Rhode Island 2023 Regular Session

Rhode Island House Bill H5749 Compare Versions

Only one version of the bill is available at this time.

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5	5	2023 -- H 5749
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7	7	LC001470
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9	9	S TATE OF RHODE IS LAND
10	10	IN GENERAL ASSEMBLY
11	11	JANUARY SESSION, A.D. 2023
12	12	____________
13	13
14	14	A N A C T
15	15	RELATING TO PROPERTY -- COMMUNITY OPPORTUNITY TO PURCH ASE ACT
16	16	Introduced By: Representatives Speakman, Morales, Henries, Alzate, Felix, Giraldo,
17	17	Potter, Cruz, Tanzi, and Stewart
18	18	Date Introduced: February 21, 2023
19	19	Referred To: House Municipal Government & Housing
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21	21
22	22	It is enacted by the General Assembly as follows:
23	23	SECTION 1. Title 34 of the General Laws entitled "PROPERTY" is hereby amended by 1
24	24	adding thereto the following chapter: 2
25	25	CHAPTER 18.3 3
26	26	COMMUNITY OPPORTUNITY TO PURCHASE ACT 4
27	27	34-18.3-1. Legislative findings and purpose. 5
28	28	(a) The general assembly finds as follows: 6
29	29	(1) The state faces a severe and continuing housing crisis. Many state residents are unable 7
30	30	to obtain or retain affordable housing. 8
31	31	(2) This crisis has profoundly negative effects on the state. It causes dislocation, which 9
32	32	frays the social ties that bind our neighborhoods and communities together. It forces vulnerable 10
33	33	residents to leave their home, the state, for new communities where they are strangers. And it 11
34	34	contributes to homelessness, which is itself a severe and continuing crisis in the state. 12
35	35	(3) The state's housing crisis is caused, in large part, by a shortage of affordable rental 13
36	36	housing. The creation and preservation of such housing is therefore of paramount public concern. 14
37	37	(4) One obstacle to the creation and preservation of affordable rental housing is rapid 15
38	38	turnover in the state's real estate market. Nonprofit organizations seeking to create and preserve 16
39	39	affordable housing may be willing and able to pay market prices to purchase residential buildings 17
40	40	for sale, but nevertheless find themselves unable to purchase such buildings before they leave the 18
41	41	market. Nonprofit organizations serving the broader public interest must often move more 19
42	42
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45	45	deliberately and borrow purchase money from non-traditional lenders in such real estate 1
46	46	transactions than private entities concerned solely with profit. 2
47	47	(b) The purpose of this chapter (which may be referred to as the "community opportunity 3
48	48	to purchase act") is to enhance nonprofit organizations' ability to purchase multi-family residential 4
49	49	buildings, at market prices, within a reasonable period of time and to thereby promote the creation 5
50	50	and preservation of affordable rental housing. 6
51	51	34-18.3-2. Definitions. 7
52	52	As used in this chapter: 8
53	53	(1) "Area median income" means the unadjusted area median income published by the U.S. 9
54	54	Department of Housing and Urban Development for the geographic area that includes the state. 10
55	55	(2) "Fee interest" means ownership of real property in fee simple absolute. 11
56	56	(3) "Multi-family residential building" or "building" means any privately-owned real 12
57	57	property in the state improved with five (5) or more residential rental units (whether or not the 13
58	58	property also includes non-residential uses). Any privately-owned real property on which five (5) 14
59	59	or more residential units are under construction, and any privately-owned vacant lot on which the 15
60	60	local zoning and other applicable laws would permit the construction of five (5) or more residential 16
61	61	rental units. 17
62	62	(4) "Notice of special restrictions" means an agreement executed by a qualified nonprofit 18
63	63	and recorded against a multi-family residential building purchased by such qualified nonprofit 19
64	64	substantially in the form published by Rhode Island housing. 20
65	65	(5) "Purchase of a multi-family residential building," or "purchase," means to acquire any 21
66	66	interest that is transferred pursuant to the sale of a multi-family residential building. 22
67	67	(6) "Purchaser" means the individual, individuals, entity, or entities engaged or seeking to 23
68	68	engage, in the purchase of a multi-family residential building. 24
69	69	(7) "Rhode Island housing" means the Rhode Island housing and mortgage finance 25
70	70	corporation ("RIHMFC") created pursuant to chapter 55 of title 42. 26
71	71	(8) "Sale of a multi-family residential building," or "sale," means any of the following: 27
72	72	(i) The transfer, in exchange for money or any other thing of economic value, of a present 28
73	73	interest in the multi-family residential building, including beneficial use, where the value of the 29
74	74	present interest is the fee interest in the multi-family residential building, or substantially equal to 30
75	75	the value of that fee interest; 31
76	76	(ii) If an interest in the multi-family residential building is held by a trust, the transfer, in 32
77	77	exchange for money or any other thing of economic value, of a beneficial interest in the trust, where 33
78	78	the value of the beneficial interest in the trust is substantially equal to the value of the fee interest 34
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82	82	of the multi-family residential building; or 1
83	83	(iii) If an interest substantially equal to the value of the fee interest of the multi-family 2
84	84	residential building is held by any kind of corporate entity or partnership (including, but not limited 3
85	85	to, a corporation, limited liability company, general partnership, limited partnership, or limited 4
86	86	liability partnership), and if that interest is substantially equal in value to the total value of assets 5
87	87	held by the corporate entity or partnership, the transfer in exchange for money or any other thing 6
88	88	of economic value, of a controlling interest in the corporate entity or partnership. For purposes of 7
89	89	this section, in any instance in which multiple entities (whether those entities are natural persons, 8
90	90	trusts, corporate entities, partnerships, or any other kind of entity, or any combination of different 9
91	91	kinds of entities) hold interests in a multi-family residential building, the transfer of multiple 10
92	92	interests by or in those entities shall be considered the transfer of a single interest, if the transfers 11
93	93	are made in connection with substantially the same transaction or set of transactions. 12
94	94	(iv) "Sale of a multi-family residential building," or "sale," does not include any of the 13
95	95	following: 14
96	96	(A) Any transfer made under a mortgage, deed of trust, or deed in lieu of foreclosure; 15
97	97	(B) Any transfer made in connection with any bankruptcy proceeding (including, but not 16
98	98	limited to, any transfer made by a bankruptcy trustee); 17
99	99	(C) Any transfer of an interest in real property held by the federal government, by the state 18
100	100	government, or by any special district created by state law (including, but not limited to, any 19
101	101	transfer of any such interest held because of a taxpayer's nonpayment of tax); 20
102	102	(D) Any transfer by devise or intestacy, or any other transfer made in connection with a 21
103	103	bona fide effort to pass an interest in real property to one's devisees or heirs (including, but not 22
104	104	limited to, such transfers made in connection with a living trust); 23
105	105	(E) Any transfer between or among spouses, domestic partners, siblings (including, but not 24
106	106	limited to, half-siblings, step-siblings, and adoptive siblings), parents (including, but not limited to, 25
107	107	step-parents and adoptive parents) or guardians and their children, grandparents and their 26
108	108	grandchildren, aunts or uncles and their nieces or nephews, great-aunts or great-uncles and their 27
109	109	grand-nieces or grand-nephews, or first or second cousins, or any combination thereof; or 28
110	110	(F) Any transfer of an interest in a multi-family residential building income restricted at or 29
111	111	below an average of eighty percent (80%) of area median income for a minimum of ten (10) years 30
112	112	if such transfer is to an entity controlled by a housing authority, and that entity also participates in 31
113	113	the management, direction, or control of the building. 32
114	114	(9) "Sell," "sale," or "sold" means a transaction for the transfer of real estate from a seller 33
115	115	to a buyer, including, but not limited to, exchanges of real estate between the seller and buyer and 34
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119	119	transactions involving the creation of a sales agreement. 1
120	120	(10) "Seller" means the individual, individuals, entity, or entities engaged, or seeking to 2
121	121	engage, in the sale of a multi-family residential building. 3
122	122	(11) "Qualified nonprofit housing development corporation" means a nonprofit 4
123	123	corporation, which has applied under 42 U.S.C. § 501(c)(3) for approval as a § 501(c)(3) 5
124	124	corporation with the Internal Revenue Service, or been so approved, and which is organized and 6
125	125	operated with one of its principal purposes being to provide housing for low- and moderate-income 7
126	126	persons. 8
127	127	34-18.3-3. Qualified nonprofits. 9
128	128	(a) Annual selection of qualified nonprofits. Rhode Island housing shall establish a process 10
129	129	for certifying on an annual basis, nonprofit organizations that meet the following criteria: 11
130	130	(1) The organization is a bona fide nonprofit as evidenced by the fact that it is exempt from 12
131	131	federal income tax under 26 USC § 501(c)(3); 13
132	132	(2) The organization has demonstrated a commitment to the provision of affordable 14
133	133	housing for low- and moderate-income residents, and to preventing the displacement of such 15
134	134	residents; 16
135	135	(3) The organization has demonstrated a commitment to community engagement as 17
136	136	evidenced by relationships with neighborhood-based organizations or tenant counseling 18
137	137	organizations; and 19
138	138	(4) The organization has demonstrated the capacity (including, but not limited to, the legal 20
139	139	and financial capacity) to effectively acquire and manage residential real property at multiple 21
140	140	locations in the state. 22
141	141	(b) Nonprofit organizations that Rhode Island housing certifies as having met these criteria 23
142	142	shall be known as "qualified nonprofits." An organization's certification as a qualified nonprofit 24
143	143	shall be valid for three (3) years. Rhode Island housing shall solicit new applications for qualified 25
144	144	nonprofit status at least once each calendar year, at which time existing qualified nonprofits shall 26
145	145	be eligible to apply for renewed certification as qualified nonprofits. In the absence of new 27
146	146	information raising doubts about whether the organization qualifies as a qualified nonprofit, an 28
147	147	existing qualified nonprofit's application for renewed certification as a qualified nonprofit shall be 29
148	148	routinely and swiftly granted. 30
149	149	34-18.3-4. Existence and publication of qualified nonprofits list. 31
150	150	RIHMFC shall publish on its website, and make available upon request, a list of qualified 32
151	151	nonprofits. In addition to such other information as RIHMFC may include, this list shall include 33
152	152	contact information for each qualified nonprofit. This contact information shall include, but need 34
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156	156	not be limited to, a mailing address, an email address that the qualified nonprofit monitors regularly, 1
157	157	and a telephone number. 2
158	158	34-18.3-5. Priority for Rhode Island nonprofits. 3
159	159	Qualified Rhode Island nonprofits shall be given priority over qualified out-of-state non-4
160	160	profits. 5
161	161	34-18.3-6. General provisions - First right to purchase conferred. 6
162	162	(a) This chapter shall be construed to confer upon each qualified nonprofit a first right to 7
163	163	purchase any multi-family residential building for sale in the state. This first right to purchase shall 8
164	164	consist of both a right of first offer, and a right of first refusal. 9
165	165	(b) Confidential information protected. Any information obtained from a seller by a 10
166	166	qualified nonprofit under this chapter including, but not limited to, disclosures made and terms and 11
167	167	conditions of an offer of sale made shall be kept confidential to the maximum extent permitted by 12
168	168	law, except that a qualified nonprofits may, if otherwise permitted by law, share such information 13
169	169	with other qualified nonprofits to facilitate qualified nonprofit exercise of the rights conferred by 14
170	170	this chapter. Nothing in this chapter permits or requires the disclosure of information where such 15
171	171	disclosure is otherwise prohibited by law. 16
172	172	(c) Preexisting rights unaffected. This chapter shall not be construed to impair any contract, 17
173	173	or affect any property interest held by anyone other than the seller of a multi-family residential 18
174	174	building (including, but not limited to, any interest held under a mortgage, deed of trust, or other 19
175	175	security interest; any option to purchase: or any right of first offer or right of first refusal), in 20
176	176	existence before the effective date of this chapter. 21
177	177	34-18.3-7. State owned buildings. 22
178	178	When any state-owned property, either land or buildings, is to be sold, RIHMFC shall be 23
179	179	given the right of first refusal lasting sixty (60) days to enter into an agreement to purchase it at the 24
180	180	appraised value. The municipality where the property is located shall be given the right of second 25
181	181	refusal (lasting another sixty (60) days) to purchase, before the property goes on the open market. 26
182	182	34-18.3-8. Enforcement - Seller certification. 27
183	183	(a) Every seller of a multi-family residential building in any city or town shall, within 28
184	184	fifteen (15) days of the sale of that building, submit to RIHMFC a signed declaration, under penalty 29
185	185	of perjury, affirming that the sale of that building substantially complied with the requirements of 30
186	186	this chapter. Each such declaration shall include the address of the relevant building and RIHMFC 31
187	187	shall publish all such addresses on its website at least once per week. 32
188	188	(b) Failure to file the declaration required by this section shall be an infraction punishable 33
189	189	by a fine not to exceed five thousand dollars ($5,000). 34
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193	193	SECTION 2. This act shall take effect upon passage. 1
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200	200	EXPLANATION
201	201	BY THE LEGISLATIVE COUNCIL
202	202	OF
203	203	A N A C T
204	204	RELATING TO PROPERTY -- COMMUNITY OPPORTUNIT Y TO PURCHASE ACT
205	205	***
206	206	This act would grant a right of first refusal to qualified nonprofits for the purchase of certain 1
207	207	multi-family residential properties at market prices, within a reasonable period of time to promote 2
208	208	the creation and preservation of affordable rental housing. 3
209	209	This act would take effect upon passage. 4
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