Administrative Rules of the State of Montana

BEFORE THE DEPARTMENT OF COMMERCE

OF THE STATE OF MONTANA

In the matter of the adoption of New Rules I through VII pertaining to the administration of the Coal Trust Multifamily Homes (CTMH) Program

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NOTICE OF PUBLIC HEARING ON PROPOSED ADOPTION

TO: All Concerned Persons

1. On August 15, 2019, at 10:00 a.m., the Department of Commerce will hold a public hearing in Room 268 of the Park Avenue Building at 301 South Park Avenue, in Helena, Montana, to consider the proposed adoption of the above-stated rules.

2. The Department of Commerce will make reasonable accommodations for persons with disabilities who wish to participate in this rulemaking process or need an alternative accessible format of this notice. If you require an accommodation, contact the Department of Commerce no later than 5:00 p.m., August 13, 2019, to advise us of the nature of the accommodation that you need. Please contact Bonnie Martello, Department of Commerce, 301 South Park Avenue, P.O. Box 200501, Helena, Montana 59620-0523; telephone (406) 841-2596; TDD 841-2702; fax (406) 841-2771; or e-mail [email protected].

3. The rules as proposed to be adopted provide as follows:

NEW RULE I PURPOSE OF REGULATIONS (1) These rules are enacted by the board to provide explanation and guidance for loans from the coal trust account authorized by 17-6-308(6), MCA, and Title 90, chapter 6, part 1, MCA, pursuant to the criteria and procedures described in [NEW RULES III through VII].

AUTH: HB 16 of the 2019 Legislative session

IMP: HB 16 of the 2019 Legislative session

NEW RULE II DEFINITIONS When used in these rules, unless the context clearly requires a different meaning:

(1) "Application" means the Montana Board of Housing Uniform Application, Loan Supplement, or any more current application forms published by the board, a copy of which may be obtained by contacting the board by mail at P.O. Box 200528, Helena, Montana 59620-0528, by telephone at (406) 841-2840, or at the board's web site www.housing.mt.gov.

(2) "Board" means the Montana Board of Housing created by 2-15-1814, MCA.

(3) "CTMH" means the Coal Trust Multifamily Homes program authorized by 17-6-308(6), MCA, and Title 90, chapter 6, part 1, MCA.

(4) "Low-income" means households whose incomes do not exceed 80% of the median income in the area as determined by the US Department of Housing and Urban Development with adjustments for smaller and larger families.

(5) "Moderate-income" means households whose incomes are between 81% and 95% of the median income for the area as determined by the US Department of Housing and Urban Development with adjustments for smaller and larger families.

(6) "Multifamily rental housing project" means a project that is two or more rental units.

(7) "Total development cost" means all costs shown in the application on the Uses of Funds line "Total Projects Costs without Grant Admin." Total project cost does not include grant administration costs.

AUTH: HB 16 of the 2019 Legislative session

IMP: HB 16 of the 2019 Legislative session

NEW RULE III CTMH LOAN ELIGIBLE LOAN ACTIVITIES (1) The board may make a CTMH loan to meet the basic housing needs of low-income or moderate-income households and for the following purposes:

(a) development of multifamily rental housing projects;

(b) acquisition and/or rehabilitation of existing multifamily rental housing projects for the purpose of preservation of or conversion to housing for low-income or moderate-income households; or

(c) acquisition of land for multifamily rental housing projects including land trusts and for mobile or manufactured homes.

(2) Property funded with a CTMH is subject to property taxes.

AUTH: HB 16 of the 2019 Legislative session

IMP: HB 16 of the 2019 Legislative session

NEW RULE IV CTMH LOAN APPLICANT ELIGIBILITY (1) Organizations eligible for CTMH loans are agencies or programs of state government, local governments, tribal governments, local housing authorities, nonprofit community or neighborhood based organizations, regional or statewide nonprofit housing assistance organizations, and for-profit housing developers.

(2) The applicant must document to the satisfaction of the board experience in the development or management of housing for low-income or moderate-income households. Criteria considered by the board include, but are not limited to:

(a) number of years' experience in development or management of housing for low-income and/or moderate-income households;

(b) number of housing developments and units developed or managed;

(c) involvement in other low-income and moderate-income housing programs of the board, federal agencies, and tribal and local governments; and

(d) successful completion of other housing development projects.

AUTH: HB 16 of the 2019 Legislative session

IMP: HB 16 of the 2019 Legislative session

NEW RULE V CTMH LOAN APPLICATION PROCEDURES (1) An application must be submitted.

(2) At the time the application is submitted, an applicant must also submit:

(a) a description of the efforts made by the applicant to coordinate the loan with other housing assistance programs administered by the board, the federal government, state agencies, tribal government, local public housing authorities, local governments, and private entities;

(b) an explanation of how the loan will not supplant existing or available funding for the project; and

(3) Applications will be reviewed by staff designated by the board and presented to the board for consideration as soon as the review is completed, but not later than 90 days following receipt of a complete application by the board.

(4) Applications that are substantially incomplete as determined by the board staff shall not be processed but will be returned to the applicant.

AUTH: HB 16 of the 2019 Legislative session

IMP: HB 16 of the 2019 Legislative session

NEW RULE VI CTMH LOAN TERMS AND CONDITIONS (1) A CTMH loan shall:

(a) provide for complete amortization at maturity through substantially equal monthly payments of principal and interest;

(b) have a term not to exceed 30 years;

(c) bear interest at an annual rate of at least 0.5% less than the interest rate charged for a loan funded by the Housing Montana Fund as outlined in ARM 8.111.506;

(d) be subject to a late charge of 4% of the monthly payment due for each monthly payment that is not made within 15 days of its due date;

(e) be secured by a lien (perfected either by a mortgage or a trust indenture) against the real property benefited by the loan; and

(f) be in first lien position, will not exceed 95% of total development cost, and may be a loan participation or pari passu loan as long as it minimizes the risk of the CTMH program.

(2) The board and the CTMH loan recipient must each pay half of the loan servicing fees as determined by the board.

AUTH: HB 16 of the 2019 Legislative session

IMP: HB 16 of the 2019 Legislative session

NEW RULE VII CRITERIA FOR APPROVAL OF CTMH LOAN (1) The board will review the following criteria in considering an application for an CTMH loan:

(a) the applicant's experience in managing or developing housing for low-income and/or moderate-income households;

(b) the percentage of the units in the project that will be available for low-income or moderate-income households;

(d) project location;

(e) the loan size and whether it maximizes the geographical distribution of the loan program; and

(f) the use of other funds to leverage the use of CTMH funds.

AUTH: HB 16 of the 2019 Legislative session

IMP: HB 16 of the 2019 Legislative session

REASON: The proposed rules are necessary to implement and administer the Coal Trust Multifamily Homes (CTMH) program as required by HB 16 of the 2019 Legislative session.

FISCAL IMPACT: The fee estimate requirements of 2-4-302(1)(c), MCA, cannot be determined at this time. The number of applicants and requested loan amounts are unknown.

4. Concerned persons may submit their data, views, or arguments either orally or in writing at the hearing. Written data, views, or arguments may also be submitted to the Department of Commerce, Legal Department, 301 South Park Avenue, P.O. Box 200501, Helena, Montana 59620-0501; telephone (406) 841-2596; TDD 841-2702; fax (406) 841-2771; or e-mail [email protected], and must be received no later than 5:00 p.m., August 23, 2019.

5. Bonnie Martello, Paralegal, Department of Commerce, has been designated to preside over and conduct this hearing.

6. The department maintains a list of interested persons who wish to receive notices of rulemaking actions proposed by this agency. Persons who wish to have their name added to the list shall make a written request that includes the name, e-mail, and mailing address of the person to receive notices and specifies for which program the person wishes to receive notices. Notices will be sent by e-mail unless a mailing preference is noted in the request. Such written request may be mailed or delivered to the contact listed in 4 above or may be made by completing a request form at any rules hearing held by the department.

7. The bill sponsor contact requirements of 2-4-302, MCA, apply and have been fulfilled. The primary bill sponsor, Representative Dave Fern, was contacted on July 11, 2019 by e-mail at [email protected] and [email protected].

8. With regard to the requirements of 2-4-111, MCA, the department has determined that the adoption of the above-referenced rules will not significantly and directly impact small businesses.

MONTANA BOARD OF HOUSING

Patrick E. Melby, Chairman

/s/ Garrett R. Norcott /s/ Tara Rice

Garrett R. Norcott Tara Rice

Rule Reviewer Director

Department of Commerce

Certified to the Secretary of State July 16, 2019.