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