Rhode Island 2025 Regular Session

Rhode Island Senate Bill S0202 Compare Versions

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

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5	5	2025 -- S 0202
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7	7	LC000182
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9	9	S T A T E O F R H O D E I S L A N D
10	10	IN GENERAL ASSEMBLY
11	11	JANUARY SESSION, A.D. 2025
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: Senators Kallman, DiMario, Lauria, Mack, Quezada, Vargas, Gallo, and
17	17	Acosta
18	18	Date Introduced: February 07, 2025
19	19	Referred To: Senate Housing & Municipal Government
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22	22	It is enacted by the General Assembly as follows:
23	23	SECTION 1. The general assembly hereby finds that: 1
24	24	(1) The state faces a severe and continuing housing crisis. Many state residents are unable 2
25	25	to obtain or retain affordable housing. 3
26	26	(2) This crisis has profoundly negative effects on the state. It causes dislocation, which 4
27	27	frays the social ties that bind our neighborhoods and communities together. It forces vulnerable 5
28	28	residents to leave their home, the state, for new communities where they are strangers. And it 6
29	29	contributes to homelessness, which is itself a severe and continuing crisis in the state. 7
30	30	(3) The state's housing crisis is caused, in large part, by a shortage of affordable rental 8
31	31	housing. The creation and preservation of such housing is therefore of paramount public concern. 9
32	32	(4) One obstacle to the creation and preservation of affordable rental housing is rapid 10
33	33	turnover in the state's real estate market. Nonprofit organizations seeking to create and preserve 11
34	34	affordable housing may be willing and able to pay market prices to purchase residential buildings 12
35	35	for sale, but nevertheless find themselves unable to purchase such buildings before they leave the 13
36	36	market. Nonprofit organizations serving the broader public interest must often move more 14
37	37	deliberately and borrow purchase money from non-traditional lenders in such real estate 15
38	38	transactions than private entities concerned solely with profit. 16
39	39	(5) The purpose of this chapter (which may be referred to as the "community opportunity 17
40	40	to purchase act") is to enhance nonprofit organizations' ability to purchase multi-family residential 18
41	41	buildings, at market prices, within a reasonable period of time and to thereby promote the creation 19
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45	45	and preservation of affordable rental housing. 1
46	46	SECTION 2. Title 34 of the General Laws entitled "PROPERTY" is hereby amended by 2
47	47	adding thereto the following chapter: 3
48	48	CHAPTER 18.3 4
49	49	COMMUNITY OPPORTUNITY TO PURCHASE ACT 5
50	50	34-18.3-1. Definitions. 6
51	51	As used in this chapter: 7
52	52	(1) "Area median income" means the unadjusted area median income published by the U.S. 8
53	53	Department of Housing and Urban Development for the geographic area that includes the state. 9
54	54	(2) "Fee interest" means ownership of real property in fee simple absolute. 10
55	55	(3) "Multi-family residential building" or "building" means any privately-owned real 11
56	56	property in the state improved with five (5) or more residential rental units (whether or not the 12
57	57	property also includes non-residential uses). 13
58	58	(4) "Notice of special restrictions" means an agreement executed by a qualified nonprofit 14
59	59	and recorded against a multi-family residential building purchased by such qualified nonprofit 15
60	60	substantially in the form published by Rhode Island housing. 16
61	61	(5) "Purchase of a multi-family residential building," or "purchase," means to acquire any 17
62	62	interest that is transferred pursuant to the sale of a multi-family residential building. 18
63	63	(6) "Purchaser" means the individual, individuals, entity, or entities engaged or seeking to 19
64	64	engage, in the purchase of a multi-family residential building. 20
65	65	(7) "Qualified nonprofit housing development corporation" means a nonprofit corporation, 21
66	66	which has been approved under 26 U.S.C. § 501(c)(3) as a § 501(c)(3) corporation with the Internal 22
67	67	Revenue Service, and which is organized and operated with one of its principal purposes being to 23
68	68	provide housing for low- and moderate-income persons or a public housing authority. 24
69	69	(8) "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	(9) "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 which is already 29
111	111	income restricted and shall remain income restricted upon transfer. 30
112	112	(10) "Sell," "sale," or "sold" means a transaction for the transfer of real estate from a seller 31
113	113	to a buyer, including, but not limited to, exchanges of real estate between the seller and buyer and 32
114	114	transactions involving the creation of a sales agreement. 33
115	115	(11) "Seller" means the individual, individuals, entity, or entities engaged, or seeking to 34
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119	119	engage, in the sale of a multi-family residential building. 1
120	120	34-18.3-2. Qualified nonprofits. 2
121	121	(a) Annual selection of qualified nonprofits. Rhode Island housing shall establish a process 3
122	122	which allows interested qualified nonprofits to submit for consideration, on an annual basis, their 4
123	123	credentials for participation in this program. Nonprofit organizations shall meet the following 5
124	124	criteria: 6
125	125	(1) The organization is a bona fide nonprofit as evidenced by the fact that it is exempt from 7
126	126	federal income tax under 26 USC § 501(c)(3); 8
127	127	(2) The organization has demonstrated a commitment to the provision of affordable 9
128	128	housing for low- and moderate-income residents, and to preventing the displacement of such 10
129	129	residents; 11
130	130	(3) The organization has demonstrated a commitment to community engagement as 12
131	131	evidenced by relationships with neighborhood-based organizations or tenant counseling 13
132	132	organizations; 14
133	133	(4) The organization has demonstrated the capacity (including, but not limited to, the legal 15
134	134	and financial capacity) to effectively acquire and manage residential real property at multiple 16
135	135	locations in the state; and 17
136	136	(5) A public housing authority having jurisdiction in a municipality in the State of Rhode 18
137	137	Island. 19
138	138	(b) Nonprofit organizations that Rhode Island housing certifies as having met these criteria 20
139	139	shall be known as "qualified nonprofits." An organization's certification as a qualified nonprofit 21
140	140	shall be valid for three (3) years. Rhode Island housing shall solicit new applications for qualified 22
141	141	nonprofit status at least once each calendar year, at which time existing qualified nonprofits shall 23
142	142	be eligible to apply for renewed certification as qualified nonprofits. In the absence of new 24
143	143	information raising doubts about whether the organization qualifies as a qualified nonprofit, an 25
144	144	existing qualified nonprofit's application for renewed certification as a qualified nonprofit shall be 26
145	145	routinely and swiftly granted. 27
146	146	34-18.3-3. Existence and publication of qualified nonprofits list. 28
147	147	Rhode Island housing shall publish on its website, and make available upon request, a list 29
148	148	of qualified nonprofits. In addition to such other information as Rhode Island housing may include, 30
149	149	this list shall include contact information for each qualified nonprofit. This contact information 31
150	150	shall include, but need not be limited to, a mailing address, an email address that the qualified 32
151	151	nonprofit monitors regularly, and a telephone number. 33
152	152	34-18.3-4. Priority for Rhode Island nonprofits. 34
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156	156	Qualified Rhode Island nonprofits shall be given priority over qualified out-of-state non-1
157	157	profits. 2
158	158	34-18.3-5. General provisions - First right to purchase conferred. 3
159	159	(a) This chapter shall be construed to confer upon each qualified nonprofit a first right to 4
160	160	purchase any multi-family residential building which was constructed more than twenty (20) years 5
161	161	prior for sale in the state. This first right to purchase shall consist only of a right of first offer. 6
162	162	(1) Qualified nonprofits shall have the right of first offer for a period of not more than sixty 7
163	163	(60) days; or 8
164	164	(2) If the qualified nonprofit elects to extend the right of first offer to a ninety (90) day 9
165	165	period, it shall make a payment equal to one-half of one percent (0.5%) of the asking price of the 10
166	166	multi-family residential building, which shall be fully creditable should the nonprofit proceed with 11
167	167	purchase, and non-refundable if they do not. 12
168	168	(b) Any person or entity holding property subject to this chapter shall be limited to an 13
169	169	asking price no more than twenty percent (20%) above fair market value as determined by a 14
170	170	licensed appraiser or realtor. 15
171	171	(c) Upon receiving an offer from a qualified nonprofit, the seller shall have no more than 16
172	172	ten (10) days to respond to the offer. 17
173	173	(d) Confidential information protected. Any information obtained from a seller by a 18
174	174	qualified nonprofit under this chapter including, but not limited to, disclosures made and terms and 19
175	175	conditions of an offer of sale made shall be kept confidential to the maximum extent permitted by 20
176	176	law, except that a qualified nonprofits may, if otherwise permitted by law, share such information 21
177	177	with other qualified nonprofits to facilitate qualified nonprofit exercise of the rights conferred by 22
178	178	this chapter. Nothing in this chapter permits or requires the disclosure of information where such 23
179	179	disclosure is otherwise prohibited by law. 24
180	180	34-18.3-6. State owned buildings. 25
181	181	When any state-owned property, either land or buildings, is to be sold, the department of 26
182	182	housing shall be given the right of first offer lasting sixty (60) days to enter into an agreement to 27
183	183	purchase it at the appraised value. The municipality where the property is located shall be given 28
184	184	the right of second offer (lasting another sixty (60) days) to purchase, before the property goes on 29
185	185	the open market. 30
186	186	34-18.3-7. Preexisting rights unaffected. 31
187	187	This chapter shall not be construed to impair any contract, or affect any property interest 32
188	188	held by anyone other than the seller of a multi-family residential building (including, but not limited 33
189	189	to, any interest held under a mortgage, deed of trust, or other security interest; any option to 34
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193	193	purchase: or any right of first offer or right of first refusal), in existence before the effective date of 1
194	194	this chapter. 2
195	195	34-18.3-8. Enforcement - Seller declaration and certification. 3
196	196	(a) Every seller of a multi-family residential building in any city or town shall, within 4
197	197	fifteen (15) days of the sale of that building, submit to Rhode Island housing a signed declaration, 5
198	198	under penalty of perjury, affirming that the sale of that building substantially complied with the 6
199	199	requirements of this chapter. Each such declaration shall include the address of the relevant building 7
200	200	and Rhode Island housing shall publish all such addresses on its website at least once per week. 8
201	201	(b) Failure to file the declaration required by this section shall be an infraction punishable 9
202	202	by a fine not to exceed five thousand dollars ($5,000). 10
203	203	SECTION 3. This act shall take effect upon passage. 11
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210	210	EXPLANATION
211	211	BY THE LEGISLATIVE COUNCIL
212	212	OF
213	213	A N A C T
214	214	RELATING TO PROPERTY -- COMMUNITY OPPORT UNITY TO PURCHASE ACT
215	215	***
216	216	This act would grant a right of first offer to qualified nonprofits for the purchase of certain 1
217	217	multi-family residential properties at market prices, within a reasonable period of time to promote 2
218	218	the creation and preservation of affordable rental housing. 3
219	219	This act would take effect upon passage. 4
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