Chapter 267

2006 -- S 2462 SUBSTITUTE A AS AMENDED

Enacted 07/03/06

A N A C T

RELATING TO AFFORDABLE HOUSING

Introduced By: Senators Metts, Pichardo, Goodwin, Perry, and F Caprio

Date Introduced: February 09, 2006

It is enacted by the General Assembly as follows:

     SECTION 1. Sections 34-45-7 and 34-45-8 of the General Laws in Chapter 34-45

entitled "Preservation of Federally Insured or Assisted Housing" are hereby amended to read as

follows:

34-45-7. Opportunity to purchase. -- No owner shall:

      (1) Sell, lease, or otherwise dispose of, or prepay any obligation secured by, a federally

insured or assisted development in a manner which would result in either:

      (i) A discontinuance of the use of the development as a federally insured or assisted

housing development or a development that was federally insured or assisted within the preceding

two year period, or

      (ii) Cause the termination of any use restrictions which apply to the development, or

      (2) Record a declaration of condominium, pursuant to chapter 36.1 of this title, with

respect to all or any portion of a federally insured or assisted development, or

(3) Terminate any contract subject to the provisions of section 34-45-5 of this chapter

unless he or she shall have first provided each of the persons and entities listed below an

opportunity to purchase the development at a price and upon terms which represent a bona fide

offer to sell, in compliance with the provisions of section 34-45-8. The persons and entities to

whom such an opportunity to purchase shall be provided are:

      (i) The tenant association of the development,

      (ii) The corporation,

      (iii) The housing authority of the city or town in which the development is located, and

      (iv) The municipal government of the city or town in which the development is located.

34-45-8. Offer to sell -- Rights of first refusal. -- (a) At or before the time an owner of

an existing federally insured or assisted development or an owner of a development that was

federally insured or assisted within the preceding two (2) years (1) offers to sell, lease, or

otherwise dispose of a development to any person or entity other than those persons or entities

listed in section 34-45-7, or prepays any obligation secured by a development, in a manner which

would result in either (i) a discontinuance of the use of the development as a federally insured or

assisted housing development, or (ii) cause the termination of any use restrictions which apply to

the development, or (2) records a declaration of condominium, pursuant to chapter 36.1 of this

title, with respect to all or any portion of a federally insured or assisted development, he or she

shall first provide to each person and entity listed in section 34-45-7 a written copy of a bona fide

offer to sell, by registered or certified mail, return receipt requested, and post a copy of the offer

of sale in a conspicuous place in common areas of the development.

(b) Not less than one year prior to terminating any contract subject to section 34-45-5 of

this chapter an owner shall first provide to each person and entity listed in section 34-45-7 a

written copy of a bona fide offer to sell, by registered or certified mail, return receipt requested,

and post a copy of the offer of sale in a conspicuous place in common areas of the development.

(b)(c) An offer of sale made pursuant to subsections (a) and (b) must contain, at a

minimum:

      (1) The essential terms of the sale, which shall include, but which need not be limited to:

      (i) The sale price, which shall be no higher than the development's fair market value,

said value to be based on its higher and best use, without affordability restrictions, as determined

by the average of two (2) independent appraisals performed by two (2) appraisers qualified to

perform multi-family appraisals, with one of said appraisers to be selected from a list of

appraisers developed by the corporation;

      (ii) The terms of seller financing, if any, including the amount, the interest rate, and the

amortization rate thereof;

      (iii) The terms of assumable financing, if any, including the amount, the interest rate, and

the amortization rate thereof; and

      (iv) Proposed improvements to the property to be made by the owner in connection with

the sale, or other economic concessions by the owner in connection with the sale, if any.

      (2) A statement that each of the persons listed in section 34-45-7 has the right to

purchase the development under this chapter, in the order and according to the priorities

established by subsection (c) ;

      (3) A summary of tenants' rights and sources of technical assistance as contained in a

form prescribed by the department. If no such form has been prescribed by the department, the

owner will be deemed in compliance with this paragraph if the statement refers to this chapter;

      (4) A statement that the owner will make available to each of the persons listed in

section 34-45-7 a floor plan of the development and an itemized list of monthly operating

expenses, utility consumption rates, and capital expenditures within each of the two (2) preceding

calendar years, within seven (7) days after receiving a request therefor; and

      (5) A statement that the owner will make available to each of the persons listed in

section 34-45-7 the most recent rent roll, a list of tenants, a list of vacant units, and a statement of

the vacancy rate at the development for each of the two (2) preceding calendar years, within

seven (7) days after receiving a request therefor.

(c)(d) If a person or entity other than the persons and entities listed in section 34-45-7

offers to purchase, lease, or otherwise acquire a federally insured or assisted development in a

manner which would result in either (1) a discontinuance of the use of the development as a

federally insured or assisted housing development, or (2) cause the termination of any use

restrictions which apply to the development, the owner of the development shall, before accepting

the third-party offer, provide to each person and entity listed in section 34-45-7, by registered

mail, return receipt requested, (i) written notice of the pendency and essential terms of the offer,

and (ii) a bona fide offer to sell the development to those persons and entities listed in section 34-

45-7 upon the same terms and conditions of the third-party offer. An offer of sale made pursuant

to this subsection must contain, at a minimum, all of the information required of an offer of sale

made under subsections (a) and (b). The right of first refusal created under this subsection shall

not be deemed to allow any of the persons or entities listed in section 34-45-7 to vary the terms of

any third-party offer made to an owner or to make a counter offer to the owner.

(d)(e) The rights of first refusal created under this section are created and conferred in

the following order and in accordance with the following priorities: (1) the tenant association of

the development, first priority; (2) the corporation, second priority; (3) the housing authority of

the city or town in which the development is located, third priority; and (4) the municipal

government of the city or town in which the development is located, fourth priority.

(e)(f) No right of first refusal shall apply to a government taking by eminent domain or

negotiated purchase; a forced sale pursuant to a foreclosure; a transfer by gift, devise, or

operation of law; or a sale to a person who would be included within the table of descent and

distribution if there were to be a death intestate of an owner.

     SECTION 2. This act shall take effect upon passage.

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LC01904/SUB A

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