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(continued)
(e) Development loans shall bear interest at the rate of six percent simple interest per annum. The Department may forgive accrued interest on a pro rata basis to the extent that the number of lower-income households originally proposed to be served, have been served upon completion of the project.


Note: Authority cited: Sections 50406(n) and 50650.2, Health and Safety Code. Reference: Sections 50650.3(b) and 50650.7, Health and Safety Code.








s 7747. Development Loan-to-Value Limits.
Loan-to-value limits include all liens recorded or to be recorded on the project property.
(a) When development loan funds are used for the purchase of unimproved real property, the loan-to-value ratio shall not exceed one hundred (100) percent of the unimproved appraised value.
(b) When development loan funds are used for the purchase of improved real property, the loan-to-value ratio shall not exceed one hundred (100) percent of the improved appraised value.
(c) When development loan funds are used for predevelopment or site improvement costs, the loan-to-value ratio shall not exceed 100 percent of the appraised land value, plus predevelopment and/or site improvements costs.


Note: Authority cited: Sections 50406(n) and 50650.2, Health and Safety Code. Reference: Sections 50650.3(b) and 50650.7, Health and Safety Code.








s 7748. Development Requirements.
(a) Prior to disbursement of development loan proceeds:
(1) the developer borrower shall be the sole owner of the development site or upon close of purchase escrow when CalHome funds are being used for site acquisition;
(2) the developer borrower shall have a firm financing commitment(s) for all costs to complete the development;

(3) the Department shall have approved a final construction budget that ensures that the estimated sales price of the homes to be constructed:
(i) do not exceed the limits established in the NOFA; and
(ii) can reasonably be expected to be affordable to eligible buyers; and
(4) the developer borrower shall have met all other Department conditions for disbursement as stated in the Standard Agreement required by Section 7752(a).
(b) Consistent with the capacity requirements of Section 7717 and 7742, the developer borrower shall be required to develop the project without any co-developer.
(c) A home assisted with a development loan shall not be sold at a price that exceeds its appraised value.


Note: Authority cited: Sections 50406(n) and 50650.2, Health and Safety Code. Reference: Sections 50650.3(b), 50650.4 and 50650.7, Health and Safety Code.








s 7749. Application Process.
(a) The Department shall periodically issue a NOFA that specifies, among other things, the amount of funds available, the minimum/maximum application amount, the minimum/maximum activity amount, minimum/maximum amount per assisted unit, the maximum reimbursement amount per shared housing match, the maximum sales price/value limit which will represent 100% of the current local median sales price of a single family home, minimum number of units per homeownership development project, application requirements, the activities eligible for funding, the number of activities that may be applied for in one application, the allocation of rating points, the deadline for submittal of applications, the schedule for rating and ranking applications and awarding funds, and the general terms and conditions of funding commitments.
(b) In order to implement goals and purposes of the CalHome Program, the Department may adopt measures to direct funding awards to designated local program types or project types including, but not limited to local programs or projects that: are utilizing self-help labor; are utilizing volunteer labor; involve a construction skills training program; contribute toward community revitalization; or are located in rural areas or other areas to achieve a reasonable geographic distribution of funding, to the extent feasible. Such measures may include, but are not limited to:
(1) issuing a separate NOFA for designated local program or project types;
(2) awarding bonus points to designated local program or project types within a particular NOFA;
(3) reserving a portion of funds in the NOFA for designated local program or project types; and/or

(4) notwithstanding anything in these regulations to the contrary, a separate NOFA issued pursuant to this subsection may establish an over-the-counter application process meaning the Department continuously accepts and rates applications until the funding available under the NOFA is exhausted. At a minimum, a separate NOFA shall include a description of the application process and funding conditions, shall require compliance with paragraph (a) of this Section, and shall establish minimum funding threshold criteria based on the rating criteria set forth in subdivision 7741.


Note: Authority cited: Sections 50406(n) and 50650.2, Health and Safety Code. Reference: Section 50650.7, Health and Safety Code.








s 7750. Application Requirements.
Application shall be made in a format provided by the Department. The Department shall request the following information:
(a) Applicant identification information including: name, address, telephone number, contact person and, for nonprofit corporations, corporate governing documents and financial information (e.g., articles and by laws, certificate of good standing, confirmation of 501(c)(3) status, audited financial statements), and list of legislative representatives for the area where the program or project will be undertaken.
(b) Governing board resolution which legally authorizes the application.
(c) Certification that the applicant: has the authority to undertake the activities applied for; that it does not have any unresolved Department audit findings nor pending lawsuits; that if the application is for a construction project, construction work has not yet begun; and that it agrees to comply with all program requirements.
(d) Project or program description including: amount applied for, number of units or households to be assisted, income levels of households to be assisted, description of prior experience with the type of program or project applied for, geographic location of the activities, financing sources and uses, and description of any contributed labor.
(e) For development projects, the description of the project also shall include: a description of how the applicant has site control; the status of all local government approvals; availability of on and off site improvements and utilities; soil condition and environmental conditions; project costs; unit description in terms of size, number of bedrooms; per unit construction cost; estimated sales price and sources of financing; estimated monthly housing costs of purchasers; and description of the homebuyer education program.
(f) A description of how the applicant will comply with the requirements for local program administration set forth in Section 7721 applicable to the program or project being applied for.


Note: Authority cited: Sections 50406(n) and 50650.2, Health and Safety Code. Reference: Section 50650.7, Health and Safety Code.








s 7751. Selection Criteria.
(a) Applications shall not be considered for funding unless the application is received by the deadline as stated in the NOFA and demonstrates that all of the following conditions exist:
(1) The application contains substantially all of the information required by Section 7750 and contains sufficient information to allow the Department to apply the rating factors set forth in subsection (b) of this Section.

(2) the applicant is eligible;
(3) the applicant proposes an eligible activity;
(4) the applicant proposes an eligible use of the funds;
(5) the applicant does not have any unresolved audit findings for prior Department or federally-funded housing or community development projects or programs;
(6) the applicant has no pending lawsuits that would impact implementation of the program or project for which funding is being requested;
(7) if the application is for a development project, construction on the project has not yet begun; and
(8) the proposed program or project is consistent with any special terms and conditions of the NOFA (e.g., maximum amounts for downpayment assistance, sales price, development loan).
(b) Each application considered for funding shall be rated using the following criteria and maximum possible rating points. The maximum points an application may receive shall not exceed 1,000 points. Applications must receive a minimum of 550 points to be considered for funding.
(1) Capability to operate the local proposed program, administer and conduct the self-help technical assistance project, or develop the type of homeownership project proposed in the application as follows (up to 400 points):
(A) prior experience with administration/implementation of the type of program proposed in the application; or
(B) prior experience in developing the type of homeownership development project or self-help technical assistance homeownership project as proposed in the application; and
(C) prior experience with loan servicing or a plan to provide loan servicing/management capabilities.
(2) Community need in a geographic area of the proposed local program or project will be based on one or more of the following factors: poverty level and overpayment for housing by low-income households, age of housing stock in the jurisdiction, numbers and percentages of substandard housing units, overcrowding of housing by tenure (including rental and ownership housing) in the jurisdiction, and percentages of households that are below poverty level and who are overcrowded and living in substandard housing by tenure, as reflected in U.S. Census data; and the ratio between the median home sales price and the median household income in the jurisdiction. The specific community need factors that will apply to each activity will be identified in the NOFA. (up to 150 points)
(3) Feasibility of the proposed activity as demonstrated by either of the following (up to 250 points):
(A) for applications proposing local program activities, the extent to which the proposed local program is responding to a community need. Feasibility will be determined by statistical indicators based on single-source data readily available to the Department for all potential jurisdictions that may apply for CalHome funding.
(i) For mortgage assistance programs, feasibility will be based on U.S. Census Bureau data regarding the percentage of low-income homeownership in a jurisdiction, the ratio of the CalHome appraised value limits relative to the CalHome median income for a four-person household. From data supplied by the California Association of Realtors, the number of homes sold in the previous 12 months in a jurisdiction at or below the median sales price for the jurisdiction. The higher the percentage of low-income homeowners, the higher the points awarded. The higher the ratio of housing cost to income, the higher the points awarded. The higher the number of homes sold at or below median sales price the higher the points awarded.
(ii) For owner-occupied rehabilitation, feasibility will be based on U.S. Census Bureau data regarding the percentage of low-income households that are currently homeowners, the number of overcrowded households, and the age of the housing stock. The higher the percentage of low-income homeowners, the higher the points awarded. The higher the percentage of pre-1980 homes, the higher the points awarded. The higher the number of overcrowded households, the higher the points awarded.
(iii) For shared housing, feasibility will be determined by the U. S. Department of Housing and Urban Development's (HUD) fair market rent (FMR) for a one-bedroom unit as a percentage of CalHome median income (AMI) for a one-person household and U.S. Census Bureau data on the jurisdiction vacancy rate. The higher the ratio of FMR to AMI, and the lower the vacancy rate, the higher the points awarded.
(B) for applications proposing a homeownership development project or a self-help technical assistance homeownership project:
(i) the readiness of the project development to proceed as evidenced by the status of local government approvals; project financing commitments; resolution to impediments to development; and
(ii) evidence of ability to serve low- and very low-income households pursuant to the mortgage assistance underwriting requirements stated in Section 7731, as evidenced by the development budget and proposed unit sales prices.
(iii) feasibility will be based on U.S. Census Bureau data regarding percentage of low-income homeownership in a jurisdiction and the ratio of the CalHome appraised value limits relative to the CalHome median income for a four-person household. The higher the percentage of low-income homeowners, the higher the points awarded. The higher the ratio of housing cost to income, the higher the points awarded.

(4) Contributes to community revitalization as defined in Section 7716(g) or meets a legislatively mandated priority for funds allocated to the CalHome Program. (up to 100 points)
(5) Volunteer Labor, Self-Help Labor or Youth Construction Skills Training Program (up to 100 points)
Applications applying for homeownership development projects, self-help technical assistance homeownership projects, or a mortgage assistance local program for new construction housing or acquisition with rehabilitation when the recipient is acquiring and rehabilitating properties for sale to first-time homebuyers, will receive up to 100 points to the extent that they are utilizing:
(A) volunteer or self-help construction labor, where a minimum of five hundred (500) hours of on-site construction labor per assisted unit is provided; or
(B) labor provided by youth participating in a construction skills training program, where a minimum of five hundred (500) hours of on-site construction labor per assisted unit is provided. The five hundred (500) hours of construction training labor must be provided by the 16 to 24 year old program participants.
(c) Performance Penalty (50 points) A deduction to the total score will be applied for failure to meet CalHome Program Performance Goals pursuant to Section 7755.


Note: Authority cited: Sections 50406(n) and 50650.2, Health and Safety Code. Reference: Sections 50650.4 and 50650.7, Health and Safety Code.








s 7752. Legal Documents.
(a) Upon the award of funds the Department shall enter into a Standard Agreement with the Recipient constituting a conditional commitment of funds. This contract shall require the parties to comply with the requirements and provisions of these regulations. The Standard Agreement shall encumber State monies in an amount sufficient to fund the approved local program or project, subject to limits established in the NOFA and consistent with the application. The Standard Agreement shall contain, but not be limited to, the following as appropriate for the activity. In the case of a self-help technical assistance award, the Department shall enter into a Technical Assistance Standard Agreement (TASA) pursuant to CCR Title 25, Division 1, Chapter 7, Subchapter 6.5, Article 3, Section 7554. Where that section and the following deviate, the aforementioned Section 7554 takes precedence.
(1) a description of the approved local program or project and the permitted uses of CalHome program funds;
(2) provisions governing the amount, terms and conditions of the Department's development loan or grant to the Recipient;
(3) for homeownership development projects, provisions governing the construction work and, as applicable, the acquisition of the project site, and the disbursement of loan proceeds;
(4) for self-help technical assistance projects, a budget and a timetable for completion of the project;
(5) requirements for the execution and, where appropriate, the recordation of the agreements and documents required under the CalHome Program;

(6) for a local program or project, the Recipient's responsibilities for operation of the local program or completion of the project, including, but not limited to, number of units to be assisted, marketing, CalHome Program loan processing and funding, construction monitoring and disbursement, report submissions, file documentation;
(7) for a homeownership development project, the Recipient's responsibilities for the development of the project, including, but not limited to, number of units to be assisted, marketing, processing of individual homebuyer CalHome Program loans, expiration date, report submissions, file documentation;
(8) manner, timing and conditions for disbursement of CalHome Program or project funds to Recipients;
(9) provisions relating to the placement on or in the vicinity of the homeownership development project site, a sign indicating that the Department has provided financing for the project. The Department may also arrange for publicity of the Department CalHome Program homeownership development loan in its sole discretion;
(10) remedies available to the Department in the event of a violation, breach or default of the standard agreement;
(11) requirements that the Recipient permit the Department or its designated agents and employees the right to inspect the project or local program and all books, records and documents maintained by the Recipient in connection with the local program or self-help technical assistance project grant or development loan or local program individual CalHome Program loans;
(12) special conditions imposed on a case-by-case basis as part of Department approval of the local program or project;
(13) terms and conditions required by federal or state law; and
(14) other provisions necessary to ensure compliance with the requirements of the CalHome Program.
(b) Prior to the disbursement of funds, the Department shall enter into a twenty (20) year monitoring agreement with the Recipient requiring the parties to comply with the requirements and provisions of Section 7724 regarding a reuse account established pursuant to the CalHome legislation. The monitoring agreement shall contain, but not be limited to, the following:

(1) requirements regarding the establishment of a reuse account for the deposit of CalHome loan repayments, including interest and principal, and the requirements for disbursement of funds from the reuse account;
(2) the plan for servicing of the CalHome loans as prepared by the Recipient and reviewed and approved by the Department;
(3) the plan for the reuse of CalHome funds;
(4) requirements for submittal of an annual report;
(5) remedies available to the Department in the event of a violation, breach or default of the monitoring agreement;
(6) requirements that the Recipient permit the Department or its designated agents and employees the right to inspect the local program or project and all books, records and documents maintained by the Recipient in connection with the reuse account and long term loan servicing; and
(7) other provisions necessary to ensure compliance with the requirements of the CalHome Program.
(c) All homeowner/homebuyer CalHome Program loans originated by a Recipient shall be evidenced by the following documents and provisions:
(1) a promissory note evidencing the CalHome Program loan, payable to the Recipient in the principal amount of the CalHome Program loan and stating the terms and rate of interest of the CalHome Program loan consistent with the requirements of the CalHome Program. The Recipient is prohibited from assigning their beneficial interest under the note. The note shall be secured by a deed of trust, or other appropriate security instrument acceptable to the Department, on the homeowner/homebuyer property naming the Recipient as beneficiary. This deed of trust or other appropriate security instrument shall be recorded and shall secure the Recipient's financial interest in the project.
(2) in the case of homeowner rehabilitation CalHome Program loans, a loan agreement between the homeowner and the Recipient governing the rehabilitation and the CalHome Program loan terms. The terms of any other financing provided by the Recipient should also be included.
(d) Development loan legal documents shall include, but not be limited to:

(1) a promissory note evidencing the loan, payable to the Department in the principal amount of the loan and stating the terms of the loan consistent with the requirements of the CalHome Program. The note shall be secured by a deed of trust on the project property naming the Department as beneficiary. This deed of trust 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 the developer borrower's program obligations;
(2) a development agreement between the Department and the developer borrower for not less than the term of the development loan.
(e) Self-help technical assistance grant legal documents shall include, but not be limited to, an agreement between the Recipient and self-help participants which clearly sets forth what is expected of each party and which clearly shows what work is expected of the participating household.


Note: Authority cited: Sections 50406(n) and 50650.2, Health and Safety Code. Reference: Sections 50650.2, 50650.3(b), 50650.4 and 50650.7, Health and Safety Code.








s 7753. Disbursement of Grant and Loan Funds.
(a) CalHome Program funds shall be disbursed on an advance basis. Details of the process for advance disbursements will be published in the current NOFA, and shall be included in all Standard Agreements. Advances may include, but are not limited to:
(1) homeownership project development loan disbursements;
(2) advances of up to 25% of the award for self-help and shared housing technical assistance;
(3) advances for Owner-Occupied Rehabilitation programs up to the amount of the Recipient's anticipated volume of closed loans for the following sixty days; or
(4) advances to escrow for mortgage assistance loans.


Note: Authority cited: Sections 50406(n) and 50650.2, Health and Safety Code. Reference: Sections 50650.2, 50650.3(b), 50650.4 and 50650.7, Health and Safety Code.








s 7754. Reporting Requirements.
(a) During the term of the Standard Agreement and no later than thirty (30) days after the end of each calendar quarter, the Recipient shall submit to the Department a performance report which shall address the following topics;
(1) Description of current status of program activity, including number of units assisted,
(2) Description of activities to be undertaken in the next reporting period,

(3) Description of problems or delays encountered in program implementation, and course of action taken to address them,
(4) Description of actions to achieve program expenditure deadlines,
(5) Summary of program fiscal status, including:
(A) Award amount,
(B) Funds drawn, and,
(C) Remaining balance.
(b) During the term of the Standard Agreement and Monitoring Agreement, no later than thirty (30) days after June 30th of each year, the Recipient shall submit to the Department an annual performance report which shall address the following topics;
(1) Number of units assisted with CalHome Program loans by program activity type,

(2) Amount of CalHome Program funds spent on CalHome eligible activities by category,
(3) Summary of fiscal status for the reporting period, including
(A) Award amount,
(B) Funds drawn as of June 30th, and,
(C) Remaining balance.
(c) At any time during the term of the Standard Agreement or the Monitoring Agreement, the Department may perform or cause to be performed an independent financial audit of any and all phases of the Recipient's local program, self-help technical assistance project or homeownership development project. At the Department's request, the Recipient shall provide, at its own expense, a financial audit prepared by a certified public accountant.


Note: Authority cited: Sections 50406(n) and 50650.2, Health and Safety Code. Reference: Sections 50650.2, 50650.3(b) and 50650.7, Health and Safety Code.








s 7755. Performance Goals.
(a) For all local program activities:
(1) One hundred (100) percent of funds must be expended within thirty-six (36) months of the date of the award of funds by the Department. If this goal is not met:
(A) the remaining unused funds shall be disencumbered by the Department; and

(B) if less than ninety-five (95) percent of the funds are expended at the end of the 36th month, the Recipient's next application for funding under the CalHome Program shall receive a penalty deduction in the total points awarded pursuant to the current NOFA.
(b) For homeownership development projects:
(1) the Recipient shall draw down CalHome funds or begin onsite construction within twenty-two (22) months of the award of funds by the Department. If this goal is not met the Department may disencumber all funds and cancel the Department commitment to the project; and
(2) unit construction must be completed and CalHome Program mortgage assistance loans closed within thirty-six (36) months of the award of funds by the Department. If the projected number of assisted units has not been achieved by the end of the 36th month, the Recipient's next application for funding under the CalHome Program shall receive a penalty deduction in the total points awarded pursuant to the current NOFA.
(c) For self-help technical assistance grants:

(1) the Recipient shall begin onsite construction within twelve (12) months of the award of funds by the Department. If this goal is not met the Department may disencumber all funds and cancel the Department commitment to the project; and
(2) unit construction must be completed within thirty-six (36) months of the award of funds by the Department. If this goal is not met then:
(A) the remaining unused funds may be disencumbered by the Department; and
(B) if the projected number of assisted units has not been completed by the end of the 36th month, the Recipient's next application for funding under the CalHome Program shall receive a penalty deduction in the total points awarded pursuant to Section 7751.


Note: Authority cited: Sections 50406(n) and 50650.2, Health and Safety Code. Reference: Sections 50650.2 and 50650.7, Health and Safety Code.








s 7756. Defaults and Loan Cancellations.
(a) Funding commitments may be canceled by the Department under any of the following conditions:
(1) the objectives and requirements of the CalHome Program cannot be met;
(2) implementation of the local program or project cannot proceed in a timely fashion in accordance with the timeframes established in the Standard Agreement; or

(3) funding conditions have not been fulfilled within required time periods.
(b) In the event of a breach or violation by the Recipient of any of the provisions of the Standard Agreement, the Development Agreement, the homeownership project development loan promissory note, or the homeownership project development loan deed of trust, or any other agreement pertaining to the homeownership development project, the Department may give written notice to the sponsor to cure the breach or violation within a period of not less than fifteen (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 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 amount 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 complete the project in accordance with CalHome Program requirements; and
(3) the Department may seek such other remedies as may be available under the relevant agreement or any law.
(c) Upon receipt of a notice of intent to cancel the commitment from the Department, the Recipient shall have the right to appeal to the Director.


Note: Authority cited: Sections 50406(n) and 50650.2, Health and Safety Code. Reference: Sections 50650.2, 50650.3(b) and 50650.7, Health and Safety Code.








s 7800. Scope and Application.
(a) These regulations implement and interpret the Rental Housing Construction Program, Sections 50735 through 50770, inclusive, of the Health and Safety Code. They establish procedures for the disbursement of development and subsidy funds and establish policies and procedures for use of these disbursements to provide affordable housing under the Program. They also delegate authority for the initial recommendation of approval, rejection, amendment, and termination of loans or grants, with the exception of emergency loans and loans and grants to the Agency, from the Director of the Department of Housing and Community Development to the Committee referred to in this subchapter.
(b) The program is divided into three main components, designated as
(1) the sponsor development component,
(2) the rights of occupancy component, and
(3) the housing authority component, each of which is financed by the development payments account. In addition, these are complemented by the annuity fund, the management reserve account, and the feasibility account.
(c) Developments financed by the Agency shall be subject to the requirements of Articles 1, 2, and 6. All other developments shall be subject to the requirements of Articles 1 through 5, inclusive.


Note: Authority cited: Section 50737, Health and Safety Code. Reference: Section 50737, Health and Safety Code.










s 7801. Severability.
If any provision of this subchapter or the Program, or the application thereof to any person, entity or circumstances, is held invalid, such invalidity shall not affect other provisions or applications of the part which can be given effect without the invalid provision or application, and to this end the provisions of this subchapter are severable.


Note: Authority cited: Section 50737, Health and Safety Code. Reference: Section 50737, Health and Safety Code.








s 7802. Definitions.
The following are definitions governing the Program. They are supplemented by definitions in Subchapter 2 (commencing with Section 6910) of Chapter 6 of Title 25, California Administrative Code.
"Affordable rent" means rent determined by the Department to be affordable, in accordance with Section 7806.
"Agency" means the California Housing Finance Agency.
"Applicant" means a local finance entity or a housing authority seeking assistance from the Program or the Department acting as a local housing authority pursuant to law.
"Assisted unit" means a dwelling unit in a rental housing development or space in a mobilehome park available on a priority basis to or occupied by an eligible household at a rent which is affordable to that household as a result of assistance from the Program.
"Available to or occupied by on a priority basis" with respect to an assisted unit means a dwelling unit occupied by an eligible household or unoccupied and held out for rent on a priority basis to eligible households.
"Below market interest financing" means any of the following:
(1) A long-term loan made by the agency with below-market interest, as defined by Section 50056.
(2) A long-term loan made by a local finance entity at a below-market interest rate no higher than that established from time to time by the Department, provided such rate shall not exceed by more than one and one-half percent the interest rate on long-term loans, if any, made by the Agency for rental housing development proposals being submitted or processed for Department assistance under this chapter at the same time.
(3) The use of subsidies, assistance, or financing, other than as provided in paragraphs (1) and (2), which reduce rent levels by an amount equivalent to that enabled by long-term loans at the interest rate established for purposed of paragraph (2).
(4) Subsidies, assistance, or financing provided to the sponsor by or through the Agency or local finance entity and which is a loan made at below-market interest by an agency of the federal government.
"Code" means the California Health and Safety Code.
"Committee" means the Rental Housing Construction Program Committee established pursuant to Title 25, California Administrative Code, Section 6902(c).
"Department" means the California Department of Housing and Community Development.
"Development agreement" means a contract between an applicant and a sponsor in accordance with Section 7822 which regulates the construction of the rental housing development.
"Development costs" means the aggregate of all approved costs incurred in connection with construction of a rental housing development or rental unit, as the context requires, including:
(1) land acquisition, whether by purchase or lease,
(2) the construction of the rental units and related structures, including the costs of construction financing,
(3) overhead, including architectural, legal and accounting fees,
(4) off-site improvements, including sewers, utilities and streets,
(5) necessary on-site improvements,
(6) relocation costs,
(7) long-term financing fees
(8) rent-up and marketing expenses, and
(9) long-term financing costs where recommended by the Committee pursuant to Section 7842(d), (g).
"Elderly household" means a family in which the head of the household is 60 years of age or older or a single person who is 60 years of age or older except that different age limitation may be utilized if federal funding is utilized and such funding requires a different limitation.
"Eligible household" means a very low-income household or other lower income household, as defined in Sections 6926 and 6928.
"Excess Rents" means the project income attributable to the assisted units in excess of approved operating expense attributable to the assisted units. Project income attributable to the assisted units shall include carrying charges pursuant to Section 7858(g) and (h).
"Fund" means the Rental Housing Construction Fund.
"Handicapped household" means:
(1) a single person or a family in which the head of the household is suffering from an orthopedic disability impairing personal mobility or a physical disability affecting the ability to obtain employment, where the family or person requires special care or facilities in the home, or
(2) a single person or a family in which the head of household suffers from a developmental disability specified in Section 38010(a) of the Code or a mental disorder which would render him or her eligible to participate in programs of rehabilitation or social services conducted by or on behalf of a public agency.
"Interagency operating agreement" means the contract between the Department and the Agency pursuant to Article 6 which regulates the relationship between the Department and the Agency.
"Local finance entity" means a redevelopment agency, local housing authority, city, county, city and county, or duly constituted governing body of an Indian rancheria, or any combination thereof, which proposes to provide or use below market interest financing or an equivalent subsidy for a rental housing development.
"Program" means the Rental Housing Construction Program and Chapter 9 (commencing with Section 50735) of Part 2 of Division 31 of the Health and Safety Code, and regulations promulgated thereunder.
"Regulated agreement" means a contract between the Agency or a responsible agency and a sponsor in accordance with Section 7822 which, establishes the respective rights and duties of the parties with respect to the development and payment therefor.
"Regulatory agreement" means a contract between the Agency or a responsible agency and a sponsor in accordance with Section 7822 which, establishes the respective rights and duties of the parties with respect to the development and payment therefor.
"Rental housing development" means five or more rental dwelling units, including mobilehomes, on one or more sites assisted or sought to be assisted under the Program. "Rental housing development" also includes five or more mobilehome park spaces. For purposes of the Program, a stock cooperative or limited equity housing cooperative is a rental housing development.
"Responsible agency" means the local finance entity under the sponsor development component, the local housing authority under the rights of occupancy component, or the Department under the housing authority development component. It includes the Department where the Department has contracted with a local finance entity pursuant to Section 50750 of the Code.
"Rural area" means any open country or any place, town, village, or city which by itself and taken together with any other places, towns, villages, or cities that it is part of or associated with:
(1) has a population not exceeding 10,000 or
(2) has a population not exceeding 20,000 and is contained within a nonmetropolitan area.
"Rural area" also includes any open country, place, town, village, or city located within a Standard Metropolitan Statistical Area if the population thereof does not exceed 20,000 and the area is not part of, or associated with, an urban area and is rural in character.
"Site control" includes actual ownership of a site, the right to purchase a site under a contract to purchase or option agreement, or such other control of the ownership or possession of a site as the Department considers satisfactory.
"Sponsor" means any individual, joint venture, partnership, limited partnership, trust, corporation, cooperative, local public entity, duly constituted governing body of an Indian rancheria, or other legal entity, or any combination thereof, certified pursuant to Section 7812 as qualified to own and manage or construct a rental housing development. A sponsor may be organized for profit or limited profit or be nonprofit.
"State contract" means the contract between the Department and an applicant in accordance with Section 7822 which regulates the conduct of those entities.


Note: Authority cited: Section 50737, Health and Safety Code. Reference: Sections 50735 and 50737, Health and Safety Code.








s 7804. Priorities.
Priorities for allocation of Program funds for applicants shall be in accordance with the Department's guidelines for a rating system, and for the Agency, in accordance with the explanation by the Agency consistent with the requirements of this subchapter, which will give priority to housing developments which:
(a) are of the lowest cost possible, given Program requirements and local market conditions,
(b) incorporate innovative or energy-efficient design and construction techniques and higher densities, where such techniques and densities result in lower costs without reducing the quality of the housing.
(c) complement the implementation of a local housing program intended to increase the housing supply for persons and families of low or moderate income.
(d) have been subsidized beyond minimum requirements by
(1) funds, services or land contributed or received by the sponsor, or in the case of the housing authority development component by the local housing authority, or
(2) an allocation of Community Development Block grant funds for eligible expenditures including but not limited to rent subsidies, site acquisition, development costs and construction costs,
(e) use available funds in the most efficient manner to produce the maximum number of housing units, and
(f) are located within existing public transit corridors as defined in Section 50093.5 of the Health and Safety Code, to the extent feasible and consistent with the other priorities contained in this section. This priority shall not apply to rental housing developments located in rural areas.


Note: Authority cited: Section 50737, Health and Safety Code. Reference: Section 50737, Health and Safety Code.








s 7806. Calculation of Affordable Rents.
(a) For the purposes of the Program, rent for the assisted units shall include all regular charges paid to a sponsor or local housing authority by an eligible household for the use and occupancy of an assisted unit in a rental housing development.
(b) Rent payable for assisted units occupied by very low income households shall be deemed affordable for the purposes of the Program if, including an allowance for utility costs, it does not exceed the greater of:

(1) A "base rent" of twenty-five percent (25%) of the amount payable to specific household sizes pursuant to Section 11453 of the Welfare and Institutions Code, as adjusted annually pursuant to Section 11453 of the Welfare and Institutions Code, and the size of the unit, as set forth below
1-BR Unit-2 person household
2-BR Unit-2 person household
3-BR Unit-4 person household
4-BR Unit-6 person household
5-BR Unit-8 person household
or, if higher,
(2) twenty-five percent (25%) of the income of such household.
(c) Rent payable for assisted units occupied by other lower income households shall be deemed affordable for the purposes of the Program if, including an allowance for utility costs, it does not exceed the greater of:
(1) a "base rent" of twenty-five percent (25%) of fifty percent (50%) of the area median income adjusted for family size of the geographical area in which the rental housing development is located, or, if higher,
(2) twenty-five percent (25%) of the income of such household.
(d) For the purposes of this section, "utilities" include garbage collection, sewer, water, gas, electricity and other heating, cooling or refrigeration fuels which are billed separately from the rent but do not include the cost of telephone service.
(e) The allowance for utility costs shall be calculated as follows: An estimate of utility usage and costs will be prepared for each assisted unit. Such estimate will be based on a reasonable use of utilities by a typical household and will take into account the size and energy efficiency of each unit, and the cost of such utilities then current with respect to the development, considering any subsidies to which the typical eligible household may be entitled. This estimate shall be the allowance for determination of affordable rent pursuant to subdivisions (b) and (c) for the first year of occupancy of the assisted unit. This estimate shall be reviewed annually, taking into account changes in utility costs, and the allowance for utility costs after approval by the Agency or responsible agency shall be adjusted accordingly and implemented pursuant to Sections 7864 and 7888.
(f) Notwithstanding any provision of this section, an eligible household shall not be entitled to receive any payment or "negative rent" if its allowance for utilities exceeds the amount specified in subdivisions (b)(1) or (b)(2) or (c)(1) or (c)(2).
(g) Notwithstanding any other provision of this Section, where assisted units are receiving subsidies under Section 8 of Title II of the Housing and Community Development Act of 1974 as amended, then the rents payable by tenants of such assisted units pursuant to the rules and regulations governing the Section 8 Program shall be deemed affordable for the purpose of this Program.
(h) Where the responsible agency or the Agency is authorized to fix and alter a schedule of rents necessary to provide residents of non-assisted units with affordable rents, to the extent consistent with the maintenance of the financial integrity of the rental housing development, the affordable rents, if any, will be determined by the responsible agency or the Agency on a case-by-case basis consistent with the calculation of rental income necessary to ensure the financial feasibility of the particular rental housing development.


Note: Authority cited: Section 50737, Health and Safety Code. Reference: Sections 50749 and 50759, Health and Safety Code.








s 7808. Component Accounts.
(a) The Fund is to be allocated to four component accounts, the Development Payments Account, the Annuity Fund Account, the Feasibility Account, and the Management Reserve Account. The Management Reserve Account shall consist of 4(four) percent of the amount in the Fund as of January 1, 1980. The Department shall allocate the remainder of the Fund to the remaining Accounts in such a way so as to ensure that the maximum number of assisted units is developed and maintained at affordable rents and not less than 20 percent of the Fund is allocated for annuity fund payments.
(b) The Department may direct the transfer of funds from one account to another consistent with legal requirements.


Note: Authority cited: Section 50737, Health and Safety Code. Reference: Sections 50738, 50740, and 50748, Health and Safety Code.








s 7810. Eligibility of Sponsors.
(a) At the time of application for assistance for a proposed rental housing development, the applicant shall certify to the Department that the sponsor of the proposed rental housing development has or will have the capability to construct, or own and manage, such development in accordance with the criteria set out in subdivision (b).
(b) In determining the capability of a sponsor under this section, the Department and Agency or applicant shall take into account at least the following criteria:
(1) administrative capability,
(2) the sponsor's previous experience in design, construction and management of multi-family rental housing or the experience in such design, construction and management of staff or consultants employed or to be employed by the sponsor, taking into account the size and complexity of the proposed development,
(3) financial capability, and
(4) the possession of sufficient assets or credit to provide adequately for the predevelopment costs of the proposed rental housing development, and contingent expenses.


Note: Authority cited: Section 50732, Health and Safety Code. Reference: Section 50745, Health and Safety Code.








s 7812. Eligible Projects.
(a) To be eligible for assistance under sponsor development component, the applicant must be the Agency or a local finance entity and a project must be a rental housing development with a sponsor and financed with below-market interest rate financing. In the rental housing development, no less than thirty percent (30%) of the units will be assisted units and no less than twenty percent (20%) of the units shall be available on a priority basis to or occupied by very low- income households, including all households with income equal to or less than fifty percent (50%) of the area median income adjusted for family size.
(b) To be eligible for assistance under the rights of occupancy component, a project must be a rental housing development with a sponsor in which a local housing authority will obtain rights of occupancy to at least thirty percent (30%) of the units, and no less than twenty percent (20%) of the units shall be available on a priority basis to or occupied by very low-income households, including all households with income equal to or less than fifty percent (50%) of the area median income adjusted for family size.
(c) To be eligible for assistance under the housing authority development component, a project must be a rental housing development:
(1) to be developed, constructed, owned and operated by a local housing authority;
(2) in which all of the units will be available to or occupied by eligible households at affordable rents; and
(3) in which two-thirds of the units will be available on a priority basis to or occupied by very low income households, and one-third available on a priority basis to or occupied by other low-income households.
(d) No development shall be eligible for assistance under this subchapter unless construction commenced on or after July 1, 1980. "Construction" for the purposes of this subdivision shall mean on-site improvements including the construction of the rental units and related structures, and excluding demolition, land fill, grading and site improvements intended for public dedication including sewers, utilities, and streets.
(e) No development shall be eligible for assistance under this subchapter unless:
(1) the locality in which the project will be located has an adopted housing element pursuant to Section 65302(c) of the Government Code which the Department has found to be in conformance with Section 65302(c) of the Government Code, or the locality, prior to approval of the project application, has an extension from the Office of Planning and Research pursuant to Government Code, Section 65302.6, to prepare a housing element; or
(2) the Department makes the following findings:

(A) that the proposed housing development has a satisfactory level of compliance with the priorities as set forth in Section 7804; and
(B) that there exists in the region a severe housing shortage for low and moderate income households, and notwithstanding the locality's failure to comply with State housing element requirements, there exists such an overriding need for the particular proposed housing development that state funding is justified. (continued)