AN ACT CONCERNING HOUSING PRESERVATION.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective July 1, 2006, and applicable to any termination of subsidy for the rental housing development occurring on or after July 1, 2007) As used in sections 2 and 3 of this act:

(1) "Development" means a rental housing development that receives government assistance under any covered program, including any property whose mortgage is held by the United States Department of Housing and Urban Development and was formerly insured under any covered program but excluding the foreclosure of a development by an applicable agency.

(2) "Covered program" means:

(A) New construction, substantial rehabilitation, moderate rehabilitation, property disposition and loan management set-aside programs or any other program providing project-based assistance under Section 8 of the United States Housing Act of 1937, as from time to time amended;

(B) The Below Market Interest Rate Program under Section 221(d)(3) of the National Housing Act, 12 USC 1715l(d)(3), (5);

(C) Section 236 of the National Housing Act, 12 USC 1715z-1;

(D) Section 202 of the Housing Act of 1959, 12 USC 1701q;

(E) Programs for rent supplement assistance under Section 101 of the Housing and Urban Development Act of 1965, 12 USC 1701s;

(F) Programs under Section 515 of the Housing Act of 1949, 42 USC 1485;

(G) Programs under Section 521 of the Housing Act of 1949, 42 USC 1490a; or

(H) The Low Income Housing Tax Credit program, 26 USC 42.

(3) "Applicable agency" means any governmental agency that administers a covered program.

(4) "Assisted unit" means a dwelling unit in a development, including a cooperative, that is receiving assistance pursuant to a covered program.

(5) "Owner" means an individual, partnership, corporation, association, joint venture or business entity that owns or controls a development or any successor in interest of such individual, partnership, corporation, association, joint venture or business entity.

(6) "Tenant" means a tenant, subtenant, lessee, sublessee or other person entitled to possession, occupancy or benefits of a rental unit within the development.

(7) "Tenant association" means an association, organization or other entity that represents tenants in a development, including, but not limited to, an association that is incorporated as a nonprofit corporation or a cooperative.

(8) "Cooperative" shall have the same meaning as in subdivision (10) of section 47-202 of the general statutes. For purposes of sections 2 and 3 of this act, a cooperative shall be deemed to be a rental housing development, and the terms "rent" and "rental" shall include occupancy payments made by a member of a cooperative, and the term "tenants" shall include residents of a cooperative.

(9) "Low and moderate income household" means any household with an adjusted gross income that satisfies the occupancy requirements for income-restricted units in the development existing before termination of subsidy for the development.

(10) "Termination of subsidy for the development" or "termination of subsidy" means: (A) Any sale, transfer of title, lease or prepayment of a loan that was made pursuant to a covered program with respect to a development that would result in the cessation or reduction of the financial assistance or regulatory requirements designed to make the assisted unit affordable to low and moderate income households; (B) an owner's decision not to extend or renew its contractual participation in a covered program, either at or prior to the scheduled date of the expiration of the contract; or (C) the expiration of restrictions for a development that may result in an increase in tenant rent or a change in the form of the subsidy from project-based to tenant-based.

(11) "Affordability preservation transaction" means a transaction described in section 3 of this act.

Sec. 2. (NEW) (Effective July 1, 2006, and applicable to any termination of subsidy for the rental housing development occurring on or after July 1, 2007) On and after July 1, 2006, any owner of a development shall, not later than one year before the termination of subsidy for the development, provide written notice of the owner's intent to terminate the subsidy. Such notice shall be sent by first class mail or hand-delivered to (1) each tenant residing in the development, (2) each tenant association representing tenants in the development, (3) the executive director of any housing authority of the municipality in which the development is located, (4) the chief executive officer of the municipality in which the development is located, (5) the executive director of the Connecticut Housing Finance Authority, (6) the Commissioner of Economic and Community Development, and (7) the executive director of the Connecticut Housing Coalition. The notice shall be posted in a conspicuous common area of the development accessible to the tenants. A copy of the notice shall be filed in the land records of the municipality in which the development is located.

Sec. 3. (NEW) (Effective July 1, 2006, and applicable to any termination of subsidy for the development occurring on or after July 1, 2007) The provisions of sections 1 to 3, inclusive, of this act shall not apply to an affordability preservation transaction undertaken by the owner in connection with the refinancing of such a development's governmental program mortgage, or undertaken by a buyer in connection with the sale, transfer or other disposition of such a development by contract or agreement with a proposed new mortgage lender or equity investor, or with the United States Department of Housing and Urban Development, the Connecticut Housing Finance Authority, the Department of Economic and Community Development or any other governmental agency or body, provided the contract or agreement requires the owner or buyer and owner's or buyer's respective successors and assigns to comply with all of the following affordability preservation criteria contained in a regulatory agreement that has been recorded against the property:

(1) To maintain the development as low and moderate income housing on terms at least as advantageous to existing and future tenants as the terms required by the affected development's governmental program in effect before the date of notice required by section 2 of this act for a period of time at least as long as what the remaining term of the governmental program would have been but for the termination of subsidy or for a period of time not less than twenty years after the date of the termination of subsidy, whichever is greater;

(2) To maintain at least as many dwelling units as low and moderate income housing as were required to be affordable to such households under the governmental program in effect prior to the termination of subsidy for a period of time not less than twenty years after the date of the termination of subsidy; and

(3) To maintain as rental subsidy program units such number of units as were required to be subsidy program units under the contract for the rental subsidy program in effect prior to the termination of subsidy for a period of time not less than twenty years after the date of the termination of subsidy, subject to the existence of a rental subsidy program.

Sec. 4. Section 8-68c of the general statutes is repealed. (Effective July 1, 2006, and applicable to any termination of subsidy for the development occurring on or after July 1, 2007)