.L.991,
13 No.385), known as the Urban Redevelopment Law.
14 "Low-income and moderate-income households." Families and
15 persons who cannot afford to pay, without the assistance of this
16 act, the costs charged by private enterprise, for decent, safe
17 and sanitary housing. The income limits for admission of
18 families and persons to the programs set forth in this act shall
19 be the limits established pursuant to rules and regulations of
20 DCA.
21 "Median area income." The median income for the locality as
22 defined annually by the United States Department of Housing and
23 Urban Development.
24 "Total development costs." The sum total of all costs
25 incurred in the development of a project which are approved by
26 DCA as reasonable and necessary. These costs shall include, but
27 are not necessarily limited to the following:
28 (1) The cost of land acquisition and any buildings
29 thereon.
30 (2) The cost of site preparation, demolition and
19890H2131B2932 - 3 -
1 development.
2 (3) Architect, engineer and legal fees paid or payable
3 in connection with the planning, execution and financing of
4 the project.
5 (4) The cost of necessary studies, surveys, plans and
6 permits.
7 (5) Insurance, interest, financing, tax and assessment
8 costs and other operating and carrying costs during
9 construction.
10 (6) The cost of construction, reconstruction, fixtures
11 and equipment related to the real property.
12 (7) The cost of land improvements.
13 (8) Necessary expenses in connection with initial
14 occupancy of the project.
15 (9) A reasonable profit or fee to the builder and
16 developer.
17 (10) An allowance established by DCA for working capital
18 and contingency reserves, and reserved for any anticipated
19 operating deficits during the first two years of occupancy.
20 (11) The cost of such other items, including tenant
21 relocation, as DCA determines to be reasonable and necessary
22 for the development of the project, less any and all net
23 rents and other net revenues received as a result of
24 operating real and personal property on the project site
25 during construction.
26 All costs shall be subject to approval and audit by the agency.
27 DCA may adopt rules and regulations specifying in detail the
28 types and categories of costs which shall be allowable if
29 actually incurred in the construction or reconstruction of a
30 project.
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1 Section 4. Affordable Homeownership Program.
2 (a) Purpose.--The Affordable Homeownership Program will deal
3 directly with the problem facing many of this Commonwealth's
4 residents who are attempting to buy their first home. This
5 program will provide subsidies in the form of deferred mortgage
6 loans to eligible households in approved areas and to projects.
7 (b) Eligible properties.--An eligible property under this
8 program must be a permanent structure used for year-round
9 residential use. Eligible properties may include single units of
10 newly constructed housing or newly rehabilitated units which
11 have been previously unoccupied. For the purpose of this
12 program, single-family units, cooperatives, townhomes and
13 condominiums shall be considered as types of eligible units. All
14 such units shall be eligible only if the owner establishes and
15 maintains the unit as his principal residence.
16 (c) Eligible borrowers.--The determination of eligible
17 households under this program shall be established by DCA based
18 upon household incomes that are no greater than 115% of the
19 median area income. Households with incomes of 80% of the median
20 area income shall be eligible and receive a priority in the
21 criteria of selection developed by DCA. DCA may exceed the 115%
22 of median limit in areas of extreme economic distress or high
23 cost, but only to the extent that these households comprise less
24 than 50% of the application.
25 (d) Loan terms and conditions.--The subsidy limit under this
26 program shall be 33% of total development cost, except in cases
27 of low-income households, where the limit shall be 50%. The loan
28 to the homebuyer shall be deferred and is due upon sale, devise
29 or other transfer of the property. Grants of up to $5,000 per
30 housing unit will be available to make handicapped accessibility
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1 improvements.
2 (e) Administration.--DCA shall be responsible for the
3 overall administration of the program.
4 (f) Allocation of funds.--Funds appropriated for this
5 program shall be distributed on a competitive basis to local
6 governments and their instrumentalities, which shall administer
7 the program locally. Funds shall be available to localities
8 based upon criteria developed by DCA. The application process
9 and the distribution of funds shall be accomplished in the same
10 manner that Housing and Redevelopment Assistance Program Funds
11 are distributed.
12 (g) Administration.--Up to 20% of the available program
13 funding shall be administered directly by DCA. DCA, however, may
14 delegate, assign or subcontract the implementation activity to
15 another department, agency or instrumentality. The funds shall
16 be awarded on a project-by-project basis, based upon an
17 application, review and selection process established by DCA, or
18 its designee.
19 (h) Repayment of program funds.--Any program funds repaid to
20 the locality, or to DCA or its designee, shall be returned to
21 the program account and shall be used to make additional loans.
22 Section 5. Home Improvement Loan Program.
23 (a) Purpose.--The Home Improvement Loan Program will provide
24 home improvement loans at affordable interest rates to low-
25 income and moderate-income homeowners. Loans or grants for
26 emergency repairs is also a component of this program.
27 (b) Eligible activities.--Eligible costs for funds under
28 this program include interest rate subsidies, front-end-write-
29 down grants, emergency grants and administrative costs
30 associated directly with program implementation.
19890H2131B2932 - 6 -
1 (c) Eligible borrowers.--Eligibility under this program
2 shall be limited to households whose incomes are 80% or less of
3 median area income. DCA may waive this limitation if the
4 applicant provides sufficient documentation that funds will be
5 utilized for a targeted area of economic distress, and in such
6 case, assistance may be provided to improve the units of
7 homeowners with incomes in excess of 80% of the median area
8 income.
9 (d) Loan-terms and conditions.--
10 (1) Maximum home improvement loans or grants shall be
11 $15,000.
12 (2) Maximum emergency loans or grants shall be $5,000.
13 (e) Administration.--DCA shall be responsible for the
14 overall administration of this program.
15 (f) Allocation of funds.--The funds appropriated for the
16 program shall be distributed on a competitive basis to local
17 governments and their instrumentalities, which shall administer
18 the program locally. The funds shall be available to localities
19 based upon criteria developed by DCA. The application process
20 and the distribution of the funds shall be accomplished in the
21 same manner that Housing and Redevelopment Assistance Program
22 funds are distributed.
23 (g) Administration.--Up to 20% of the available program
24 funding shall be administered directly by DCA. DCA, however, may
25 delegate, assign or subcontract the implementation activity to
26 another department, agency or instrumentality. The funds shall
27 be awarded on a project-by-project basis, based upon an
28 application, review and selection process established by DCA or
29 its designee.
30 (h) Repayment of funds.--Any program funds repaid to the
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1 locality, or to DCA or its designee, shall be returned to the
2 program account and shall be used to make additional loans or
3 grants.
4 Section 6. Rental Housing Production Program.
5 (a) Purpose.--The Rental Housing Production Program is
6 designed to stimulate the production of affordable housing and
7 to stimulate the rehabilitation of existing rental housing
8 throughout this Commonwealth. The program provides a flexible
9 source of funding for the acquisition, construction and
10 rehabilitation of housing for low-income and moderate-income
11 households.
12 (b) Eligible activities.--Funds available under this program
13 can be used for the acquisition of property, site preparation
14 and development, rehabilitation costs and new construction
15 costs; architectural, engineering and other development-related
16 costs. In addition, program funds can be used as matching funds
17 for other Federal, State or local needs. The funds can also be
18 used for capital write down or mortgage assistance, or for
19 creation of sinking fund accounts or assisted rental payment
20 accounts.
21 (c) Eligible borrowers.--Eligible borrowers shall include
22 any for-profit developers, nonprofit housing organization and
23 housing cooperatives.
24 (d) Loan terms and conditions.--Funds shall be provided to
25 the borrowers in the form of grants, deferred loans or
26 amortizing loans depending on the type and nature of the
27 project. Grants shall be available to defray the costs of making
28 units accessible to handicapped persons. Either deferred loans
29 or amortizing loans shall be used, depending on the percentage
30 of low-income or very-low-income households to be served. The
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1 loan rates and terms for program funds shall be tied to the
2 number of low-income units to be provided. For each project, a
3 minimum of 51% of a project's units must be served for
4 households earning less than 80% of the median income in the
5 project jurisdiction.
6 (e) Administration.--DCA shall be responsible for the
7 overall administration of this program.
8 (f) Allocation of funds.--Funds appropriated for this
9 program shall be distributed on a competitive bases to local
10 governments and their instrumentalities, which shall administer
11 the program locally. The funds shall be available to localities
12 based upon criteria developed by DCA. The funds may be used for
13 total development costs. The application process and the
14 distribution of funds shall be accomplished in the same manner
15 that Housing and Redevelopment Assistance Program funds are
16 distributed. Up to 20% of the available program funding shall be
17 administered directly by DCA. The department, however, may
18 delegate, assign or subcontract implementation activity to
19 another department, agency or instrumentality. The funds shall
20 be awarded on a project-by-project basis, based upon an
21 application, review and selection process established by DCA, or
22 its designee.
23 (g) Repayment of funds.--Any program funds repaid to the
24 locality, or to DCA or its designee, shall be returned to the
25 program account and shall be used to make additional loans and
26 grants.
27 Section 7. Public Housing Modernization Program.
28 (a) Purpose.--The Public Housing Modernization Program is
29 designed to provide adequate funding to modernize and
30 rehabilitate existing public housing facilities and to construct
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1 new public housing facilities.
2 (b) Eligible activities.--Fifty percent of the funds
3 available under this program shall be used to finance the
4 rehabilitation and modernization of existing public housing
5 facilities, including energy conservation activities, and the
6 correction of building code deficiencies. The remaining 50% of
7 funding shall be used to finance capital improvement programs.
8 The project application shall be subject to review and
9 concurrence by local tenant management organizations.
10 (c) Eligible borrowers.--All housing authorities in this
11 Commonwealth are eligible to participate in this program. The
12 application shall be subject to review and concurrence by the
13 local municipality.
14 (d) Loan terms and conditions.--Funds provided to housing
15 authorities under this program shall be in the form of a grant.
16 Funds provided for modernization activities must be used in
17 conjunction with matching Federal funds. The requirement for
18 matching Federal funds may be waived for housing authorities
19 with less than 5,000 units.
20 (e) Administration.--DCA shall be responsible for the
21 overall administration of this program.
22 (f) Allocation of funds.--The funds for this program shall
23 be awarded to housing authorities on a competitive basis after
24 an application, review and selection process established by DCA.
25 Section 8. Nonprofit Organization Technical Assistance and
26 Operating Assistance Program.
27 (a) Purpose.--The Nonprofit Organization Technical
28 Assistance and Operating Assistance Program is designed to
29 increase the number and the capacity of nonprofit housing
30 organizations. This program is targeted to organizations that
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1 are engaged in housing development and housing services which
2 meet the needs of low-income and moderate-income households.
3 (b) Eligible activities.--Funds provided under this program
4 may be used by nonprofit organizations for operating expenses
5 and as working capital for project developments. Eligible
6 operating expenses shall include such terms as staff salaries
7 and related costs, equipment purchase or leasing, office space
8 rental and professional services. Working capital expenses shall
9 include items such as the direct staff and administrative <--
10 PROJECT DEVELOPMENT costs attributable to a particular housing <--
11 development project., as well as total development costs. <--
12 (c) Eligible borrowers.--Organizations eligible to receive
13 assistance under this program shall include any Pennsylvania-
14 based nonprofit corporation or entity that is authorized to
15 provide housing or housing-related services. Community-wide, or
16 neighborhood-based organizations, as well as housing
17 cooperatives, shall be eligible.
18 (d) Loan and grant terms and conditions.--Of the funds
19 appropriated for this program, 50% of the available funds shall
20 be allocated for operating expenses and 50% shall be allocated
21 for use as working capital expenses. Funds provided for
22 operating expenses shall be in the form of grants. Grants shall
23 be limited to 50% of the total operating expenses of an
24 organization. Working capital funds shall be provided in the
25 form of loans to the nonprofit organizations. The loan shall be
26 provided as an advance of funds for a particular housing
27 development project. The loans shall be provided at no interest
28 and shall be payable upon the closing or completion of the
29 housing development.
30 (e) Administration.--DCA shall be responsible for the
19890H2131B2932 - 11 -
1 overall administration of this program.
2 (f) Allocation of funds.--Funds allocated for this program
3 shall be awarded to nonprofit organizations on a competitive
4 basis after an application, review and selection process
5 established by DCA.
6 (g) Repayment of funds.--Any program funds repaid to the
7 locality, or to DCA or its designee, shall be returned to the
8 program account and shall be used to make additional grants or
9 loans.
10 Section 9. Housing Initiative Fund.
11 Fifteen percent of the revenues generated by the tax imposed
12 under Article XI-C of the act of March 4, 1971 (P.L.6, No.2),
13 known as the Tax Reform Code of 1971, shall be placed in a
14 separate fund in the State Treasury to be known as the Housing
15 Initiative Fund. The moneys in the Housing Initiative Fund shall
16 be used by the Department of Community Affairs to carry out the
17 provisions of this act.
18 Section 10. Appropriation.
19 The following sums from the House Initiative Fund are hereby
20 appropriated to the Department of Community Affairs to carry out
21 the provisions of this act:
22 (1) For the Affordable Homeownership Program.. 8,000,000 <--
23 (1) FOR THE AFFORDABLE HOMEOWNERSHIP PROGRAM.. 9,500,000 <--
24 (2) For the Home Improvement Loan Program..... 5,000,000
25 (3) For the Rental Housing Production Program. 10,000,000
26 (4) For the Public Housing Modernization
27 Program........................................... 5,000,000
28 (5) For the Nonprofit Organization Technical
29 Assistance and Operating Assistance Program....... 3,000,000 <--
30 ASSISTANCE AND OPERATING ASSISTANCE PROGRAM....... 1,500,000 <--
19890H2131B2932 - 12 -
1 Section 11. Repeals.
2 All acts and parts of acts are repealed insofar as they are
3 inconsistent with this act.
4 Section 12. Effective date.
5 This act shall take effect in 30 days.
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