HOUSE BILL 31

51st legislature - STATE OF NEW MEXICO - second session, 2014

INTRODUCED BY

Roberto "Bobby" J. Gonzales and Lee S. Cotter

ENDORSED BY THE MORTGAGE FINANCE AUTHORITY ACT

OVERSIGHT COMMITTEE

AN ACT

RELATING TO HOUSING; AMENDING THE AFFORDABLE HOUSING ACT BY

PROVIDING TERMS FOR THE TIMELY SALE OF FORECLOSED OR FAILED AFFORDABLE HOUSING PROJECTS WITHOUT RETAINING THE LONG-TERM AFFORDABILITY RESTRICTIONS, PROVISIONS FOR ENFORCEMENT OF THE ACT AND PENALTIES FOR VIOLATIONS OF THE ACT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. Section 6-27-1 NMSA 1978 (being Laws 2004, Chapter 104, Section 1) is amended to read:

     "6-27-1. SHORT TITLE.--[This act] Chapter 6, Article 27 NMSA 1978 may be cited as the "Affordable Housing Act"."

     SECTION 2. A new section of the Affordable Housing Act is

enacted to read:

     "[NEW MATERIAL] INVESTIGATION OF ACT VIOLATIONS--

PENALTIES--REMEDIES.--

          A. The attorney general shall investigate an

alleged violation of the Affordable Housing Act reported by the

authority. As used in this section, "person" means an

individual, including a municipal or county government employee

or elected official; or a corporate entity, including any

organization formed under state law to carry out business or

other activities.

          B. If the attorney general has reasonable belief

that a person might be in possession, custody or control of an

original or copy of a document or recording, including a record, report, memorandum, paper, communication, tabulation, map, chart, photograph, mechanical transcription or other tangible document or recording that the attorney general believes to be relevant to the subject matter of an investigation of a probable violation of the Affordable Housing Act, the attorney general may, prior to the institution of a civil proceeding, execute in writing and cause to be served upon the person a civil investigative demand requiring the person to produce for inspection or copying the document or recording. The demand by the attorney general shall not be a matter of public record and shall not be published by the attorney general except by order of the court. 

          C. If the attorney general has reasonable belief

that a person has violated a provision of the Affordable

Housing Act and that instituting a proceeding against that

person would be in the public interest, the attorney general may bring a civil action on behalf of the state alleging a

violation of the Affordable Housing Act. The action may be

brought in the district court of the county in which the person

alleged to have violated that act resides or in which the

person's principal place of business is located. The attorney

general shall not be required to post bond when seeking a

temporary or permanent injunction in the civil action.

          D. The attorney general may, in addition to or as

an alternative to pursuing a civil action, as provided in this

section, pursue criminal charges against a person for an

alleged violation of the Affordable Housing Act under the

applicable provisions of the Criminal Code. Venue for any

criminal action shall be in the judicial district where

the violation occurred.

          E. In a civil action brought under this section for

an alleged violation of the Affordable Housing Act, if a court

finds that a person willfully committed an act in violation of

the Affordable Housing Act, the attorney general may seek to

recover a civil penalty not exceeding the amount of five

thousand dollars ($5,000) per violation, in addition to any

equitable relief imposed by the court."

     SECTION 3. Section 6-27-8 NMSA 1978 (being Laws 2004, Chapter 104, Section 8, as amended) is amended to read:

     "6-27-8. PROVISIONS TO ENSURE SUCCESSFUL COMPLETION OF AFFORDABLE HOUSING PROJECTS--[INVESTIGATION] SALE AFTER FORECLOSURE--RELEASE OF AFFORDABILITY RESTRICTION.--

          A. State, county and municipal housing assistance grants pursuant to the Affordable Housing Act shall be applied for and awarded to qualifying grantees pursuant to the rules promulgated by the authority subject to the requirements of that act.

          B. The authority shall adopt rules covering:

                (1) procedures to ensure that qualifying grantees meet the requirements of the Affordable Housing Act and rules promulgated pursuant to that act both at the time of the award and through the term of the grant;

                (2) establishment of an application and award timetable for housing assistance grants to permit the selection of the potential qualifying grantees prior to January of the year in which the grants would be made;

                (3) contents of the application, including an independent evaluation of the:

                     (a) financial and management stability of the applicant;

                     (b) demonstrated commitment of the applicant to the community;

                     (c) cost-benefit analysis of the project proposed by the applicant;

                     (d) benefits to the community of a proposed project;

                     (e) type or amount of assistance to be provided;

                     (f) scope of the affordable housing project;

                     (g) substantive or matching contribution by the applicant to the proposed project; and

                     (h) performance schedule for the qualifying grantee with performance criteria;

                (4) a requirement for long-term affordability of a state, county or municipal project so that a project cannot be sold shortly after completion and taken out of the affordable housing market [to ensure a quick profit for the qualifying grantee];

                (5) a requirement that a grant for a state or local project must impose a contractual obligation on the qualifying grantee that the housing units in a state or local project pursuant to the Affordable Housing Act be occupied by low- or moderate-income households;

                (6) provisions for adequate security [against] to minimize the loss of public funds or property in the event that a qualifying grantee defaults on a contractual obligation for the project or abandons or otherwise fails to complete a project;

                (7) a requirement for review and approval of a housing grant project budget by the grantor before any expenditure of grant funds or transfer of granted property;

                (8) a requirement that, unless the period is extended for good cause shown, the authority shall act on an application within forty-five days of the date of receipt of an application that the authority deems to be complete and, if not acted upon, the application shall be deemed approved;

                (9) a requirement that a condition of grant approval be proof of compliance with all applicable state and local laws, rules and ordinances;

                (10) provisions defining "low- and moderate-

income" and setting out requirements for verification of income levels;

                (11) a requirement that a county or municipality that makes a housing assistance grant shall have an existing valid affordable housing plan or housing elements contained in its general plan; and

                (12) a requirement that the governmental entity enter into a contract with a qualifying grantee consistent with the Affordable Housing Act, which contract shall include remedies and default provisions in the event of the unsatisfactory performance by the qualifying grantee.

          C. In addition to the rulemaking duties provided in

Subsection B of this section, the authority shall adopt rules

covering provisions necessary to ensure the timely sale of an

affordable housing project as provided in Paragraph (6) of Subsection B of this section, including the land or buildings:

                (1) that is subject to a long-term affordability contract executed by a governmental entity pursuant to the Affordable Housing Act but that is determined by the authority not to be marketable for a price that would sufficiently recover the public funds invested in the project;

                (2) in the event that the qualifying grantee defaults on a contractual obligation or if the project is abandoned by the qualifying grantee or otherwise fails; and

                (3) that has a title that is subsequently

transferred by or to the contracting governmental entity

through:

                     (a) a foreclosure sale;

                     (b) a transfer of title by deed in lieu

of foreclosure; or

                     (c) any other manner.

          D. The rules adopted by the authority pursuant to

Subsection C of this section shall require that a governmental

entity shall exercise reasonable efforts to ensure that all

proceeds from the sale of a property pursuant to Subsection C

of this section are used solely for purposes pursuant to the

Affordable Housing Act and that the qualifying grantee that held title to the property shall not benefit from the sale of the property or from the transfer of the affordable housing

project. The rules shall provide the terms for:

                (1) the sale of the property at fair market

value; and

                (2) the removal of the contractual obligation requiring long-term occupancy of the property by low-income or moderate-income households.

          [C.] E. In addition to the rulemaking mandated in [Subsection B] Subsections B, C and D of this section, the authority may adopt additional rules to carry out the purposes of the Affordable Housing Act. Rulemaking procedures pursuant to the Affordable Housing Act shall:

                (1) provide a public hearing in accordance with the state Administrative Procedures Act; and

                (2) require concurrence in a rule having

application to local government by both the New Mexico municipal league and the New Mexico association of counties.

          [D. The attorney general shall investigate any

alleged violation of the Affordable Housing Act as reported

by the authority.]"

     SECTION 4. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2014.

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