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(continued)
(7) Adaptive Reuse/Infill/Proximity to Amenities - 10 points maximum.

The following criteria shall apply only to applications requesting funds appropriated pursuant to Section 53533(a)(1) of the Health and Safety Code.
Applications will receive 10 points for meeting any of the following three conditions. Applications not meeting any one of these three conditions will not receive points pursuant to this criterion.
(A) Adaptive reuse. The Project will be located in a developed area served with public infrastructure and shall consist of the rehabilitation of vacant or underused commercial or industrial buildings.
(B) Infill development. The Project will be located in a developed area.
(C) Proximity to amenities. The Project will be proximate to public transit, public schools, public parks, or public recreational facilities, as determined by TCAC regulations that would result in TCAC scoring points given thereto; or the Project will be located within one mile of a Job Center. A Job Center is a concentration of employment opportunities reasonably available to the tenants of the Project.
(c) In the event of tied point scores, the Department shall rank tied applications based on the lowest weighted average affordability of Restricted Units, which shall be computed as follows:
(1) Multiplying each income limit applicable to the Project by the number of Units restricted at that income level.
(2) Adding the products calculated pursuant to the previous subsection.
(3) Dividing the sum calculated pursuant to the previous subsection by the number of Restricted Units in the Project.


Note: Authority cited: Sections 50406(n), 50675.1(c) and 50675.11, Health and Safety Code. Reference: Sections 50675.4, 50675.5, 50675.6 and 50675.7, Health and Safety Code.








s 7321. Legal Documents.
(a) Upon the award of Program funds to a Project, the Department shall enter into one or more agreements with the Sponsor, which may be in the form of a conditional commitment letter issued by the Department and accepted by the Sponsor, which shall commit monies from the Fund in an amount sufficient to fund the approved loan amount. The agreement or agreements shall contain the following:
(1) a description of the approved Project and the permitted uses of Program funds;
(2) the amount and terms of the loan;
(3) the regulatory restrictions to be applied to the Project through the Regulatory Agreement;
(4) provisions governing the construction work and, as applicable, the acquisition of the Project site, and the disbursement of loan proceeds;
(5) special conditions imposed as part of Department approval of the Project;
(6) requirements for the execution and the recordation of the agreements and documents required under the Program;
(7) terms and conditions required by federal or state law;
(8) requirements regarding the establishment of escrow accounts for the deposit of documents and the disbursement of loan proceeds;
(9) the approved schedule of the Project, including land acquisition if any, commencement and completion of construction or Rehabilitation work, and occupancy by Eligible Households;
(10) the approved Project development budget and sources and uses of funds and financing;
(11) requirements for reporting to the Department;
(12) terms and conditions for the inspection and monitoring of the Project in order to verify compliance with the requirements of the Program;
(13) provisions regarding tenant relocation;
(14) provisions relating to the erection and placement on or in the vicinity of the Project site a sign indicating that the Department has provided financing for the Project. The Department may also arrange for publicity of the Program loan in its sole discretion; and
(15) other provisions necessary to ensure compliance with the requirements of the Program.
(b) The Department shall enter into a Regulatory Agreement with the Sponsor for not less than the original term of the loan that shall be recorded against the Project property title prior to the disbursement of funds. The Regulatory Agreement shall include, but not be limited to, the following:
(1) the number, type and income level of Assisted Units pursuant to Section 8304 of this title;
(2) standards for tenant selection pursuant to Section 8305 of this title;
(3) provisions regulating the terms of the rental agreement pursuant to Section 8307 of this title;
(4) provisions related to an annual operating budget approved by the Department pursuant to Section 7326;
(5) provisions related to a management plan pursuant to Section 7324;
(6) provisions related to a Rent schedule, including initial Rent levels for Assisted Units and non-Assisted Units pursuant to subsections (a) and (b) of Section 7312;

(7) conditions and procedures for permitting Rent increases pursuant to Section 7312;
(8) provisions for limitations on Distributions pursuant to Section 8314 of this title;
(9) provisions relating to annual reports, inspections and independent audits pursuant to Section 7325;
(10) provisions regarding the deposit and withdrawal of funds to and from reserve accounts;
(11) assurances that the Rental Housing Development will be maintained in a safe and sanitary condition in compliance with state and local housing codes and the management plan, pursuant to Section 7324;
(12) description of the conditions constituting breach of the Regulatory Agreement and remedies available to the parties thereto;
(13) provisions governing use and operation of non-Assisted Units and common areas to the extent necessary to ensure compliance with Program requirements;
(14) provisions relating to enforcement of Program requirements by tenants;
(15) special conditions of loan approval imposed by the Department;
(16) provisions specifying that the Regulatory Agreement shall be binding on all assigns and successors in interest of the Sponsor and that all sales, transfers, and encumbrances shall be subject to Section 7322;
(17) for Projects serving Special Needs Populations and/or providing services to the general tenant population, provisions regarding the implementation and maintenance of services and facilities for the targeted Special Needs Population group and/or general tenant population; and
(18) other provisions necessary to assure compliance with the requirements of the Program.
(c) All loans shall be evidenced by a promissory note payable to the Department in the principal amount of the loan and stating the terms of the loan consistent with the requirements of the Program. The note shall be secured by a deed of trust on the Project property naming the Department as beneficiary or by other security acceptable to the Department; this deed of trust or other security shall be recorded junior only to such liens, encumbrances and other matters of record approved by the Department and shall secure the Department's financial interest in the Project and the performance of Sponsor's Program obligations.


Note: Authority cited: Sections 50406(n), 50675.1(c) and 50675.11, Health and Safety Code. Reference: Sections 50675.1, 50675.6 and 50675.8, Health and Safety Code.








s 7322. Sales, Transfers, and Encumbrances.
(a) A Sponsor shall not sell, assign, transfer, or convey the Rental Housing Development, or any interest therein or portion thereof, without the express prior written approval of the Department. A sale, transfer or conveyance shall be approved only if all of the following requirements are met:
(1) the existing Sponsor is in compliance with the Regulatory Agreement, or the sale, transfer or conveyance will result in the cure of any existing violations;

(2) the successor-in-interest to the Sponsor agrees to assume all obligations of the existing Sponsor pursuant to the Regulatory Agreement and the Program;
(3) the successor-in-interest is an eligible Sponsor and demonstrates to the Department's satisfaction that it can successfully own and operate the Rental Housing Development and comply with all Program requirements; and
(4) no terms of the sale, transfer, or conveyance jeopardize either the Department's security or the successor's ability to comply with all Program requirements.
(b) If the Sponsor or its successor-in-interest is a partnership, the Sponsor shall not discharge or replace any general partner or amend, modify or add to its partnership agreement, or cause or permit the general partner to amend, modify or add to the organizational documents of the general partner, without the prior written approval of the Department. The Sponsor may transfer limited partnership interests without the prior written approval of the Department.
(c) The Department shall grant its approval of a sale, assignment, transfer, or conveyance subject to such terms and conditions as may be necessary to preserve or establish the Fiscal Integrity of the Project. Such conditions may include:
(1) the deposit of sales proceeds, or a portion thereof, to maintain required reserves, or to offset negative cash flow;
(2) the recapture of syndication proceeds or other funds in accordance with special conditions included in any agreement executed by the Sponsor; or
(3) such conditions as may be necessary to ensure compliance with the Program requirements.
(d) The Sponsor shall not encumber, pledge, or hypothecate the Rental Housing Development, or any interest therein or portion thereof, or allow any lien, charge, or assessment against the Rental Housing Development without the prior written approval of the Department. The Department may permit refinancing of existing liens or additional financing secured by the Rental Housing Development to the extent necessary to maintain or improve the Fiscal Integrity of the Project, to maintain Affordable Rents, or to decrease Rents.


Note: Authority cited: Sections 50406(n), 50675.1(c) and 50675.11, Health and Safety Code. Reference: Sections 50675.1 and 50675.8, Health and Safety Code.








s 7323. Defaults and Loan Cancellations.
(a) In the event of a breach or violation by the Sponsor of any of the provisions of the Regulatory Agreement, the promissory note, or the deed of trust, or any other agreement pertaining to the Project, the Department may give written notice to the Sponsor to cure the breach or violation within a period of not less than 15 days. If the breach or violation is not cured to the satisfaction of the Department within the specified time period, the Department, at its option, may declare a default under the relevant document(s) and may seek legal remedies for the default including the following:

(1) The Department may accelerate all amounts, including outstanding principal and interest, due under the loan and demand immediate repayment thereof. Upon a failure to repay such accelerated amounts in full, the Department may proceed with a foreclosure in accordance with the provisions of the deed of trust and state law regarding foreclosures.
(2) The Department may seek, in a court of competent jurisdiction, an order for specific performance of the defaulted obligation or the appointment of a receiver to operate the Rental Housing Development in accordance with Program requirements.
(3) The Department may seek such other remedies as may be available under the relevant agreement or any law.
(b) If the breach or violation involves charging tenants Rent or other charges in excess of those permitted under the Regulatory Agreement, the Department may demand the return of such excess Rents or other charges to the respective households. In any action to enforce the provisions of the Regulatory Agreement, the Department may seek, as an additional remedy, the repayment of such overcharges.
(c) The Department may cancel Loan commitments under any of the following conditions:
(1) the objectives and requirements of the Program cannot be met;
(2) implementation of the Project cannot proceed in a timely fashion in accordance with the approved plans and schedules;
(3) special conditions have not been fulfilled within required time periods; or
(4) there has been a material change, not approved by the Department, in the principals or management of the Sponsor or Project. The Department, in writing and upon demonstration by the Sponsor of good cause, may extend the date for compliance with any of the conditions in this subsection.
(d) Upon receipt of a notice from the Department of intent to cancel the loan, the Sponsor shall have the right to appeal to the Director.
(e) The Department may use amounts in the Fund to cure or avoid a Sponsor's default on the terms of any loan or other obligation that jeopardizes the Fiscal Integrity of a Project or the Department's security in the Project. Such defaults may include defaults or impending defaults in payments on mortgages, failures to pay taxes, or failures to maintain insurance or required reserves. The payment or advance of funds by the Department pursuant to this subsection shall be solely within the discretion of the Department and no Sponsor shall be entitled to or have any right to payment of these funds. All funds advanced pursuant to this subsection shall be part of the Program loan and, upon demand, due and payable to the Department. Where it becomes necessary to use the Fund to assist a Project to avoid threatened defaults or foreclosures, the Department shall take those actions necessary, including, but not limited to, foreclosure or forced sale of the Project property, to prevent further, similar occurrences and ensure compliance with the terms of the applicable agreements.


Note: Authority cited: Sections 50406(n), 50675.1(c) and 50675.11, Health and Safety Code. Reference: Sections 50675.1, 50675.8 and 50675.10, Health and Safety Code.








s 7324. Management and Maintenance.
(a) The Sponsor shall be responsible for all management functions of the Rental Housing Development including selection of the tenants, annual recertification of household income and size, evictions, and collection of Rent.
(b) The Sponsor is responsible for all repair and maintenance functions of the Rental Housing Development, including ordinary maintenance and replacement of capital items. The Sponsor shall ensure maintenance of residential Units, Commercial Space and common areas in accordance with local health, building, and housing codes, and the management plan.
(c) The Sponsor shall ensure that the Rental Housing Development is managed by an entity approved by the Department that is actively in the business of managing low-income housing. Any management contract entered into for this purpose shall be subject to Department approval and contain a provision allowing the Sponsor to terminate the contract upon 30-days' notice. The Sponsor shall terminate said contract as directed by the Department upon determination that management does not comply with Program requirements.
(d) The Sponsor shall develop a management plan subject to Department approval prior to loan closing. Any change to the plan shall be subject to the approval of the Department. The plan shall be consistent with Program requirements and shall include the following:
(1) the role and responsibility of the Sponsor and its delegation of authority, if any, to the managing agent;
(2) personnel policy and staffing arrangements;

(3) plans and procedures for publicizing and achieving early and continued occupancy;
(4) procedures for determining tenant eligibility and selecting tenants and for certifying and annually recertifying household income and size;
(5) plans for carrying out an effective maintenance and repair program;
(6) Rent collection policies and procedures;
(7) a program for maintaining adequate accounting records and handling necessary forms and vouchers;
(8) plans for enhancing tenant-management relations;
(9) the management agreement, if any;
(10) provisions for periodic update of the management plan;
(11) appeal and grievance procedures;

(12) plans for collections for tenant-caused damages, processing evictions and terminations; and
(13) for Projects serving Special Needs Populations and/or providing special services to the general tenant population, a supportive services plan, that includes:
(A) a description of the services to be provided;
(B) a preliminary services budget;
(C) funding source(s);
(D) identification of the organization(s) that will provide services;
(E) a preliminary staffing plan;
(F) location of services to be provided off site; and
(G) any special eligibility requirements for the services.


Note: Authority cited: Sections 50406(n), 50675.1(c) and 50675.11, Health and Safety Code. Reference: Sections 50675.1 and 50675.8, Health and Safety Code.








s 7325. Reporting.
No later than 90 days after the end of each Project fiscal year, the Sponsor shall submit an independent audit of the Rental Housing Development prepared by a certified public accountant in accordance with Department audit requirements, as specified in the Department's Rental Housing Construction Program Information Memorandum dated August 14, 1995, as periodically updated and incorporated by reference. Upon a determination that the cost of meeting this requirement exceeds the potential benefits from it to the Department and to the tenants of the Rental Housing Development, the Department may:
(a) reduce the required frequency of the audit;
(b) accept an audited financial statement in lieu of the audit; or
(c) waive this requirement completely.


Note: Authority cited: Sections 50406(n), 50675.1(c) and 50675.11, Health and Safety Code. Reference: Sections 50675.1 and 50675.8, Health and Safety Code.








s 7326. Operating Budget.
(a) Prior to loan closing, the Sponsor shall submit an initial operating budget to the Department. Such budget shall show all anticipated income; expenses for management, operations and maintenance; debt service; and reserve deposits for the Initial Operating Year.
(b) For as long as deemed necessary by the Department to ensure compliance with Program requirements, the Sponsor shall submit to the Department for its approval, 60 days prior to the end of each Project fiscal year, a proposed operating budget. The proposed operating budget shall set forth the Sponsor's estimate of the Project's Operating Income, Operating Expenses, debt service for the upcoming year, and any proposed Rent increases pursuant to Section 7312. In lieu of the requirement for submission of complete proposed operating budgets, the Department may require submission of limited budget information, such as a proposed Rent schedule, proposed management fees, and reserve deposit amounts. The Department may re-impose the requirement for submission of complete operating budgets where necessary to ensure compliance with Program requirements.
(c) The initial and subsequent proposed operating budgets, where required, shall be subject to the approval of the Department based on its determination that the budget line items are reasonable and necessary in light of costs for comparable Rental Housing Developments and prior year budgets. Actual expenditures in excess of the approved budget amount shall be subject to Department approval.
(d) The initial operating budget and subsequent proposed operating budgets shall include periodic deposits to the operating reserve, replacement reserve, and any other reserve account required by the Department in accordance with the requirements of Sections 8308 and 8309 of this title.
(e) For Projects with non-Assisted Units or Commercial Space, all budgets submitted pursuant to this section shall show income and uses of income allocated among Assisted Units, Restricted Units, non-Restricted Units, and Commercial Space. The allocation method used for each budget line item shall be subject to Department approval, and shall apportion income and expenses in a manner that accurately reflects the particular physical, operational and economic characteristics of the Project.


Note: Authority cited: Sections 50406(n), 50675.1(c) and 50675.11, Health and Safety Code. Reference: Sections 50675.1 and 50675.8, Health and Safety Code.








s 7327. General.
(a) This Article 5 governs Program loans designated as Rent Write-Down (RWD) loans for the purpose of lowering income limits and corresponding Rent levels for Low Income Housing Tax Credit Program Projects that are otherwise feasible without the use of Program funds.
(b) This article will govern the award, terms, conditions and uses of RWD loans only. Except where specifically noted the provisions of Articles 1, 2, 3 and 4 do not govern RWD loans


Note: Authority cited: Sections 50406(n), 50675.1, and 50675.11, Health and Safety Code. Reference: Sections 50675.2(c), 50675.4(c)(1), and 50675.5(b)(8), Health and Safety Code.








s 7328. [Reserved].


Note: Authority cited: Sections 50406(n), 50675.1(c) and 50675.11, Health and Safety Code. Reference: Sections 50675, 50675.1(c) and 50675.2, Health and Safety Code.








s 7329. Eligibility for RWD Loans.
(a) In order to receive an RWD loan, the Project must:
(1) have received an award of 9% or 4% tax credits from TCAC;
(2) include the new construction or Rehabilitation of a Rental Housing Development, or conversion of a nonresidential structure to a Rental Housing Development;

(3) have sufficient financing and funding commitments to demonstrate that the Project is feasible at marketable rents without the use of Program funds;
(4) not receive other funds from the Program; and
(5) not have completed construction at the time of the award of Program funds, as evidenced by the lack of a recorded notice of completion or comparable indicator of construction status.
(b) The Sponsor may be any entity qualified to receive a tax credit allocation from TCAC.


Note: Authority cited: Sections 50406(n), 50675.1(c) and 50675.11, Health and Safety Code. Reference: 50675.2(d), 50675.4 and 50675.7, Health and Safety Code.








s 7330. Amounts and Terms for RWD Loans.
(a) RWD loan amounts shall be limited to the sum of a base amount per Assisted Unit plus the amount required to:
(1) reduce Rents from the rent structure for Assisted Units that would apply without RWD assistance to the proposed restricted Rents for Assisted Units, by either substituting Program funds for amortized debt or capitalizing a rent subsidy reserve; and

(2) preserve Project cash flow at the level that would be generated without participation in the RWD program.
The initial base amount shall be $3,000. The Department may periodically adjust the base amount to equal the lowest amount necessary to ensure sufficient demand for Program funds, taking into account factors such as the previous demand for RWD funds and the total amount of Program funds available for award under the RWD component.
(b) RWD funds may be used to capitalize a reserve only if it is not feasible to reduce Rents and maintain Project cash flow by substituting RWD funds for amortized debt. The amount of the capitalized reserve shall not exceed the amount needed to reduce Rents and preserve cash flow at the level that would apply without RWD assistance for a period of 20 years. Thereafter the Assisted Units shall continue to be occupied by eligible households at affordable Rents for the remaining term of the Regulatory Agreement. The Department shall disburse the funds in a manner to ensure the fiscal integrity of the Project for the 20-year period.
(c) Program funds shall be used for post-construction, permanent financing only, except under an agreement with California Housing Finance Agency to provide construction period financing to eligible projects receiving financing from both California Housing Finance Agency and the Program.
(d) The interest rate and loan repayment terms shall be as set forth in Section 7308.
(e) The initial term of the loan shall be 55 years, commencing on the date of recordation of the Program loan documents.
(f) Upon request by the Sponsor, the Department may approve a 10-year extension of the loan term if the Department determines both of the following are met:
(1) The Sponsor is in compliance with the Regulatory Agreement and other Program loan documents and agrees to continue to comply during the extended term.
(2) The extension is necessary to continue operations consistent with Program requirements.
The Department may condition the extension on such terms as it deems necessary to ensure compliance with the requirements of the Program.
(g) The Program loan shall be secured by the Project real property and improvements, subject only to liens, encumbrances and other matters of record approved by the Department.


Note: Authority cited: 50406(n), 50675.1(c) and 50675.11, Health and Safety Code. Reference: Sections 50675.6 and 50675.8, Health and Safety Code.








s 7331. Occupancy and Rent Requirements
(a) Upon initial occupancy, Assisted Units shall be restricted to one or more of the following income levels: 20%, 30%, 35%, or 40% of State Median Income, expressed as a percentage of Area Median Income. Rents for Assisted Units shall not exceed 30% of the applicable income limit.
(b) No more than 30% of the total Units in a Project assisted with a RWD loan may be funded as Assisted Units.
(c) The Sponsor shall provide relocation benefits and assistance for tenants directly displaced as a result of RWD funds.
(d) Assisted Units shall not differ substantially in size or amenity level from non-Assisted Units with the same number of bedrooms, and Units shall not differ in size or amenity level on the basis of income-level restrictions. Assisted Units shall not be segregated from non-Assisted Units, and Units shall not be segregated from each other on the basis of income-level restriction. Within these limits, Sponsors may change the designation of a particular Unit from Assisted to non-Assisted or from one income-restriction to another over time. For Projects involving Rehabilitation or conversion, the Department may permit certain Units to be designated as exclusively market-rate Units where necessary for Fiscal Integrity and where all other Program requirements are satisfied.
(e) The number, size, type, and amenity level of Assisted Units shall not be fewer than the number nor different from the size, type and amenity level described in the Regulatory Agreement for the full loan term.
(f) Sponsors shall select only Eligible Households as tenants of Assisted Units, and shall annually recertify household income and size to determine continued eligibility. If, at the time of tenant recertification, a household's income exceeds the income limit designated for the household's Unit by more than 10% of State Median Income, the Sponsor shall increase the household's Rent to the level applicable to other households with similar incomes, and shall designate the next available Unit as an Assisted Unit restricted for occupancy by households at the income level formerly applicable to the first Unit until the mix required by the Regulatory Agreement is achieved.


Note: Authority cited: Sections 50406(n), 50675.1(c) and 50675.11, Health and Safety Code. Reference: 50675.2(b) and (c) and 50675.8, Health and Safety Code.








s 7332. Application Process.
(a) The Department may issue a NOFA limited to RWD loans and as authorized by Section 7317(c)(4). The NOFA shall specify the amount of RWD funds available, the period during which loan applications may be accepted and the specific requirements of the RWD loan application. The NOFA may establish a minimum point total for rating Projects pursuant to the criteria set forth in Section 7320(b) or similar TCAC criteria, and may provide that Projects meeting or exceeding that minimum score may be eligible for funding so long as funds are available.
(b) Projects shall not be eligible for an award of funds unless the application demonstrates that all of the following conditions exist:
(1) The application meets the eligibility requirements pursuant to
Section 7329; and
(2) The application is complete. Applications shall be deemed complete when the Department is able to assess that the Project is eligible pursuant to Section 7329 and to rate the Project pursuant to Section 7332(a).
(c) The application shall be made on a form made available by the Department requesting the information required by the Multifamily Housing Program Regulations and shall include the proposed number of Assisted Units and the income and Rent levels to be achieved in the Assisted Units as a result of the RWD loan. The application shall also specify the proposed use of the proceeds of the RWD loan, which may include a capitalized rent reserve fund or a reduction in the approved permanent amortized financing for the Project.


Note: Authority cited: Sections 50406(n), 50675.1(c) and 50675.11, Health and Safety Code. Reference: Sections 50675.1(c), 50675.6 and 50675.1(d), Health and Safety Code.








s 7333. Legal Documents.
(a) The provisions of Section 7321(a) shall apply to loans made under this article.
(b) The Department shall enter into a Regulatory Agreement with the Sponsor for not less than the original term of the loan that shall be recorded against the Project property title prior to the disbursement of funds. The Regulatory Agreement shall include, but not be limited to, the following:

(1) the number, type and income level of Assisted Units pursuant to Section 7331;
(2) provisions related to a management plan pursuant to Section 7324;
(3) provisions related to a Rent schedule, including initial Rent levels for Assisted Units and non-Assisted Units pursuant to subsections (a) and (b) of Section 7331;
(4) conditions and procedures for permitting Rent increases;
(5) provisions relating to annual reports, inspections and independent audits pursuant to Section 7325;
(6) provisions regarding the deposit and withdrawal of funds to and from reserve accounts;
(7) assurances that the Rental Housing Development will be maintained in a safe and sanitary condition in compliance with state and local housing codes and the management plan, pursuant to Section 7324;

(8) description of the conditions constituting breach of the Regulatory Agreement and remedies available to the parties thereto;
(9) provisions governing use and operation of non-Assisted Units and common areas to the extent necessary to ensure compliance with Program requirements;
(10) provisions relating to enforcement of Program requirements by tenants;
(11) special conditions of loan approval imposed by the Department;
(12) provisions specifying that the Regulatory Agreement shall be binding on all assigns and successors in interest of the Sponsor and that all sales, transfers, and encumbrances shall be subject to Section 7322;
(13) for Projects serving Special Needs Populations and/or providing services to the general tenant population, provisions regarding the implementation and maintenance of services and facilities for the targeted Special Needs Population group and/or general tenant population; and
(14) other provisions necessary to assure compliance with the requirements of the Program.
(c) All loans shall be evidenced by a promissory note payable to the Department in the principal amount of the loan and stating the terms of the loan consistent with the requirements of the Program. The note shall be secured by a deed of trust on the Project property naming the Department as beneficiary or by other security acceptable to the Department; this deed of trust or other security shall be recorded junior only to such liens, encumbrances and other matters of record approved by the Department and shall secure the Department's financial interest in the Project and the performance of Sponsor's Program obligations.


Note: Authority cited: Sections 50406(n), 50675.1(c) and 50675.11, Health and Safety Code. Reference: Sections 50675.1(c), 50675.6 and 50675.8, Health and Safety Code.








s 7334. Sales, Transfers, Encumbrances, Defaults, and Cancellations.
(a) the provisions of Sections 7322 and 7323 shall apply to this article.


Note: Authority cited: Sections 50406(n), 50675.1(c) and 50675.11, Health and Safety Code. Reference: Sections 50675.1(c), 50675.8 and 50675.10, Health and Safety Code.








s 7335. Management and Maintenance.
(a) the provisions of Section 7324 shall apply to this article.


Note: Authority cited: Sections 50406(n), 50675.1(c) and 50675.11, Health and Safety Code. Reference: Sections 50675.1(c) and 50675.8, Health and Safety Code.








s 7336. Reporting.
(a) the provisions of Section 7325 shall apply to this article.


Note: Authority cited: Sections 50406(n), 50675.1(c) and 50675.11 Health and Safety Code. Reference: Sections 50675.1(c) and 50675.8, Health and Safety Code.








s 7340. General.
(a) This Article 6 governs Projects funded pursuant to Health and Safety Code Sections 50675.14 and 53533(a)(3) for the purpose of providing loans to supportive housing Projects.
(b) The provisions of Articles 1, 2, 3 and 4 of this subchapter 4 apply to assistance made available pursuant to this Article 6 except as modified herein.


Note: Authority cited: Sections 50406(n), 50675.1(c), 50675.11, 50675.14(c) and 53533(a)(3), Health and Safety Code. Reference: Sections 50675, 50675.14 and 53533(a)(3), Health and Safety Code.








s 7341. Definitions.
For the purposes of this Article, in addition to the definitions in Section 7301 and Section 8301, the following definitions shall apply:
(a) "Supportive Housing Unit" means a Unit of permanent housing linked to supportive services restricted to occupancy by an Eligible Household and which meets all of the following requirements:
(1) Occupancy is restricted to Eligible Households that are Homeless or At Risk of Homelessness and that include a Disabled Adult.

(2) It is operated as independent housing, in which each tenant:
(A) Holds a lease or rental agreement in his or her own name and is responsible for paying Rent;
(B) Has his or her own room or apartment and is individually responsible for arranging any shared tenancy, to the extent that shared tenancy is allowed under his or her lease; and
(C) May stay as long as he or she pays his or her share of Rent and complies with the terms of his or her lease.
(3) The Unit is subject to applicable state and federal landlord-tenant laws.
(4) The tenant's participation in services or any particular service shall not be required as a condition of tenancy.
(5) At initial occupancy, the tenant household income, to the extent that it can be documented, shall not exceed 30 percent of the greater of State Median Income or Area Median Income.
(b) "Homeless" means:
(1) Moving from an emergency shelter; or
(2) Moving from Transitional Housing; or
(3) Currently Homeless which means:
(A) An individual who lacks a fixed, regular, and adequate nighttime residence; or
(B) An individual who has a primary nighttime residence that is:
(i) A supervised publicly or privately operated shelter designed to provide temporary living accommodations (including welfare hotels, congregate shelters, and Transitional Housing for the mentally ill); or
(ii) An institution that provides a temporary residence for individuals intended to be institutionalized; or

(iii) A public or private place not designed for, or ordinarily used as, a regular sleeping accommodation for human beings.
(c) "At Risk of Homelessness" means:
(1) Households with incomes at or below the greater of 20 percent of State Median Income (SMI) or Area Median Income (AMI) with no rental subsidy available to the household; or
(2) Households with incomes above 20 percent but not exceeding 30 percent of the greater of SMI or AMI who:
(A) Face immediate eviction and have been unable to identify a subsequent residence; or
(B) Face imminent release from an institution (i.e.; jail, hospital or foster care system) where other housing placement resources are not available; or
(C) Reside in an overcrowded setting (more than two persons per living/sleeping area) in which the household does not hold a lease; or

(D) Reside in substandard housing subject to a current official vacation notice; or
(E) Pay more than 50 percent of income in housing costs.
(d) "High Risk of Homelessness" means the same as "Homeless" or "At Risk of Homelessness."
(e) "Disabled Adult" for the purposes of this Article 6 only shall mean a person 18 years of age or older, or an emancipated minor, with one of the following disabilities:
(1) Mental illness;
(2) HIV or AIDS;
(3) Substance abuse;
(4) Developmental disability; or
(5) Long-term chronic health condition that qualifies them for:

(A) Eligibility under either of two Medicaid Waiver programs, the Multipurpose Senior Services Program (MSSP) or the Assisted Living Waiver Pilot Project (or its successor);
(B) Eligibility for 20 or more personal care hours per week under the In-Home Supportive Services Program (IHSS); or
(C) Eligibility for services under the Program of All Inclusive Care for the Elderly (PACE).
Eligibility for these programs must be established by the agency responsible for determining eligibility for the benefits it provides.


Note: Authority cited: Sections 50406(n), 50675.1(c), 50675.11, 50675.14(c) and 53533(a)(3), Health and Safety Code. Reference: Sections 50675.14(b) and (c), 53260(d) and 53533(a)(3), Health and Safety Code.








s 7342. Eligible Project.
In order to be eligible to apply for funding pursuant to this Article 6, in addition to the requirements of Section 7302, a proposed Project shall:
(a) Contain Supportive Housing Units at least equal to the greater of 5 Units or 35 percent of the total number of Units in the Project;
(b) Restrict Supportive Housing Units for permanent housing for Eligible Households that are Homeless or At-Risk of Homelessness and that include a Disabled Adult;
(c) In the event that the Department utilizes an over-the-counter selection process, meet or exceed the minimum points required by subsection (a) of Section 7346;
(d) Be linked to onsite or offsite services that assist the tenant in retaining the housing, improving his or her health status, and maximizing his or her ability to live and, when possible, work in the community;
(e) Utilize a primary service provider (the entity responsible for overall implementation of the service plan, including coordination between service providers, where there are more than one) with at least 24 months' experience in the provision of the proposed services to the targeted population, and a successful history of securing funds for similar activities;
(f) Utilize a property management agent with at least 24 months' experience in managing a special needs or supportive housing Project that would qualify as a Rental Housing Development pursuant to Section 8301(o), except that if the proposed Project has fewer than 10 Units, the Department may approve a property management agent with experience managing projects that do not qualify as Rental Housing Developments, provided that the agent has at least 24 months' experience managing housing for the specific population targeted by the proposed Project; and
(g) Not be operated as either a health facility, as defined by Section 1250 of the Health and Safety Code, or an alcoholism or drug abuse recovery or treatment facility, as defined by Section 11834.02 of the Health and Safety Code.


Note: Authority cited: Sections 50406(n), 50675.1(c), 50675.11, 50675.14(c) and 53533(a)(3), Health and Safety Code. Reference: Sections 50675.2(d), 50675.4, 50675.7, 50675.14(b) and 53533(a)(3), Health and Safety Code.








s 7343. Eligible Sponsor.
In order to be eligible to apply for funding pursuant to this Article 6, in addition to the requirements of Section 7303, a Sponsor shall:
(a) Have at least 24 months experience in the ownership or operation of at least one Rental Housing Development with 5 or more Units that includes Units reserved for the disabled or other special needs group; and
(b) If the Department uses an over-the-counter application process, have sufficient experience to score at least 4 points under the development and ownership scoring criteria (pursuant to Section 7320(b)(3)), except that the score shall be based on experience acquired in the prior 10 years.


Note: Authority cited: Sections 50406(n), 50675.1(c), 50675.11, 50675.14(c), and 53533(a)(3), Health and Safety Code. Reference: Sections 50675.7(c)(3), 50675.14(e) and 53533(a)(3), Health and Safety Code.








s 7344. Application Requirements.
In addition to the application requirements of Article 3, applications for funding under this Article shall include all the following information:
(a) Information sufficient to ascertain that the requirements of sections 7342 and 7343 have been met, and including at least one reference able to verify the role of the Sponsor in Projects submitted for experience;
(b) A supportive services plan that meets the requirements of Section 7345.


Note: Authority cited: Sections 50406(n), 50675.1(c), 50675.11, 50675.14(c) and 53533(a)(3), Health and Safety Code. Reference: Sections 50675.6, 50675.7, 50675.14 and 53533(a)(3), Health and Safety Code.








s 7345. Supportive Services Plan.
A supportive services plan shall be subject to the Department's approval and shall contain the following information and address the following topics:
(a) A description of the target population to be served including a narrative describing the tenant selection criteria, tenant eligibility verification process, tenant selection process, and expected sources of referrals. The tenant selection criteria and process shall be in accordance with applicable state and federal fair housing laws. The narrative shall also describe any reasonable accommodation policies as they relate to targeting and tenant selection of persons with disabilities.
(b) A description of the service needs of each target population that will be served.
(c) A description of the services that will be provided, where the services will be provided, who the provider will be, the provider's experience, and the provider's relationship to applicant.
(d) Documentation confirming the number of supportive service staff available to the Project and a narrative explaining staffing ratio and experience. Staffing levels must be documented as sufficient to make services available to meet the needs of the target population.
(e) A services line-item budget itemizing all expenses and listing the sources, amounts, and status (i.e., proposed or committed) of supportive service funds. The budget must demonstrate that the level of proposed funding is adequate to the types and levels of services to be provided and that all necessary costs are included.

(f) A narrative description of tenant engagement plan (i.e., plan to elicit voluntary tenant participation in services).
(g) Commitments or letters of intent to provide operational funding for a minimum of 25 percent of the total service budget. This requirement may be waived where the service provider documents a history of securing supportive service funding sufficient for the Department to make a determination that the proposed Project service funding needs will be attainable. (All Sponsors must document commitment of 100 percent of the approved services budget prior to the disbursement of MHP funds.)
(h) An assessment from a public or nonprofit funding or regulatory agency with oversight or monitoring responsibilities for the proposed supportive services for the proposed target population that verifies that:
(1) The proposed services and staffing levels are adequate and appropriate to meet the needs of the target population(s); and
(2) The applicant or proposed service provider is a viable provider of the proposed support services.

(i) If the Sponsor is applying for a competitive advantage in the Leverage scoring category based on collaborative relationships and a focus on measurable outcomes and a plan for evaluation pursuant to Section 7346(c), the following information:
(1) Evidence of its collaboration with an organization other than the Sponsor or affiliates of the Sponsor to provide a portion of the services to Project tenants, or evidence of collaboration among specialized intra-organizational programs, groups, or departments. The evidence of collaboration must: be in writing (e.g., contract, memorandum of understanding, letter of intent, letter of interest, or letter of understanding); clearly identify the entity it is from (e.g., on letter head paper); include the Project address; specify the services to be included in the collaborative effort; specify whether the services will be funded or provided, or both; include the estimated value of funds or in-kind services; include the term of the funding or service; and include a brief description and history of the entity providing the funding or services.
(2) A plan listing the projected outcomes and outcome measures that will be tracked and detailing how data will be collected, analyzed and evaluated.


Note: Authority cited: Sections 50406(n), 50675.1(c), 50675.11, 50675.14(c), and 53533(a)(3), Health and Safety Code. Reference: Sections 50675.14(b) and 53533(a)(3), Health and Safety Code.








s 7346. Application Point Scoring.
Pursuant to Section 7317(c), the Department has the discretion to make funds under this Article 6 available on a competitive or over-the-counter basis.
(a) In the event that the Department utilizes an over-the-counter process, the following provisions shall apply, and in order to be considered for funding, an application shall:
(1) Score a minimum of 125 points utilizing the criteria set forth in Section 7320, except that Development and Ownership Experience (Section 7320(b)(3)) shall be scored based on experience acquired in the prior 10 years;
(2) Score a minimum of 4 points in the Development and Ownership Experience criterion (Section 7320(b)(3)) based on the Sponsor's experience acquired in the prior 10 years; and
(3) Score a minimum of 5 points in the Project Readiness criterion (Section 7320(b)(6)).
(b) Projects requesting both MHP Supportive Housing and MHP General funding shall be scored under the requirements specified in Section 7320(b)(7), Adaptive Reuse/Infill/Proximity to Amenities. Projects requesting only Supportive Housing funding, and not MHP General funding, shall receive the full 10 points available under this scoring criterion.
(c) Applications that demonstrate collaboration with programs that meet the needs of disabled tenants at High Risk of Homelessness and include a focus on measurable outcomes and a plan for evaluation will receive a competitive advantage in the Leverage Scoring Category (Section 7320(b)(5)) as follows:
(1) Applications will be deemed to meet the "collaboration" criterion if the application documents a commitment from an organization other than the applicant or affiliates of the applicant to provide a portion of the services to Project tenants. Cooperation among specialized intra-organizational programs, groups, or departments may also qualify as collaboration.
(2) Applications will be deemed to meet the focus on measurable outcomes criterion if the applicant establishes reasonable projected outcomes and outcome measures for residential stability, increased skills or income, and greater self-determination. Applications will be deemed to meet the requirement for a plan for evaluation if the applicant can reasonably describe the proposed system for tracking the data and agrees to collect and evaluate data on outcomes at least annually, with a baseline established at move-in. As specified in Subdivision (c)(3), further competitive advantage will be awarded to applications that track and evaluate pre- and post-occupancy service utilization data for tenants who were, or become during occupancy, incarcerated, hospitalized, housed in a residential treatment facility, or in homeless facilities, and include this in their evaluation.
(3) Applications will be scored based on the amount of non-MHP funds for permanent funding of the development costs attributable to the Restricted Units, as a percentage of the requested amount of MHP funds. The leverage advantage for qualifying Projects will be applied as follows:
(A) Projects containing at least the minimum 35%, but less than 75% of total Units as Supportive Housing Units will receive one half point for every full 5 percentage point increment of other funds as a percentage of MHP funds. These Projects will receive the first half point when the other funds are equal to 55% of MHP funds. The maximum point award (20 points) will be reached when the other funds are equal to 250% of MHP funds.
(B) Projects containing 75% or more of total Units as Supportive Housing Units will receive one full point for every full 5 percentage point increment of other funds as a percentage of MHP funds. These Projects will receive the first point when the other funds are equal to 55% of MHP funds. The maximum point award (20 points) will be reached when other funds are equal to 150% of MHP funds.
(C) An additional 2 points will be awarded to Projects that track and evaluate service utilization data, up to the maximum 20 points available under the leverage scoring criterion.
Applications that do not demonstrate both collaboration and a focus on measurable outcomes with a plan for evaluation shall be awarded leverage points solely pursuant to Section 7320(b)(5).


Note: Authority cited: Sections 50406(n), 50675.1(c), 50675.11, 50675.14(c) and 53533(a)(3), Health and Safety Code. Reference: Sections 50675.4, 50675.5, 50675.6, 50675.7, 50675.13, 50675.14 and53533(a)(3), Health and Safety Code. (continued)