CHAPTER 512

FORMERLY

HOUSE BILL NO. 704

AS AMENDED BY HOUSE AMENDMENT NO. 1

AN ACT ENTITLED "THE HOUSING DEVELOPMENT ACT OF 1986", AMENDING CHAPTER 86, TITLE 29 OF THE DELAWARE CODE AND CHAPTER 40, TITLE 31 OF THE DELAWARE CODE RELATING TO THE STATE COUNCIL ON HOUSING AND THE HOUSING DEVELOPMENT FUND.

WHEREAS, finance capital for law income rental housing has fallen to a perilously low level, and severe cutbacks in federal subsidies for housing for the poor, amounting to more than a 519.6 billion loss nationally in federal budget authority for low income housing subsidies, along with fluctuating high interest rates and chronically unmet housing needs, leave states and cities with the burden of meeting these housing needs: and

WHEREAS, in order to resolve the local crisis In housing financing, and its wide- ranging effects on moderate and low income citizens, creative ideas and new sources of capital arc desperately needed by the State of Delaware; and

WHEREAS, a "housing trust fund" program is one approach to providing at least a small part of the capital needed to bridge the gap between the cost of effective low and moderate income housing strategies and the shrinking availability of financing by providing a predictable source of capital which can be applied flexibly to the particular needs of the State of Delaware; and

WHEREAS, in 1968 the General Assembly established the Housing Development Fund as a revolving fund within the Delaware State Housing Authority to make low interest and interest- free loans to non- profit and limited profit housing sponsors for the development of housing for low- moderate- income persons and families: and

WHEREAS, with an initial endowment of $3,000.000. supplemented by an additional $S,000.000 appropriation in 1971, the Housing Development Fund, over its 18 years of operation, has generated some ;38,100,000 in loans to spur development of low/moderate. Income housing, assisting some 3,203 units of such housing in the process, thus providing essential interim financing without which many such projects would have been impossible or too costly to benefit low/moderate- income persons and families; and

WHEREAS, the drying-up of new federal housing subsidies has resulted in a slowing- down of the Housing Development Fund's programs, leaving uncommitted balances in the Fund which currently amount to some $2,100,000; and

WHEREAS, by expanding the permitted uses of the Housing Development Fund to include making grants u well as loans, by removing the current restriction on the amortization period of loans made. by permitting the Fund to retain interest on its uncommitted balances, and by appropriating an additional $2,S00,000 to the Fund, thus bringing its total assets to more than ;11,000,000, the Housing Development Fund could serve as Delaware's "housing trust fund" to help bridge the gap between the State's low/moderate- income needs and the ever-shrinking availability of finance capital; and

WHEREAS, in order to insure that the maximum benefit is derived from a revamped Housing Development Fund, and to encourage the public private partnership essential to any successful housing program, it Is appropriate to expand the State Council on Housing and give it oversight authority concerning the programs proposed by the State Housing Authority for the use of the Fund.

NOW, THEREFORE:

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend Subchapter I, Chapter 86, Title 29 of the Delaware Code by striking the numeral "7" from subsection (b) of Section 8609 and substituting in lieu thereof the numeral "9".

Section 2. Further amend Subchapter I, Chapter 86, Title 29 of the Delaware Code by striking from subsection (c) of Section 8609 the words and phrase "At least 3, but no more than 4" and substituting in lieu thereof the words and phrase "At least 4, but no more than 5", and by further striking from subsection (c) of Section 8609 the words and phrase "and at least 2, but no more than 3" and substituting in lieu thereof the words and phrase and at least 3, but no more than e.

Section 3. Amend Subchapter 111, Chapter 40, Title 31 of the Delaware Code by striking from subdivision (II) of Section 4016 the word "and" that appears following the semicolon ending that subdivision. by striking the period that appears at the end of subdivision (12) of Section 4016 and substituting in lieu thereof a semicolon followed by the word "and", and by adding to Section 4016 a new subdivision (13) to read as follows:

"(In Approve all programs proposed by the State Housing Authority for using the Housing Development Fund."

Section 4. Amend Subchapter V, Chapter 40, Title 31 of the Delaware Code by designating the existing text of Section 4067 as subsection "(a)" and by adding to Section 4067 new subsections designated "(b)", "(c)" and "(d)" to read as follows:

"(b) In addition to the appropriation made in subsection (a) of this section, and in addition to any further appropriations which may not be reflected in subsection (a) of this section, and in addition to accrued interest on loans, the Housing Development Fund shall retain any interest or other earnings which accrue on uncommitted balances remaining in the Fund undisbursed, and such accrued interest shall not be deposited in the General Fund.

(c) Any other law to the contrary notwithstanding, programs for the disbursement of funds from the Housing Development Fund, and disbursements pursuant to such programs, may include grants as well as loans; provided, however, that any program including grants shall not cause the Fund to lose entirely its character as a revolving fund.

(d) In allocating the resources of the Housing Development Fund over time, any program mix or targeting of funds shall account for the demographics of the population in need of housing, should balance the programs appropriately between rental assistance and home ownership, and should apportion the available resources statewide according to local need."

Section 5. Amend Subchapter V, Chapter 40, Title 31 of the Delaware Code by striking from the first paragraph of subdivision (2) of Section 4073 the semicolon which appears following the words and phrase "for each housing development", and by striking from the second paragraph of subdivision (2) of Section 4073 the comma which appears following the words and phrase "by the Authority", and by further striking from subdivision (2) of Section 4073 the words and phrase "but in no event shall such amortization period exceed 50 years" where it appears therein.

Section 6. This Act shall become effective on July 1, 1986.

Approved July 9, 1986.