Relates to loans to state-aided limited-profit housing companies

Title of bill

An act to amend the private housing finance law, in relation to loans for state-aided limited-profit housing companies

Purpose or general idea of bill

The purpose of this bill is to allow Starrett City to refinance in excess of its actual project cost in return for thirty years of additional compliance with the provisions of the Mitchell-Lama program.

Summary of specific provisions

This bill would approve a loan and encumbrance in excess of the actual project cost of a Mitchell-Lama project containing over five thousand rental units provided that:

* rents paid by tenants may not be increased to pay for any subsequent debt produced by the project;

* the company enters into agreement to remain subject to the provisions of article 2 of the private housing finance law for a period of no less than thirty years, from the issuance of the loan and encumbrance;

* the greater of 25 percent of the loan proceeds in excess of actual project cost or $40 million of the loan proceeds go towards capital improvements of existing structures and facilities;

* the company creates a plan of all the capital improvements within one year of the approval of the loan;

* the company obligates the funds dedicated to capital improvements within three years;

* the company submits the one-year plan and a report detailing the obligation of funds' to the governor, the Department of Housing and Community Renewal, the Assembly and the Senate; and

* bi-monthly meeting are held between elected officials and the members of the project's residents' association until all money set-aside for the capital improvements is spent.

Effects of present law which this bill would alter

This act amends the private housing finance law by adding a new Section 22-b.

Justification

This legislation is meant to help refinance Starrett City and entice owners to stay in the Mitchell-Lama program for another thirty years. Recently, many owners in affordable housing communities have bought-out of the program, leaving tenants in a situation where their rent will increase to market price, which could be up to three times as much as their existing rent. The new money will give owners incentive to stay in the program.

Also, at least $40 million and possibly more depending on the size of the loan will be set aside for capital improvements to individual housing units and the important community areas, such as the power plant, garage or recreational facility. Tenants will have more rights, as bi-monthly meetings with owners and elected officials will allow for their input on more issues.

Prior legislative history

This is new legislation. FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS : None to the State.

Effective date

This act shall take effect immediately.