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SB 142

AN ACT relating to affordable housing, making an appropriation therefor, and declaring an emergency.

2026 Regular Session Introduced by Brandon Smith

Creates a revolving fund to rehabilitate vacant properties into deed-restricted affordable rentals, funding loans/grants, and transferring title to renters after 240 payments.

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WeVote Research Nonpartisan
Bill Summary · SB 142

Overview

SB 142 (2026 Reg. Session, Kentucky) is an act relating to affordable housing that creates an “abandoned home pool fund,” authorizes loans and grants to eligible entities for rehabilitating vacant and abandoned properties, imposes deed restrictions on rehabilitated properties, establishes funding mechanisms (including a general fund appropriation and the collection of certain recording fees apportioned to the fund and an affordable housing trust fund), and declares an emergency with an effective date of July 1, 2026.

Main purpose and intent

  • To accelerate affordable rental housing by funding rehabilitation of vacant and abandoned properties.
  • To create a revolving fund (abandoned home pool fund) to finance acquisition, rehabilitation, and related activities, with a focus on enabling eligible renters to access affordable housing through deed-restricted properties.
  • To ensure timely funding through emergency declaration and to provide ongoing financing through dedicated fees and appropriations.

Key provisions and changes

  • Definitions (Section 1):

    • Eligible entity: entities eligible for fund financing under Section 3.
    • Eligible property: vacant and abandoned residential property subject to tax foreclosure or acquired by a private/government entity.
    • Eligible renter: household income at or below 120% of area median income; must complete HUD-certified homeownership counseling before leasing.
    • Rehabilitated property: rendered habitable through rehabilitation and eligible for leasing to eligible renters.
    • Vacant and abandoned property: defined by vacancy duration (≥1 year) and condition (code violations or disrepair).

  • Abandoned home pool fund (Section 2):

    • Establishes a revolving fund in the State Treasury.
    • Fund sources: state appropriations, gifts/grants, federal funds, fees collected under Section 4, and returns on investments.
    • Administered by the Kentucky Housing Corporation (KHC).
    • Funds used only for activities described in Section 3; unspent funds roll forward year to year.

  • Funded activities and eligibility (Section 3):

    • The Kentucky Housing Corporation may loan or grant funds to eligible entities for:
    • Acquisition of eligible properties for rehabilitation.
    • Rehabilitation of properties.
    • Major capital repairs on rental properties.
    • Matching funds for technical assistance related to housing for eligible renters.
    • Administrative costs that substantially increase access to funds beyond Sections 1–3.
    • Eligible entities: Kentucky-based nonprofit 501(c)(3) organizations with:
    • At least 5 years of housing development or repair program experience, and
    • Bylaws showing housing development/assistance as a purpose or demonstrated capacity per the corporation.
    • Rehabilitated property requirements:
    • Deed-restricted for at least 20 years.
    • KHC has a right of first refusal; property reserved for rental to eligible renters.
    • Financial details for renting:
    • Eligible entity must calculate total project cost (purchase, rehab, counseling, developer fees, interest up to 3%, and insurance costs).
    • Rent is structured as 240 equal monthly payments (amortization).
    • After 240 payments, title transfers to the eligible renter.
    • Rent receipts flow back to the fund quarterly, after operating expenses/fees.
    • Eviction rules apply after 3 consecutive missed payments.
    • If eviction/abandonment occurs after 48+ payments, the renter may receive 20% of amortized equity already paid, and property may be re-rent to another eligible renter.
    • Program administration:
    • The KHC must solicit applications publicly at least twice per year and decide within 90 days.
    • Competitive ranking criteria for funding.

  • Recording fees and housing trust fund (Section 4):

    • Amends KRS 64.012 to allocate portions of certain recording fees:
    • A $35 fee (or $33 in earlier version) for various recordations; distribution:
      • Majority retained by the county clerk.
      • A portion sent to the Affordable Housing Trust Fund (KRS 198A.710) and to the Abandoned Home Pool Fund (Section 2).
    • Similar allocations apply to other related fee items, with quarterly remittance and reporting requirements to the Kentucky Housing Corporation.
    • Provisions for different county structures (non-urban counties, urban counties, consolidated local governments) regarding fund administration and reporting.

  • General fund appropriation (Section 5):

    • $25,000,000 in fiscal year 2026-2027 appropriated to the abandoned home pool fund.

  • Emergency declaration and effective date (Section 6):

    • Declares an emergency to provide timely funding for housing assistance.
    • Effective date: July 1, 2026.

Who would be affected

  • Eligible renters: households at ≤120% of area median income who receive HUD-certified homeownership counseling and participate in rehabilitated rental properties.
  • Eligible entities: Kentucky-based nonprofit housing developers/repair organizations with the required experience and purpose in their bylaws.
  • Property owners and communities: vacant/abandoned residential properties eligible for acquisition, rehabilitation, and rental to eligible renters.
  • Local clerks and counties: new recording fee allocations impacting fee collections and remittances to the affordable housing trust fund and abandoned home pool fund.
  • Kentucky Housing Corporation: administers the fund, evaluates applications, negotiates terms, and oversees compliance.

Procedural and timeline aspects

  • Application process: opened publicly at least twice annually; decisions within 90 days of receipt.
  • Funding disbursement: funds provided as loans or grants; the corporation may set terms and requires that funding supplement, not replace, existing programs.
  • Notice and competitiveness: funding allocations are to be made to maximize use of available funds with competitive ranking criteria.
  • Financial tracking: quarterly remittances to the designated funds; annual reporting by counties/urban-county governments as applicable.
  • Effective date and emergency status: Act takes effect July 1, 2026, with an explicit emergency declaration to expedite implementation.

Summary

SB 142 creates a structured, state-supported mechanism to rehabilitate vacant and abandoned housing and convert it into affordable rental housing. It establishes the abandoned home pool fund, outlines eligible organizations and properties, imposes a 20-year deed restriction on rehabilitated properties, and sets up an amortized rent model that eventually transfers title to renters. It also channels a portion of certain recording fees to support affordable housing initiatives and provides a sizeable initial state appropriation to jump-start the program, all under an emergency designation to accelerate implementation.

Compiled from official sources — confirm details with the bill’s official record.

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