Affordable Home Ownership Program

     The division of housing in the department of local affairs (division) administers an affordable home ownership program (program) that makes grants to nonprofit organizations, local governments, tribal governments, community development financial institutions, and community land trusts (eligible organizations) to support affordable home ownership, including the development of residential housing units that are described in an eligible organization's funding request (project). Current law specifies that only a household with an income less than or equal to 120% of the area median income is eligible for assistance through the program, but it is unclear whether this requirement applies to housing units constructed by an eligible organization through one of its projects. The act clarifies that only a household with an income less than or equal to either 120% of the statewide area median income of households of that size in the jurisdiction of a local or tribal government in which the households are located, or 120% of the statewide area median income of households of that size, is eligible for housing constructed by an eligible organization through one of its projects.

     In addition, the program requires that housing offered through the program, including all taxes and fees, costs not more than 35% of a household's monthly income unless the ownership program is providing a homeowner with assistance for home rehabilitation . The act allows the division to modify this percentage as applied to a residential unit constructed by an eligible organization as part of an affordable housing project pursuant to a waiver process initiated by an eligible organization if a substantial need for housing the project's target population exists , the unit has been adequately marketed to eligible buyers for purchase for at least 6 months after the issuance of a certificate of occupancy final completion of the unit , and the unit has not been purchased by an eligible buyer within that 6-month period.

      The division also administers a land banking program (land banking program) that makes grants to local and tribal governments and loans to nonprofits to acquire and preserve land for the development of affordable housing. The development of affordable housing includes rental housing projects with an imputed income limit by household size not to exceed 60% of area median income. Regulated units in the project must have a gross rent limit that does not exceed 30% of the imputed income limitation applicable to the units. Current law requires that a project provide for-sale housing that may be purchased by a household with an annual income of 100% of area median income. The act changes the income limit to 120% of area median income.

      The division may issue a waiver with housing cost limits that are different from those requested by an eligible organization if different housing cost limits would better serve needs identified in the community, the project remains financially feasible, and there are eligible buyers that meet the division's requirements. Alternatively, the division may modify the total amount of funding to account for an increase in the sales price of the unit. In lieu of this process, the division may approve an eligible organization's process for determining when to exceed the maximum monthly household income for a unit funded by the program, which shall not require a 6-month marketing period .

     The division may issue a waiver with a different housing cost limit from the limit requested by the eligible organization if a different limit would better serve needs identified in a housing assessment and the project remains financially feasible in the division's discretion.

     For an eligible organization, the act specifies that the division is required to accept a local affordability mechanism in lieu of any state-prescribed use covenant if the division determines that the local affordability mechanism allows the state to maintain its obligations for compliance and compliance monitoring and is substantially equivalent to or more protective of long-term affordability and primary occupancy than a state-prescribed use covenant or the local affordability mechanism is necessary to access financing for disproportionately impacted communities.

     The division may allow an eligible organization to rent residential units constructed as part of the project. On or before December 31, 2026, the division is required to issue guidance for when units within a project may be rented and develop a process by which rented units may return to the for-sale market. A homeowner may rent a unit funded by the ownership program as long as the unit remains their primary residence .

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)


(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)