81-1237.

Terms, defined.

For purposes of the Middle Income Workforce Housing Investment Act:

(1) Department means the Department of Economic Development;

(2) Director means the Director of Economic Development;

(3) Eligible activities of a workforce housing investment fund means:

(a) New construction of owner-occupied or rent-to-own housing in a neighborhood and community with a demonstrated need for housing that is affordable and attractive to first-time homebuyers, middle-income families, and the emerging workforce;

(b) Substantial repair or rehabilitation of dilapidated housing stock; or

(c) Upper-story housing development for occupation by a homeowner or rent-to-own tenant;

(4) HOME funds means funds awarded as formula grants under the HOME Investment Partnerships Program administered by the United States Department of Housing and Urban Development;

(5) Homeownership incentive reserve account means an interest-bearing, deposit-insured account maintained by the owner of a housing unit for future use by the unit's tenant to purchase a home;

(6) Matching funds means dollars contributed by individuals, businesses, foundations, local and regional political subdivisions, or other nonprofit organizations to a workforce housing investment fund administered by a nonprofit development organization;

(7) Nonprofit development organization means a regional or statewide nonprofit development organization approved by the director;

(8) Owner means one or more persons, jointly or severally, in whom is vested all or part of the legal title to, or beneficial ownership of, the subject housing unit;

(9) Project reserve account means an interest-bearing, deposit-insured account maintained by the owner of a housing unit for unexpected expenses, routine maintenance, and other operational costs associated with managing rental properties;

(10) Qualified activities include purchase guarantees, loan guarantees, loan participations, and other credit enhancements related to eligible activities of the workforce housing investment fund;

(11) Qualified investment means a cash investment in a workforce housing investment fund administered by a nonprofit development organization;

(12) Rent-to-own housing means housing units that:

(a) Are located within a development of single-family housing, duplexes, townhouses, or multifamily housing in which there are no more than ten units on a parcel of land; and

(b) Meet the following requirements until the housing unit is owner occupied:

(i) The housing unit is occupied by a tenant as the tenant's primary residence;

(ii) The tenant does not own a home or other residential real estate;

(iii) The lease for the housing unit provides that:

(A) Not less than fifty dollars of the tenant's monthly rent shall be set aside in a homeownership incentive reserve account prior to any cash flow distributions to the owner. Such homeownership incentive reserve account shall be maintained by the owner in an interest-bearing account as long as the tenant resides in the unit. When the lease ends, the owner shall liquidate the homeownership incentive reserve account and distribute the money to the tenant for downpayment and closing costs on the purchase of a home that will be the tenant's new primary residence. If the tenant does not purchase a home at the end of the lease, the money in the homeownership incentive reserve account shall be transferred to a project reserve account; and

(B) The tenant may end the lease without penalty if the tenant provides the owner with thirty days' written notice and purchases a home that will be the tenant's new primary residence; and

(iv) The housing unit is the subject of a legally binding agreement granting the tenant the option to purchase the unit from the owner at fair market value not less than one year after the lease begins. Such agreement shall give the tenant the ability to apply homeownership incentive reserve account funds to downpayment and closing costs;

(13) Urban community means any area that is:

(a)(i) In a county with a population greater than one hundred thousand inhabitants as determined by the most recent federal decennial census; and

(ii) Within or adjacent to a qualified census tract as described in 26 U.S.C. 42(d)(5)(B), as such section existed on January 1, 2022;

(b) Within a city of the primary class or within a county in which a city of the primary class is located; or

(c) In a county with a population greater than one hundred thousand inhabitants, as determined by the most recent federal decennial census, that does not contain a city of the metropolitan class or a city of the primary class;

(14) Workforce housing means:

(a) Owner-occupied or rent-to-own housing units that have an after-construction appraised value of at least one hundred twenty-five thousand dollars but not more than three hundred thirty thousand dollars. For purposes of this subdivision, housing unit after-construction appraised value shall be updated annually by the department based upon the most recent increase or decrease in the Producer Price Index for all commodities, published by the United States Department of Labor, Bureau of Labor Statistics;

(b) Owner-occupied or rent-to-own housing that meets the following requirements:

(i) The cost to substantially rehabilitate such housing exceeds fifty percent of its before-construction assessed value; and

(ii) The after-construction appraised value of the building alone is at least one hundred twenty-five thousand dollars but not more than two hundred seventy-five thousand dollars. For purposes of this subdivision, housing unit after-construction appraised value shall be updated annually by the department based upon the most recent increase or decrease in the Producer Price Index for all commodities, published by the United States Department of Labor, Bureau of Labor Statistics;

(c) Upper-story housing for occupation by a homeowner or rent-to-own tenant; and

(d) Housing units that do not receive federal or state low-income housing tax credits, community development block grants, HOME funds, or funds from the Affordable Housing Trust Fund. Notwithstanding the foregoing, the department shall not restrict the construction of housing units on land parcels prepared using funds from the sources described in this subdivision and shall not restrict the sale of housing units to homebuyers that receive homebuyer assistance funds from the sources described in this subdivision; and

(15) Workforce housing investment fund means a fund that has been created by a nonprofit development organization and certified by the director to encourage development of workforce housing in urban communities.