AN ACT relating to affordable housing programs established by local governments.

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AN ACT relating to affordable housing programs established by local governments. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
SECTION 1. A NEW SECTION OF KRS CHAPTER 65 IS CREATED TO 3
READ AS FOLLOWS: 4
(1) As used in this section: 5
(a) "Affordable housing" means a residential dwelling unit which is reserved 6
via a deed restriction for a low-income household; 7
(b) "Applicant" means one (1) or more persons or entities that apply to a local 8
government for funds from the program established under this section; 9
(c) "Local government" means a city, county, consolidated local government, 10
urban-county government, charter county government, or unified local 11
government that establishes a program under this section; 12
(d) "Low-income household" means an individual or family whose income 13
does not exceed eighty percent (80%) of the median income for the area as 14
set out by the United States Department of Housing and Urban 15
Development; and 16
(e) "Program" means a revolving loan program fund established under this 17
section. 18
(2) A local government may establish a revolving loan program fund by enacting an 19
ordinance. The ordinance shall state the: 20
(a) Amount that the local government will initially place in the fund; 21
(b) Terms of any loans that the local government will issue as part of the 22
program; 23
(c) Methods by which the local government will secure repayment of any loans 24
issued under the program aside from those set out in this section; 25
(d) Process by which applicants may apply to the local government for program 26
funds; and 27
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(e) Criteria the local government will use to select applicants to be issued loans 1
from the program. 2
(3) A local government may issue bonds, notes, or other debt obligations for the 3
purpose of funding a revolving loan program fund. The amounts in the fund may 4
be used to: 5
(a) Issue loans to developers for the purpose of developing affordable housing 6
projects; 7
(b) Issue loans to a low -income household for the purpose of repairing or 8
renovating a primary residence; 9
(c) Defray administrative expenses, including overhead costs associated with 10
operating the program, which shall not exceed one percent (1%) of any 11
revenue placed in the fund; and 12
(d) Refinance the bonds, notes, or obligations consistent with applicable law. 13
(4) A local government shall use revenue collected f rom the repayment of loans 14
issued pursuant to subsection (3) of this section, any interest earned and any fees 15
collected for the payment of any bond, note, or other obligation issued pursuant 16
to this section. 17
(5) The maximum term of any bond, note, or othe r debt obligation issued under this 18
section shall not exceed thirty (30) years from the date of first issuance. 19
(6) If an applicant fails to repay a loan, the local government may assess additional 20
interest of one percent (1%) per month, and a penalty of o ne percent (1%) per 21
month may be added to any outstanding amount owed by the applicant. 22
(7) A loan issued from the fund, and any interest accruing on the loan, shall 23
constitute a lien on the property for which a loan has been issued. The lien shall 24
be supe rior to a lien of any trust deed, mortgage, mechanic's lien, or other 25
encumbrance, but shall not be superior to any lien for the payment of taxes or a 26
lien possessed under KRS 65.8835. Amounts collected by a local government 27
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shall not be allocated to the p ayment of a loan until all taxes, penalties, and 1
interest relating to ad valorem taxes imposed by any governmental entity have 2
been paid in full. 3
(8) If any loan is or becomes delinquent and the property subject to the loan has been 4
sold to the local gover nment as a result of the delinquency, redemption of that 5
property is allowed upon payment, not later than one (1) year after the date of 6
sale, of the full amount of any outstanding loan amounts, plus interest and 7
penalties. 8