2025 -- S 0202
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LC000182
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S T A T E O F R H O D E I S L A N D
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2025
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A N A C T
RELATING TO PROPERTY -- COMMUNITY OPPORTUNITY TO PURCH ASE ACT
Introduced By: Senators Kallman, DiMario, Lauria, Mack, Quezada, Vargas, Gallo, and
Acosta
Date Introduced: February 07, 2025
Referred To: Senate Housing & Municipal Government
It is enacted by the General Assembly as follows:
SECTION 1. The general assembly hereby finds that: 1
(1) The state faces a severe and continuing housing crisis. Many state residents are unable 2
to obtain or retain affordable housing. 3
(2) This crisis has profoundly negative effects on the state. It causes dislocation, which 4
frays the social ties that bind our neighborhoods and communities together. It forces vulnerable 5
residents to leave their home, the state, for new communities where they are strangers. And it 6
contributes to homelessness, which is itself a severe and continuing crisis in the state. 7
(3) The state's housing crisis is caused, in large part, by a shortage of affordable rental 8
housing. The creation and preservation of such housing is therefore of paramount public concern. 9
(4) One obstacle to the creation and preservation of affordable rental housing is rapid 10
turnover in the state's real estate market. Nonprofit organizations seeking to create and preserve 11
affordable housing may be willing and able to pay market prices to purchase residential buildings 12
for sale, but nevertheless find themselves unable to purchase such buildings before they leave the 13
market. Nonprofit organizations serving the broader public interest must often move more 14
deliberately and borrow purchase money from non-traditional lenders in such real estate 15
transactions than private entities concerned solely with profit. 16
(5) The purpose of this chapter (which may be referred to as the "community opportunity 17
to purchase act") is to enhance nonprofit organizations' ability to purchase multi-family residential 18
buildings, at market prices, within a reasonable period of time and to thereby promote the creation 19
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and preservation of affordable rental housing. 1
SECTION 2. Title 34 of the General Laws entitled "PROPERTY" is hereby amended by 2
adding thereto the following chapter: 3
CHAPTER 18.3 4
COMMUNITY OPPORTUNITY TO PURCHASE ACT 5
34-18.3-1. Definitions. 6
As used in this chapter: 7
(1) "Area median income" means the unadjusted area median income published by the U.S. 8
Department of Housing and Urban Development for the geographic area that includes the state. 9
(2) "Fee interest" means ownership of real property in fee simple absolute. 10
(3) "Multi-family residential building" or "building" means any privately-owned real 11
property in the state improved with five (5) or more residential rental units (whether or not the 12
property also includes non-residential uses). 13
(4) "Notice of special restrictions" means an agreement executed by a qualified nonprofit 14
and recorded against a multi-family residential building purchased by such qualified nonprofit 15
substantially in the form published by Rhode Island housing. 16
(5) "Purchase of a multi-family residential building," or "purchase," means to acquire any 17
interest that is transferred pursuant to the sale of a multi-family residential building. 18
(6) "Purchaser" means the individual, individuals, entity, or entities engaged or seeking to 19
engage, in the purchase of a multi-family residential building. 20
(7) "Qualified nonprofit housing development corporation" means a nonprofit corporation, 21
which has been approved under 26 U.S.C. § 501(c)(3) as a § 501(c)(3) corporation with the Internal 22
Revenue Service, and which is organized and operated with one of its principal purposes being to 23
provide housing for low- and moderate-income persons or a public housing authority. 24
(8) "Rhode Island housing" means the Rhode Island housing and mortgage finance 25
corporation ("RIHMFC") created pursuant to chapter 55 of title 42. 26
(9) "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 which is already 29
income restricted and shall remain income restricted upon transfer. 30
(10) "Sell," "sale," or "sold" means a transaction for the transfer of real estate from a seller 31
to a buyer, including, but not limited to, exchanges of real estate between the seller and buyer and 32
transactions involving the creation of a sales agreement. 33
(11) "Seller" means the individual, individuals, entity, or entities engaged, or seeking to 34
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engage, in the sale of a multi-family residential building. 1
34-18.3-2. Qualified nonprofits. 2
(a) Annual selection of qualified nonprofits. Rhode Island housing shall establish a process 3
which allows interested qualified nonprofits to submit for consideration, on an annual basis, their 4
credentials for participation in this program. Nonprofit organizations shall meet the following 5
criteria: 6
(1) The organization is a bona fide nonprofit as evidenced by the fact that it is exempt from 7
federal income tax under 26 USC § 501(c)(3); 8
(2) The organization has demonstrated a commitment to the provision of affordable 9
housing for low- and moderate-income residents, and to preventing the displacement of such 10
residents; 11
(3) The organization has demonstrated a commitment to community engagement as 12
evidenced by relationships with neighborhood-based organizations or tenant counseling 13
organizations; 14
(4) The organization has demonstrated the capacity (including, but not limited to, the legal 15
and financial capacity) to effectively acquire and manage residential real property at multiple 16
locations in the state; and 17
(5) A public housing authority having jurisdiction in a municipality in the State of Rhode 18
Island. 19
(b) Nonprofit organizations that Rhode Island housing certifies as having met these criteria 20
shall be known as "qualified nonprofits." An organization's certification as a qualified nonprofit 21
shall be valid for three (3) years. Rhode Island housing shall solicit new applications for qualified 22
nonprofit status at least once each calendar year, at which time existing qualified nonprofits shall 23
be eligible to apply for renewed certification as qualified nonprofits. In the absence of new 24
information raising doubts about whether the organization qualifies as a qualified nonprofit, an 25
existing qualified nonprofit's application for renewed certification as a qualified nonprofit shall be 26
routinely and swiftly granted. 27
34-18.3-3. Existence and publication of qualified nonprofits list. 28
Rhode Island housing shall publish on its website, and make available upon request, a list 29
of qualified nonprofits. In addition to such other information as Rhode Island housing may include, 30
this list shall include contact information for each qualified nonprofit. This contact information 31
shall include, but need not be limited to, a mailing address, an email address that the qualified 32
nonprofit monitors regularly, and a telephone number. 33
34-18.3-4. Priority for Rhode Island nonprofits. 34
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Qualified Rhode Island nonprofits shall be given priority over qualified out-of-state non-1
profits. 2
34-18.3-5. General provisions - First right to purchase conferred. 3
(a) This chapter shall be construed to confer upon each qualified nonprofit a first right to 4
purchase any multi-family residential building which was constructed more than twenty (20) years 5
prior for sale in the state. This first right to purchase shall consist only of a right of first offer. 6
(1) Qualified nonprofits shall have the right of first offer for a period of not more than sixty 7
(60) days; or 8
(2) If the qualified nonprofit elects to extend the right of first offer to a ninety (90) day 9
period, it shall make a payment equal to one-half of one percent (0.5%) of the asking price of the 10
multi-family residential building, which shall be fully creditable should the nonprofit proceed with 11
purchase, and non-refundable if they do not. 12
(b) Any person or entity holding property subject to this chapter shall be limited to an 13
asking price no more than twenty percent (20%) above fair market value as determined by a 14
licensed appraiser or realtor. 15
(c) Upon receiving an offer from a qualified nonprofit, the seller shall have no more than 16
ten (10) days to respond to the offer. 17
(d) Confidential information protected. Any information obtained from a seller by a 18
qualified nonprofit under this chapter including, but not limited to, disclosures made and terms and 19
conditions of an offer of sale made shall be kept confidential to the maximum extent permitted by 20
law, except that a qualified nonprofits may, if otherwise permitted by law, share such information 21
with other qualified nonprofits to facilitate qualified nonprofit exercise of the rights conferred by 22
this chapter. Nothing in this chapter permits or requires the disclosure of information where such 23
disclosure is otherwise prohibited by law. 24
34-18.3-6. State owned buildings. 25
When any state-owned property, either land or buildings, is to be sold, the department of 26
housing shall be given the right of first offer lasting sixty (60) days to enter into an agreement to 27
purchase it at the appraised value. The municipality where the property is located shall be given 28
the right of second offer (lasting another sixty (60) days) to purchase, before the property goes on 29
the open market. 30
34-18.3-7. Preexisting rights unaffected. 31
This chapter shall not be construed to impair any contract, or affect any property interest 32
held by anyone other than the seller of a multi-family residential building (including, but not limited 33
to, any interest held under a mortgage, deed of trust, or other security interest; any option to 34
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purchase: or any right of first offer or right of first refusal), in existence before the effective date of 1
this chapter. 2
34-18.3-8. Enforcement - Seller declaration and certification. 3
(a) Every seller of a multi-family residential building in any city or town shall, within 4
fifteen (15) days of the sale of that building, submit to Rhode Island housing a signed declaration, 5
under penalty of perjury, affirming that the sale of that building substantially complied with the 6
requirements of this chapter. Each such declaration shall include the address of the relevant building 7
and Rhode Island housing shall publish all such addresses on its website at least once per week. 8
(b) Failure to file the declaration required by this section shall be an infraction punishable 9
by a fine not to exceed five thousand dollars ($5,000). 10
SECTION 3. This act shall take effect upon passage. 11
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO PROPERTY -- COMMUNITY OPPORT UNITY TO PURCHASE ACT
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This act would grant a right of first offer 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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LC000182
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