PRINTER'S NO. 2025
No. 1532 Session of 1990
INTRODUCED BY DAWIDA, JONES, PORTERFIELD, REIBMAN, LYNCH,
FATTAH, STOUT, BELAN AND LEWIS, MARCH 20, 1990
REFERRED TO URBAN AFFAIRS AND HOUSING, MARCH 20, 1990
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:
16 (1) Many households live at the poverty income level or
17 below, and such households need financial assistance to
18 ensure their ability to pay for decent housing.
19 (2) Homelessness caused by inability to afford housing
20 has been the experience of thousands of this Commonwealth's
1 residents, and it is growing.
2 (3) Many households are living in overcrowded housing
3 and need a larger housing unit to accommodate their families.
4 (4) Substandard housing units need to be rehabilitated
5 or replaced.
6 (5) The median price of a home has increased
7 substantially faster than the median household income,
8 contributing to the growing problem of housing affordability.
9 (6) Median gross rents have increased at a greater rate
10 than the increase in household income.
11 (b) Declaration of policy.--It is declared to be the policy
12 of this Commonwealth to promote the health, safety and welfare
13 of its inhabitants by providing for State assistance to provide
14 affordable housing for the renovation of blighted buildings, the
15 conversion of obsolete buildings, the construction of single-
16 family and multifamily housing and the modernization of public
17 housing.
18 Section 3. Definitions.
19 The following words and phrases when used in this act shall
20 have the meanings given to them in this section unless the
21 context clearly indicates otherwise:
22 "DCA." The Department of Community Affairs of the
23 Commonwealth.
24 "Deferred loan." A loan secured by a mortgage, the payment
25 of which is due only upon the sale, devise or other transfer of
26 the property described in the mortgage.
27 "Housing and redevelopment assistance program funds." Funds
28 distributed by DCA pursuant to the act of May 20, 1949
29 (P.L.1633, No.493), known as the Housing and Redevelopment
30 Assistance Law.
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1 "Housing authority." A housing authority created pursuant to
2 the act of May 28, 1937 (P.L.955, No.265), known as the Housing
3 Authorities Law.
4 "Local governments and their instrumentalities." A county,
5 city, borough, incorporated town or township and a redevelopment
6 authority created pursuant to the act of May 24, 1945 (P.L.991,
7 No.385), known as the Urban Redevelopment Law.
8 "Low-income and moderate-income households." Families and
9 persons who cannot afford to pay, without the assistance of this
10 act, the costs charged by private enterprise, for decent, safe
11 and sanitary housing. The income limits for admission of
12 families and persons to the programs set forth in this act shall
13 be the limits established pursuant to rules and regulations of
14 DCA.
15 "Median area income." The median income for the locality as
16 defined annually by the United States Department of Housing and
17 Urban Development.
18 "Total development costs." The sum total of all costs
19 incurred in the development of a project which are approved by
20 DCA as reasonable and necessary. These costs shall include, but
21 are not necessarily limited to the following:
22 (1) The cost of land acquisition and any buildings
23 thereon.
24 (2) The cost of site preparation, demolition and
25 development.
26 (3) Architect, engineer and legal fees paid or payable
27 in connection with the planning, execution and financing of
28 the project.
29 (4) The cost of necessary studies, surveys, plans and
30 permits.
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1 (5) Insurance, interest, financing, tax and assessment
2 costs and other operating and carrying costs during
3 construction.
4 (6) The cost of construction, reconstruction, fixtures
5 and equipment related to the real property.
6 (7) The cost of land improvements.
7 (8) Necessary expenses in connection with initial
8 occupancy of the project.
9 (9) A reasonable profit or fee to the builder and
10 developer.
11 (10) An allowance established by DCA for working capital
12 and contingency reserves, and reserved for any anticipated
13 operating deficits during the first two years of occupancy.
14 (11) The cost of such other items, including tenant
15 relocation, as DCA determines to be reasonable and necessary
16 for the development of the project, less any and all net
17 rents and other net revenues received as a result of
18 operating real and personal property on the project site
19 during construction.
20 All costs shall be subject to approval and audit by the agency.
21 DCA may adopt rules and regulations specifying in detail the
22 types and categories of costs which shall be allowable if
23 actually incurred in the construction or reconstruction of a
24 project.
25 Section 4. Affordable Homeownership Program.
26 (a) Purpose.--The Affordable Homeownership Program will deal
27 directly with the problem facing many of this Commonwealth's
28 residents who are attempting to buy their first home. This
29 program will provide subsidies in the form of deferred mortgage
30 loans to eligible households in approved areas and to projects.
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1 (b) Eligible properties.--An eligible property under this
2 program must be a permanent structure used for year-round
3 residential use. Eligible properties may include single units of
4 newly constructed housing or newly rehabilitated units which
5 have been previously unoccupied. For the purpose of this
6 program, single-family units, cooperatives, townhomes and
7 condominiums shall be considered as types of eligible units. All
8 such units shall be eligible only if the owner establishes and
9 maintains the unit as his principal residence.
10 (c) Eligible borrowers.--The determination of eligible
11 households under this program shall be established by DCA based
12 upon household incomes that are no greater than 115% of the
13 median area income. Households with incomes of 80% of the median
14 area income shall be eligible and receive a priority in the
15 criteria of selection developed by DCA. DCA may exceed the 115%
16 of median limit in areas of extreme economic distress or high
17 cost, but only to the extent that these households comprise less
18 than 50% of the application.
19 (d) Loan terms and conditions.--The subsidy limit under this
20 program shall be 33% of total development cost, except in cases
21 of low-income households, where the limit shall be 50%. The loan
22 to the homebuyer shall be deferred and is due upon sale, devise
23 or other transfer of the property. Grants of up to $5,000 per
24 housing unit will be available to make handicapped accessibility
25 improvements.
26 (e) Administration.--DCA shall be responsible for the
27 overall administration of the program.
28 (f) Allocation of funds.--Funds appropriated for this
29 program shall be distributed on a competitive basis to local
30 governments and their instrumentalities, which shall administer
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1 the program locally. Funds shall be available to localities
2 based upon criteria developed by DCA. The application process
3 and the distribution of funds shall be accomplished in the same
4 manner that Housing and Redevelopment Assistance Program Funds
5 are distributed.
6 (g) Administration.--Up to 20% of the available program
7 funding shall be administered directly by DCA. DCA, however, may
8 delegate, assign or subcontract the implementation activity to
9 another department, agency or instrumentality. The funds shall
10 be awarded on a project-by-project basis, based upon an
11 application, review and selection process established by DCA, or
12 its designee.
13 (h) Repayment of program funds.--Any program funds repaid to
14 the locality, or to DCA or its designee, shall be returned to
15 the program account and shall be used to make additional loans.
16 Section 5. Home Improvement Loan Program.
17 (a) Purpose.--The Home Improvement Loan Program will provide
18 home improvement loans at affordable interest rates to low-
19 income and moderate-income homeowners. Loans or grants for
20 emergency repairs is also a component of this program.
21 (b) Eligible activities.--Eligible costs for funds under
22 this program include interest rate subsidies, front-end-write-
23 down grants, emergency grants and administrative costs
24 associated directly with program implementation.
25 (c) Eligible borrowers.--Eligibility under this program
26 shall be limited to households whose incomes are 80% or less of
27 median area income. DCA may waive this limitation if the
28 applicant provides sufficient documentation that funds will be
29 utilized for a targeted area of economic distress, and in such
30 case, assistance may be provided to improve the units of
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1 homeowners with incomes in excess of 80% of the median area
2 income.
3 (d) Loan-terms and conditions.--
4 (1) Maximum home improvement loans or grants shall be
5 $15,000.
6 (2) Maximum emergency loans or grants shall be $5,000.
7 (e) Administration.--DCA shall be responsible for the
8 overall administration of this program.
9 (f) Allocation of funds.--The funds appropriated for the
10 program shall be distributed on a competitive basis to local
11 governments and their instrumentalities, which shall administer
12 the program locally. The funds shall be available to localities
13 based upon criteria developed by DCA. The application process
14 and the distribution of the funds shall be accomplished in the
15 same manner that Housing and Redevelopment Assistance Program
16 funds are distributed.
17 (g) Administration.--Up to 20% of the available program
18 funding shall be administered directly by DCA. DCA, however, may
19 delegate, assign or subcontract the implementation activity to
20 another department, agency or instrumentality. The funds shall
21 be awarded on a project-by-project basis, based upon an
22 application, review and selection process established by DCA or
23 its designee.
24 (h) Repayment of funds.--Any program funds repaid to the
25 locality, or to DCA or its designee, shall be returned to the
26 program account and shall be used to make additional loans or
27 grants.
28 Section 6. Rental Housing Production Program.
29 (a) Purpose.--The Rental Housing Production Program is
30 designed to stimulate the production of affordable housing and
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1 to stimulate the rehabilitation of existing rental housing
2 throughout this Commonwealth. The program provides a flexible
3 source of funding for the acquisition, construction and
4 rehabilitation of housing for low-income and moderate-income
5 households.
6 (b) Eligible activities.--Funds available under this program
7 can be used for the acquisition of property, site preparation
8 and development, rehabilitation costs and new construction
9 costs; architectural, engineering and other development-related
10 costs. In addition, program funds can be used as matching funds
11 for other Federal, State or local needs. The funds can also be
12 used for capital write down or mortgage assistance, or for
13 creation of sinking fund accounts or assisted rental payment
14 accounts.
15 (c) Eligible borrowers.--Eligible borrowers shall include
16 any for-profit developers, nonprofit housing organization and
17 housing cooperatives.
18 (d) Loan terms and conditions.--Funds shall be provided to
19 the borrowers in the form of grants, deferred loans or
20 amortizing loans depending on the type and nature of the
21 project. Grants shall be available to defray the costs of making
22 units accessible to handicapped persons. Either deferred loans
23 or amortizing loans shall be used, depending on the percentage
24 of low-income or very-low-income households to be served. The
25 loan rates and terms for program funds shall be tied to the
26 number of low-income units to be provided. For each project, a
27 minimum of 51% of a project's units must be served for
28 households earning less than 80% of the median income in the
29 project jurisdiction.
30 (e) Administration.--DCA shall be responsible for the
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1 overall administration of this program.
2 (f) Allocation of funds.--Funds appropriated for this
3 program shall be distributed on a competitive bases to local
4 governments and their instrumentalities, which shall administer
5 the program locally. The funds shall be available to localities
6 based upon criteria developed by DCA. The funds may be used for
7 total development costs. The application process and the
8 distribution of funds shall be accomplished in the same manner
9 that Housing and Redevelopment Assistance Program funds are
10 distributed. Up to 20% of the available program funding shall be
11 administered directly by DCA. The department, however, may
12 delegate, assign or subcontract implementation activity to
13 another department, agency or instrumentality. The funds shall
14 be awarded on a project-by-project basis, based upon an
15 application, review and selection process established by DCA, or
16 its designee.
17 (g) Repayment of funds.--Any program funds repaid to the
18 locality, or to DCA or its designee, shall be returned to the
19 program account and shall be used to make additional loans and
20 grants.
21 Section 7. Public Housing Modernization Program.
22 (a) Purpose.--The Public Housing Modernization Program is
23 designed to provide adequate funding to modernize and
24 rehabilitate existing public housing facilities and to construct
25 new public housing facilities.
26 (b) Eligible activities.--Fifty percent of the funds
27 available under this program shall be used to finance the
28 rehabilitation and modernization of existing public housing
29 facilities, including energy conservation activities, and the
30 correction of building code deficiencies. The remaining 50% of
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1 funding shall be used to finance capital improvement programs.
2 The project application shall be subject to review and
3 concurrence by local tenant management organizations.
4 (c) Eligible borrowers.--All housing authorities in this
5 Commonwealth are eligible to participate in this program. The
6 application shall be subject to review and concurrence by the
7 local municipality.
8 (d) Loan terms and conditions.--Funds provided to housing
9 authorities under this program shall be in the form of a grant.
10 Funds provided for modernization activities must be used in
11 conjunction with matching Federal funds. The requirement for
12 matching Federal funds may be waived for housing authorities
13 with less than 5,000 units.
14 (e) Administration.--DCA shall be responsible for the
15 overall administration of this program.
16 (f) Allocation of funds.--The funds for this program shall
17 be awarded to housing authorities on a competitive basis after
18 an application, review and selection process established by DCA.
19 Section 8. Nonprofit Organization Technical Assistance and
20 Operating Assistance Program.
21 (a) Purpose.--The Nonprofit Organization Technical
22 Assistance and Operating Assistance Program is designed to
23 increase the number and the capacity of nonprofit housing
24 organizations. This program is targeted to organizations that
25 are engaged in housing development and housing services which
26 meet the needs of low-income and moderate-income households.
27 (b) Eligible activities.--Funds provided under this program
28 may be used by nonprofit organizations for operating expenses
29 and as working capital for project developments. Eligible
30 operating expenses shall include such terms as staff salaries
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1 and related costs, equipment purchase or leasing, office space
2 rental and professional services. Working capital expenses shall
3 include project development costs attributable to a particular
4 housing development project.
5 (c) Eligible borrowers.--Organizations eligible to receive
6 assistance under this program shall include any Pennsylvania-
7 based nonprofit corporation or entity that is authorized to
8 provide housing or housing-related services. Community-wide, or
9 neighborhood-based organizations, as well as housing
10 cooperatives, shall be eligible.
11 (d) Loan and grant terms and conditions.--Of the funds
12 appropriated for this program, 50% of the available funds shall
13 be allocated for operating expenses and 50% shall be allocated
14 for use as working capital expenses. Funds provided for
15 operating expenses shall be in the form of grants. Grants shall
16 be limited to 50% of the total operating expenses of an
17 organization. Working capital funds shall be provided in the
18 form of loans to the nonprofit organizations. The loan shall be
19 provided as an advance of funds for a particular housing
20 development project. The loans shall be provided at no interest
21 and shall be payable upon the closing or completion of the
22 housing development.
23 (e) Administration.--DCA shall be responsible for the
24 overall administration of this program.
25 (f) Allocation of funds.--Funds allocated for this program
26 shall be awarded to nonprofit organizations on a competitive
27 basis after an application, review and selection process
28 established by DCA.
29 (g) 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 grants or
2 loans.
3 Section 9. Housing Initiative Fund.
4 Fifteen percent of the revenues generated by the tax imposed
5 under Article XI-C of the act of March 4, 1971 (P.L.6, No.2),
6 known as the Tax Reform Code of 1971, shall be placed in a
7 separate fund in the State Treasury to be known as the Housing
8 Initiative Fund. The moneys in the Housing Initiative Fund shall
9 be used by the Department of Community Affairs to carry out the
10 provisions of this act.
11 Section 10. Appropriation.
12 The following sums from the House Initiative Fund are hereby
13 appropriated to the Department of Community Affairs to carry out
14 the provisions of this act:
15 (1) For the Affordable Homeownership Program.. 9,500,000
16 (2) For the Home Improvement Loan Program..... 5,000,000
17 (3) For the Rental Housing Production Program. 10,000,000
18 (4) For the Public Housing Modernization
19 Program........................................... 5,000,000
20 (5) For the Nonprofit Organization Technical
21 Assistance and Operating Assistance Program....... 1,500,000
22 Section 11. Repeals.
23 All acts and parts of acts are repealed insofar as they are
24 inconsistent with this act.
25 Section 12. Effective date.
26 This act shall take effect in 30 days.
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