Administrative Rule Review Report #AR07-040
Legislative Service Office
31-July-07
AGENCY: Wyoming Business Council.
DATE SUBMITTED: July 17, 2007.
SUBJECT: Chapters 1, General Provisions and Chapter 2, Workforce Housing Infrastructure Loans.
NATURE OF RULES: Legislative, Procedural
STATUTORY AUTHORITY: W.S. 9-12-104(a)(iv) and 9-12-902(a)
DETERMINATION OF PROCEDURAL COMPLIANCE BASED UPON INFORMATION
SUBMITTED BY THE AGENCY TO LSO: The Wyoming Administrative Procedure Act does not apply generally to the Wyoming Business Council. W.S. 9-12-103(g). However, W.S. 9‑12‑104(a)(iv) provides that rules adopted by the Wyoming Business Council will be submitted to the Management Council for review.
Notice of the proposed adoption of new rules was provided by the LSO as required by W.S. 28‑9‑103(d). No comments have been received to date. Otherwise, procedural compliance is apparently complete to date.
SUMMARY OF RULES: These new rules provide the mechanism for the Agency to implement the Wyoming Workforce Housing Infrastructure Loan Program, W.S. 9-12-901 through 9‑12‑905 pursuant to legislation passed at 2007 Session Laws, Chapter 181. More specifically, Chapter 1, General Provisions provide:
- Section 1 – Explains the purpose of the program.
- Section 2 – Provides for rulemaking authority.
- Section 3 - Provides definitions.
- Section 4 – Describes eligible applicants.
- Section 5 – Identifies eligible activities for workforce housing infrastructure.
- Section 6 – Identifies activities not eligible for workforce housing infrastructure.
- Section 7 – Requires the workforce housing infrastructure to be publicly owned.
- Section 8 – Requires a public hearing for the project and requires a signed resolution to be submitted with the project application.
- Section 9 – Explains funding cycles and identifies when applications can be submitted.
- Section 10 – Explains the application procedures.
- Section 11 – Explains the evaluation and scoring system.
- Section 12 – Provides for program administration, including that the Agency may contract with state agencies, authorities or instrumentalities as necessary or convenient to facilitate the Agency's duties under the program.
- Section 13 – Explains how funds will be distributed, including fund disbursement, fund reversion project monitoring and project evaluation.
Administrative Rule Review Report #AR07-040
Legislative Service Office
31-July-07
Page 2
More specifically, Chapter 2, Workforce Housing Infrastructure Loans provide:
- Section 1 – Provides the general policy of the program, including constraints to prevent unduly enriching a developer/builder, constraints to prevent speculators from buying a house in order to quickly sell at profit and requires that the public investment is passed on to the home buyer.
- Section 2 – Describes application submittal requirements.
- Section 3 – Describes loan requirements on projects involving a community land trust.
- Section 4 – Provides requirements for previous applicants.
- Section 5 – Sets the annual maximum loan amount of one million dollars ($1,000,000.00).
- Section 6 – Defines the interest rate and term.
- Section 7 – Requires a loan to be adequately collateralized as determined by the Agency.
- Section 8 – Requires an attorney general opinion on all loans to certify the legality of the transaction and all loan documents.
- Section 9 – Requires the Agency to consider each application, allow for public comments, and refer the loan to the State Loan and Investment Board.
- Section 10 – Provides for disbursement of the loan proceeds.
FINDINGS: While most of the provisions appear to be within the scope of statutory authority and legislative intent, there are a number of provisions which appear not to be so. Primarily the rules fail to "flesh out" certain provisions of statute which call for more definition.
For example, chapter 1, Section 5(k), repeats the statutory laundry list of "workforce housing infrastructure," concluding with a near verbatim repetition of statute: "(XI) Other infrastructure determined by the council to be consistent with the purposes of this program." Rules should provide further definition and clarification of statute – in this instance specifying additional items that would be considered to be workforce housing infrastructure, or at least specifying items the Council would consider in determining whether a project qualified as "workforce housing infrastructure." Simply repeating the statute without doing so leaves decisions made by the Council under such a "catch all" open to challenge as inherently arbitrary and capricious. See, In re Bessemer Mt., 856 P.2d 450 (Wyo. 1993).
The same comments apply to the following provisions:
Chapter 2, Section 3(a)(iii), lending on "terms comparable" for community land trusts;
Chapter 2, Section 6 – the setting of interest rates is a near repetition of statute, rather than a fleshing out of how those rates will actually be established;
Chapter 2, Section 7, the "council shall establish terms and conditions for each loan" – no factors are established in rule beyond the general statutory parameters.
Administrative Rule Review Report #AR07-040
Legislative Service Office
31-July-07
Page 3
It appears the legislative intent was to expound upon each of these provisions by rule.
The rules do so in at least one instance - the definition of "workforce housing." (Chapter 1, section 3(n) adds to the statutory definition the following language in bold:
"Workforce housing" means owner-occupied, residential dwellings priced to be affordable to families that have a gross income at or below 120 percent of the area median income.
Clearly the Legislature intended that workforce housing be housing affordable to workers, and the rules attempt to meet that intent. Establishing a "hard cap" ceiling of 120% of median income might be questioned as failing to meet legislative intent, since it could foreclose some projects in areas affected by the "mineral boom" (where the cap might be insufficient due to better than average paying jobs for those workers). While the rules might better reflect legislative intent by use of that ceiling as a presumptive maximum, with flexibility to modify that amount in response to specific area needs for workforce housing, the rules do flesh out the statute's use of "affordable" housing.
Finally, there is one provision of the rules which appears to exceed statutory authority. Chapter 2, section 6 establishes a minimum loan rate of 1.5% to establish a loss reserve and cover costs of loan servicing. Statute (and earlier in the rules) provides that the rate shall not exceed the average prime interest rate. While 1.5% generally would not do so, it could. Further, statute sets only a ceiling not a floor, and setting a "hard floor" appears contrary to legislative intent of establishing the rate based upon the repayment abilities and needs of local governments.
TECHNICAL NOTES FOR AGENCY CONSIDERATION:
Chapter 1, Page 1-1, Section 3(a), "homeowners" should be "homeowner's".
Chapter 1, Page 1-5, beginning at Section 10(b) - The agency needs to ensure delegation to staff or contractor is not an unlawful delegation of power. The rules will be interpreted to provide required oversight by the Council.
Chapter 2, Page 2-1, Section 1(a)(i)(A) line 5 "(developer fess shall . . .)" should be "(developer fees shall . . .)".
Throughout the rules many statutory provisions are repeated verbatim or near verbatim. This adds nothing other than convenience, while raising questions regarding as to whether the difference is authorized and requiring rule changes if a statute is amended. The Council might wish to review this issue if the rules are repromulgated.
Administrative Rule Review Report #AR07-040
Legislative Service Office
31-July-07
Page 4
STAFF RECOMMENDATION: That the Council recommend that the Governor direct the Agency to repromulgate these rules to address the concerns raised in the rule review report.
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Maxine R. Weaver
Staff Attorney
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David K. Gruver
Assistant Director
MRW/