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(continued)
Where the proposed housing development is a subdivision under the State Subdivision Map Act, the requirements of that Act and Government Code Section 66473.5, shall be met.


Note: Authority cited: Section 50737, Health and Safety Code. Reference: Sections 50736, 50745, 50755, 50765, Health and Safety Code.








s 7814. Relocation Assistance.
In the event a tenant or owner is displaced because a local government or housing authority acquires property for a development assisted by the Program, the Relocation Guidelines, Title 25, California Administrative Code, Section 6000 et seq., apply to any displacement that results from such acquisition. With respect to any other residential tenants (not owner-occupants) who will be permanently or temporarily relocated due to a development assisted by the Program other than the right of occupancy component, but who are not assisted under the Guidelines, the following requirements will apply.
(a) Such tenants are eligible for relocation assistance and benefits described in this section if they are displaced after approval for financing by a local finance entity or the Agency unless the tenancy is terminated thereafter for good cause as set forth in Section 7860 or they take occupancy after the approval for financing with notice from the sponsor of the approval and potential displacement.
(b) Within a reasonable period of time prior to displacement, each tenant to be permanently relocated will be provided a reasonable choice of suitable replacement housing. "Suitable replacement housing" is:
(1) Decent, safe, and sanitary, and affordable as set forth in Section 7806, and
(2) In a location that is not generally less desirable than the location of the displaced tenant's existing dwelling with respect to public utilities, commercial and public facilities, social and economic characteristics, and the tenant's place of employment (or to sources of employment if the tenant is unemployed but employable) .
Each tenant will be reimbursed by the owner for reasonable moving and related expenses as set forth in Section 6090 or may receive, at the discretion of the tenant, a fixed payment as set forth in Section 6098.
(c) A tenant may be required to relocate for a temporary period only if this is necessary to carry out the project and he/she is permitted to occupy a dwelling in the completed development or another assisted development in the area. The temporary relocation may not exceed 12 months in duration in a decent, safe, and sanitary dwelling and the tenant will be reimbursed for actual, reasonable, out- of-pocket expenses including moving costs to and from the temporary housing and any increase in the monthly housing cost (rent and reasonable utilities). If the new dwelling unit is not ready for occupancy within the 12- month period, the tenant will be notified of the earliest anticipated date of occupancy and will have the right to agree to wait until the extended date or to request treatment as being permanently displaced.
(d) All potential displacees will be provided advance written and oral information in a manner which ensures that they understand relocation opportunities and assistance. In addition, appropriate advisory services will be provided to minimize relocation hardships.
(e) No lawful occupant will be required to move from his/her residence without at least 90 days advance written notice of the earliest date by which he/she may be required to move and a 30-day notice prior to the actual date upon which a move is required.
(1) If a tenant is provided but refuses at least three (3) opportunities to move to suitable replacement housing, the sponsor will not be obligated to make further efforts to provide replacement housing.
(2) If affordable, replacement housing subject to subdivision (b) cannot be found, the sponsor's obligation under this section may be satisfied by providing the tenant with a lump sum payment equal to 48 times the amount, if any, necessary to reduce the monthly housing cost (rent and reasonable utilities) of an otherwise suitable replacement unit to an affordable level.
(f) A tenant who believes that this section has been violated may appeal first to the Agency or appropriate responsible agency, if appropriate, and if this appeal does not resolve the issue within a reasonable period of time, may appeal to the Department.
(g) Sponsors are responsible for assuring that payments and services required by this section are provided.


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








s 7816. Program Requirements.
(a) Except as set forth in Sections 7824 or 7874, no development payment under the sponsor development or housing authority development component shall exceed the lesser of:
(1) one hundred percent (100%) of the development cost of a rental housing development, and
(2) the amount required when considered with below market rate financing to enable the construction of the rental housing development or ensure the economic feasibility of affordable rents for the assisted units.
(b) In addition to other requirements of this subchapter, or all units assisted by the Program:
(1) at least two-thirds shall be made available on a priority basis to or occupied by very low income households, including all households with incomes equal to or less than fifty percent (50%) of the area median income adjusted for family size, and
(2) not less than twenty percent (20%) and not more than thirty percent (30%) shall be available on a priority basis to or occupied by the elderly or handicapped, and
(3) not less than ten percent (10%) shall be accessible to the physically handicapped and such units will be available by or occupied by the handicapped, and
(4) not less than twenty percent (20%) shall be located in a rural area.
(c) Funds sufficient for the construction of forty-eight (48) assisted units specially designed for the mentally and developmentally handicapped, and having access to special supportive services provided by an agency other than the Department, will be reserved for rental housing developments incorporating such units. This reservation of funds will terminate one year after the first Committee meeting. In addition to the reservation of funds for handicapped units under this subdivision, the Department sets as a non-binding goal the reservation of sufficient funds for a further forty-eight (48) such handicapped units until one year after the first Committee meeting. All handicapped units assisted under this subdivision shall be counted as units available to the elderly or handicapped for the purposes of subdivision (b)(2). No units assisted under this subdivision shall be counted as accessible to the physically handicapped for the purposes of subdivision (b)(3), whether or not so accessible.
(d) The Department establishes as a goal affirmative solicitation of and provision of technical assistance to nonprofit and cooperative sponsors.


Note: Authority cited: Section 50737, Health and Safety Code. Reference: Sections 50736, 50747, Health and Safety Code.








s 7818. Assistance Payment Enforcement.
(a) If the development assistance payments are made by way of a loan, a deed of trust in favor of the Department, or in the case of payments made through the Agency, in favor of the Agency, securing said loan and the conditions of the regulatory agreement shall be executed which shall create a first or second lien on the housing development with respect to which said loan is made and shall be executed and recorded in accordance with existing applicable laws.
(b) If the development assistance payments are made by way of a grant, the regulatory agreement shall provide that failure to operate the development in accordance with the requirements of the Program shall be deemed to be a violation of the regulatory agreement and shall subject the sponsor to the procedure set forth therein.
(c) The provisions of Sections 7870, and 7892, as applicable, shall apply to the deed of trust or regulatory agreement.
(d) Contemporaneously with the execution and recordation of the deed of trust or regulatory agreement, the Agency or local finance entity shall cause to be recorded, or referenced to a recorded document, in the office of the county recorder of the county in which the assisted units are located, the document(s) evidencing the loan or a grant and conditions therein. It shall be indexed by the recorder in the Grantor Index to the name of the grantee and in the Grantee Index to the name of the State of California, and shall include a legal description of the assisted property that is the subject of the document(s).
(e) The obligations of the sponsor under the regulatory agreement shall provide the responsible agency with regulatory authority that is separate and distinct from, and is not dependent or conditioned upon, any financial interest or claim that such agency might otherwise have with respect to the sponsor on account of the development assistance payments.


Note: Authority cited: Section 50737, Health and Safety Code. Reference: Sections 50746, 50755, 50765, Health and Safety Code.








s 7820. Eligibility of Loan Finance Entities.
(a) Before the Department makes a conditional commitment to a local finance entity, it shall certify after receipt and review of an application that such entity has the capability of:
(1) ensuring the feasibility of the rental housing development,
(2) monitoring the design and construction of the rental housing development, and

(3) monitoring the management of the rental housing development for a period of thirty (30) years or the term of the below market interest financing, if any, whichever is greater.
(b) In determining the capability of a local finance entity, the Department shall take into account the following criteria:
(1) the entity's ability to provide below market interest financing, as evidenced by the market rating and other relevant factors of bonds issued or to be issued by such entity, or the entity's ability to provide other equivalent assistance, and
(2) administrative capability, as evidenced by the experience of such entity or staff or consultants employed or to be employed by such entity, in implementing grant or loan programs for housing rehabilitation or construction and management of government-assisted housing.
(c) A local finance entity may be eligible for assistance under the Program notwithstanding that it cannot meet the criteria for certification under this section, if:

(1) it is located in a rural area,
(2) the Department or an entity approved by the Department contracts or proposes to contract with it to ensure that the terms of the regulatory agreement between it and the sponsor are carried out, and
(3) the legislative body of the local finance entity consents to such a contract.
(d) A housing authority's eligibility shall be certified in the same manner as a local finance entity.


Note: Authority cited: Section 50737, Health and Safety Code. Reference: Sections 50745, 50750, Health and Safety Code.








s 7822. Contracts and Agreements.
(a) All assistance provided by the Department shall be governed by contracts binding all applicants and sponsors in accordance with this section, except that assistance through the Agency shall be governed by an Interagency Agreement pursuant to Article 6, and the Agency's sponsors by Section 7882.
(b) Assistance to local finance entities under the sponsor development component shall be governed by a state contract between the Department and the local finance entity and by a development agreement and a regulatory agreement between the local finance entity and the sponsor.
(c) Assistance to local housing authorities under the rights of occupancy component shall be governed by a state contract between the Department and the local housing authority and by a regulatory agreement between the local and housing authority and the sponsor.
(d) Assistance to local housing authorities under the housing authority component shall be governed by a state contract, a development agreement and a regulatory agreement between the Department and the local housing authority. The terms of the contract and the agreements may be incorporated in a single document if the Department so requires.
(e) Provisions and requirements relating to assistance under the annuity trust fund shall be incorporated into the state contract and regulatory agreement governing assistance under the appropriate main component.
(f) Provisions and requirements relating to assistance under the management reserve account and the feasibility account may be incorporated by way of amendment into the state contract and regulatory agreement governing assistance under the appropriate main component.
(g) The Department may require such additional contracts and agreements between the Department, applicants and sponsors as it deems necessary to meet the purposes of the Program.
(h) All state contracts other than the Interagency Operational Agreement and all regulatory agreements shall be recorded or referenced in a recorded document in the office of the county recorder in the county in which the rental housing development to which they relate is located. When so recorded, they shall constitute a lien on the rental housing development in accordance with Section 7818 for the performance of conditions, including the payment of any money, specified therein. Recorded state contracts shall be indexed in the grantor index to the name of the sponsor and in the grantee index to the State of California. Recorded regulatory agreements shall be indexed in the grantor index to the name of the sponsor and in the grantee index to the name of the applicant.
(i) All state contracts and regulatory or development agreements shall contain such provisions as the Department considers necessary to meet the purposes of the Program, including but not limited to:

(1) a description of how the assistance under the Program will be used to ensure that each assisted unit will remain available on a priority basis to or occupied by eligible households for a period of not less than thirty (30) years or the term of the below market interest financing, if any, whichever is greater.
(2) specification of the amount, manner, terms and timing of payments, including annuity fund payments, by the Department and the applicant under state contracts and regulatory agreements, respectively, so as to ensure the economic feasibility of the rental housing development and to protect the interests of the State.
(3) requirements for reporting in accordance with Section 7850.
(4) a provision that the covenants and conditions of such contracts and agreements shall be binding upon the successors in interest to the parties thereto,
(5) a provision requiring that the local finance entity and sponsor agree to abide by the directives of the Department with respect to excess annuity fund payments and/or excess rent receipts when incoming from assisted units and/or annuity fund payments are greater than approved operating costs and when, in the Department's judgment, the assisted units can operate with less rent receipts and/or annuity fund payments, and
(6) a provision stating that the Department and the local finance entity, by mutual agreement, may reduce the number of assisted units in a rental housing development only if the annuity fund cannot provide adequate assistance to maintain the development's fiscal integrity. Any such reduction shall be reviewed no less often than annually as to its continued necessity.
(j) State contracts, in addition to provisions required in subdivision (i), shall contain provisions which:
(1) require the Department's approval of regulatory agreements and development agreements, or any amendments thereto, before such agreements or amendments are entered into by the parties thereto,
(2) assign to the Department the responsible agency's right to enforce the regulatory and development agreements in the event of the responsible agency's failure to enforce such agreements, and

(3) govern the use of annuity trust fund payments in accordance with Section 7834.
(k) Regulatory agreements, in addition to provisions required in subdivision (i), shall contain provisions which:
(1) restrict availability and occupancy of assisted units to eligible households, in accordance with this subchapter, for a period of no less than thirty (30) years or the term of the below market interest financing, if any, whichever is greater,
(2) specify the number of non-assisted and assisted units in the rental housing development and the projected rents for those units.
(3) with respect to the assisted units, specify tenant selection and occupancy standards in accordance with this subchapter,
(4) with respect to all units in the rental housing development, specify the terms of occupancy agreements in accordance with this subchapter,
(5) with respect to all units in the rental housing development, specify procedures for increases in rent in accordance with Section 7864,
(6) limit the sponsor's return on investment in accordance with Section 7866,
(7) make the agreement, or any amendment thereto, of no force or effect unless it has been approved by the Department before being entered into by the parties thereto.
(8) with respect to all units in the rental housing development, require for all documents made available or used by occupants, that copies be available in the language(s) commonly spoken by residents of the area, and
(9) with respect to the non-assisted units authorize the responsible agency to fix and alter a schedule of rents such as may be necessary to provide residents of the rental housing development with affordable rents to be consistent with the financial integrity of the rental housing development.
(10) with respect to all units in the rental housing development, require an annual budget in accordance with Section 7850.
(11) with respect to the assisted units in the rental housing development, require the return of all excess rents to the Department, and
(12) govern the establishment, procedures for use, and terms for recapture of the occupancy reserve and surplus payment reserve, if any, provided in subsection 7834(d).
( l) All development agreements shall contain provisions which:
(1) require, pursuant to state or federal law, payment of prevailing wage rates in the construction of a rental housing development,
(2) require, pursuant to state or federal law, the use of affirmative action by hiring by all contractors and subcontractors involved in the construction of a rental housing development,
(3) require, pursuant to state or federal law, such contractors and subcontractors to provide employment and training opportunities for building trades apprentices, and
(4) specify the building and property codes and standards applicable to the rental housing development.


Note: Authority cited: Section 50737, Health and Safety Code. Reference: Sections 50739, 50745, 50749, 50755, 50756, 50757, and 50766, Health and Safety Code.








s 7824. Development Standards and Costs.
(a) All rental housing developments shall conform to all applicable state and local building codes, zoning ordinances, and general plan requirements. If a locality approves an exception to such ordinances and requirements in order to facilitate construction of a rental housing development, such a development shall be considered to be in compliance with the requirements of this section.
(b) To the maximum extent feasible, the units of a specific size and nature available to assisted and unassisted households in a development shall be alike in size, design and characteristics and such units shall not be segregated.
(c) Amenities in the development generally must be limited to those which are generally provided in conventional housing of modest design in the area. All amenities will be subject to strict scrutiny by the Department. The use of energy efficient construction techniques or materials, or more durable, high quality materials to control or reduce maintenance, repair, or replacement costs, will not be considered an excess amenity.
(d) The standards of this section shall be utilized by the Department in applying priorities pursuant to Section 7804.


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








s 7826. Site Selection Criteria.
Proposed project sites must be certified by the applicant as meeting the following criteria:
(a) The site and neighborhood must be suitable for the type of housing proposed.
(b) The site must be free from severe environmental or social conditions, or such conditions must be mitigated when the housing is completed.
(c) The housing must be accessible to employment and to appropriate social, recreational, educational, commercial and health services that are typically found in the market-rate residential neighborhoods consisting largely of unassisted housing.
(d) The project must not be built on a site that has occupied residential structures which would be razed or from which residents would be permanently displaced, or has had such structures within the six months prior to application to the applicant.
(e) The project may not be built in an area identified as having special flood hazards unless the project is covered by flood insurance.


Note: Authority cited: Section 50737, Health and Safety Code. Reference: Sections 50737, 50737.5, Health and Safety Code.








s 7830. Prerequisites of Applications.
(a) Prior to submission of an application to the Department, the sponsor, or the local housing authority in the case of an application under the housing authority development component, shall have site control of the site of the proposed rental housing development.
(b) Where the proposed rental housing development is likely to contain more than fifty (50) assisted units, the applicant shall give the Department advance notice of its proposed application. Such notice shall be given as far in advance of the submission of the application as possible, but generally no less than thirty (30) days before such submission. Such notice shall not constitute a pre-application, but is required to enable the Department to meet its regional and other allocation quotas.


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








s 7832. Applications for Development Payment.
(a) Pre-applications by local finance entities and local housing authorities are to be made on the Department's application forms and in accordance with the Request For Proposals and guidelines to be issued by the Department and shall be submitted in compliance with Department instructions.
(b) Assistance from the development payments account shall be used for the purpose of reducing approved development costs of assisted units so that rents in those units remain affordable to eligible households.
(c) The application shall provide all information required by the pre-application form, including but not limited to:
(1) evidence of eligibility of the applicant, including information required for certification under Section 7820.
(2) evidence of eligibility of the project for which the application is made,
(3) evidence of the applicant's and sponsor's compliance with the prerequisites for application in accordance with Section 7830,
(4) evidence of eligibility of the sponsor (including certification of capacity under Section 7810 of these regulations), or evidence of the capability of the local housing authority,
(5) a description of the proposed rental housing development, including the number and sizes of assisted and unassisted units, the number of structures, location, access to amenities, and suitability of site,
(6) a site map indicating the location of the assisted and nonassisted units,

(7) preliminary drawings of the assisted and non-assisted units,
(8) information as to the proposed construction of the rental housing development, including the general contractor's name and experience, if known, method of construction, incorporation of solar and energy efficient design features and systems, and other special features,
(9) information as to the financial aspects of the rental housing development, including the anticipated amount and form of assistance applied for, a general breakdown of development costs, anticipated sources and terms of financing, projected operating expenses, and a statement indicating how assistance under the Program will be used to provide affordable rents to eligible households in assisted units and how the economic integrity of the rental housing development will be maintained,
(10) information as to the planning aspects of the rental housing development, including anticipated or actual compliance with the local general plan and housing element, zoning, and access to utilities,
(11) a market analysis indicating the feasibility of the proposed project in view of existing market factors, including housing demand at comparable rents, area housing needs and income levels, and regional and local vacancy rates,
(12) information qualifying the applicant for consideration under any of the priority factors included in Section 7804,
(13) information as to the projected occupancy of the assisted units (elderly, family, and/or handicapped),
(14) information as to existing structures on the proposed development site, and
(15) any other information which the Department may reasonably require to determine the eligibility or appropriateness of the proposed rental housing development for assistance under the Program.
(d) The applicant shall provide all information required by the final application form, including but not limited to:
(1) a construction timetable and incorporation of prevailing wage, equal opportunity and apprenticeship requirements,

(2) a set of architectural drawings including location, type and design of energy system and provisions for passive solar design,
(3) information as to the sources and terms of financing,
(4) information as to access to utilities, services and employment, and
(5) any other information which the Department may reasonably require to determine the eligibility or appropriateness of the rental housing development for assistance under the Program.
(e) The applicant shall provide additional information before loan and grant closing, including:
(1) a relocation plan, if necessary, including a program for implementation pursuant to Section 7814,
(2) evidence of compliance or ability to comply with the California Environment Quality Act, and regulations promulgated thereunder, and if applicable, the California Coastal Act and other relevant state law, and

(3) any other information which the Department may reasonably require to determine eligibility or appropriateness of the rental housing development for assistance under the Program.


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








s 7834. Applications for Annuity Funds.
(a) Application for annuity fund payments shall be made on the Department's application form and provide all required information.
(b) When the Department determines that assistance from the development payments account is insufficient to provide affordable rents to eligible households in assisted units, assistance may be authorized from the annuity fund.
(c) Annuity fund loan and grant closing shall be concurrent with development payment(s) loan and grant closing.
(d) Assistance from the annuity fund shall be used for the purpose of reducing rent levels in assisted units so that rents in those units remain affordable to eligible households. Such assistance shall be used to subsidize approved operating costs of the assisted units. "Operating costs" means reasonable and justifiable costs for the following items:
(1) management, including a management fee (which includes all indirect and direct costs of collecting rents and any salary or other payment to an on-site manager), advertising, legal, accounting, and telephone;
(2) operations, including heating and lighting for common areas, water, elevator maintenance, common area maintenance and supplies, garbage and trash removal, payroll and payroll taxes, insurance, janitorial supplies, ground and drives maintenance, exterminating, and office supplies;
(3) maintenance, including decorating and repairs;
(4) vacancy reserve;

(5) replacement reserve;
(6) real estate taxes;
(7) in the case of cooperatives, an occupancy reserve which shall be for the purpose of providing downpayment loans to occupants of assisted units within the cooperative; and
(8) in the case of cooperatives, a surplus payment reserve which shall be for the purpose of reducing carrying charges to a household which initially occupied an assisted unit within the cooperative and whose income exceeds the income limits established by this Program.
(e) Applications for payments from the annuity fund, in addition to other information required by the Department, shall include:
(1) the anticipated amount of assistance, required, based on cost projections provided by the Department, and
(2) a description of how the annuity payments will be used for eligible costs to reduce rents to ensure the affordability of assisted units consistent with the fiscal integrity of the rental housing development.


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








s 7836. Applications for Management Reserve Funds.
(a) Applications for management reserve funds shall be made on the Department's application form and provide all required information.
(b) Assistance from the management reserve account is available only to defray unavoidable cost increases in maintenance, taxes, utility or management costs, or charges for common areas and services, in order to maintain affordable rents in assisted units. Management reserve funds may be used only to the extent that;

(1) the annuity fund payment projected for the development is insufficient to provide rents that are affordable in the assisted units,
(2) there are insufficient annuity funds or excess rent revenues, and
(3) the sponsor can substantiate that the need for such funds is the result of unexpectedly low rent payments, extraordinary operational expenses, uninsured damages, or other extraordinary or unforeseen expenses approved by the Department.
(c) Applications for assistance from the management reserve account, in addition to other information required by the Department shall include:
(1) the anticipated amount of assistance required and the basis for the calculation of that amount,
(2) substantiation of the information required by subdivision (b), including the jeopardy to the fiscal integrity of the development,
(3) information as to how the cost increases will result in unaffordable rents in the assisted units, and
(4) what measures the applicant and sponsor have taken to reduce costs and to maintain the fiscal integrity and affordable rents in the future.


Note: Authority cited: Section 50737, Health and Safety Code. Reference: Section 50770, Health and Safety Code.








s 7838. Applications for Feasibility Account Funds.
(a) Applications for payments from the feasibility account shall be made on the Department's application form and shall provide all required information.
(b) Assistance from the feasibility account shall be available to defray development costs or short-term operational costs of non-assisted units if the Department determines that:
(1) additional payments are necessary to ensure the economic feasibility of the development,
(2) without additional payments the development could not or would not be undertaken, and
(3) sufficient funds are available to make such payments and not more than 10% of the Fund would be used for such payments.
(c ) Applications for assistance from the feasibility account, in addition to other information required by the Department, shall include:
(1) the anticipated amount of assistance required and the basis for the calculation of that amount, and
(2) substantiation of the information required by subdivision (b).


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








s 7840. Staff Review of Applications.
(a) Pre-applications will be reviewed to determine if they are complete, accurate, and generally in compliance with this subchapter. The Committee may establish application dates, prior to and subsequent to which no applications will be accepted for processing.
(b) Program staff shall review all pre-applications to determine their eligibility and the appropriateness of providing assistance from the Fund.
(c) In conducting its review, program staff shall, at a minimum:
(1) certify as to the capability of the local finance entity and the sponsor, if any, in accordance with Sections 7820 and 7812,
(2) determine the priority of the pre-application under Section 7804,
(3) establish compliance with Section 7812(e) and Department's Statewide Housing Plan,
(4) consider the allocation of assisted units throughout the state in accordance with identified housing needs and Section 7816(b), and
(5) review other relevant information to ensure that the application complies with the requirements and intent of the Program.
(d) On the basis of its review of the pre-application, Program staff will submit recommended pre-applications to the Committee for its consideration.
(e) When a pre-application is recommended to the Committee for review, the applicant shall be notified of the recommendation and the date and time of the Committee hearing considering the pre-application. When a pre-application is not recommended to the Committee for review, the applicant shall be notified of the negative recommendation of the pre-application, the reasons therefore, the right to appeal the action to the committee, and method and timing of such an appeal.
(f) After conditional commitment, the staff shall review the final application to determine compliance with all conditions. Material noncompliance with any condition, lack of progress in fulfilling conditions, and other material facts shall be reported to the Committee.


Note: Authority cited: Section 50737, Health and Safety Code. Reference: Sections 50737, 50737.5, Health and Safety Code.








s 7842. Committee Review of Applications and Other Matters.
(a) The Committee shall be responsible for the review and recommendation of all pre-applications for assistance, the allocations for assistance, the allocation of Program funds between the component accounts established by this subchapter, and such other functions and duties as may be required by the Director.
(b) The Committee shall operate and consist of members as set forth in Subchapter 1 (commencing with Section 6900) of Chapter 6.5 of Part 1 of Title 25, California Administrative Code.
(c) In reviewing any matter under this subchapter, the Committee shall consider the recommendations of Program staff; the application; and written or oral testimony, if any, from the applicant, the sponsor, or any other interested person.
(d) In its review, the Committee shall take into account:
(1) compliance with this subchapter,
(2) rating with respect to priorities,
(3) whether the provision of assistance to the sponsor will result in the most effective and efficient use of available funds,
(4) the geographic distribution of assisted units throughout the state in accordance with identified housing needs,
(5) the allocation of assistance pursuant to Section 7816(b),

(6) whether approval of the costs of permanent financing as developmental costs will reduce expenses to the Program over the life of the State Contract, and
(7) such other considerations as are consistent with the terms and objectives of the program.
(e) The Committee shall inform the Director in writing of its recommendation, stating:
(1) that it recommends for conditional commitment, postponed consideration of, or recommended rejection of the pre-application, or taken such other action with respect to other matters as is deemed appropriate,
(2) the conditions, if any, attached to its recommendation for conditional commitment or other directive of the reasons for its recommendation for rejection of postponement of consideration.
(f) The Committee, in any recommendation of approval of any pre-application, shall specify any terms, conditions, or special requirements which are not present in the pre-application, as well as form, term, and timing of assistance payments.
(g) The Committee, in reviewing the progress of developments, amendments of any agreements, or other actions permitted by the Program shall consider all relevant and available information prior to making a recommendation to amend, terminate or otherwise effect an application or development.


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








s 7844. Action by the Director and Applicant Request for Reconsideration.
(a) The Director shall, within (15) days of the Committee recommendation, inform the applicant in writing of his/her decision stating:
(1) that the pre-application has been approved for conditional commitment and condition, if any, attached to the commitment.
(2) that the pre-application has been postponed by the Committee and the date that it will be reconsidered or an explanation of the actions necessary for it to be reconsidered.
(3) that the pre-application has been rejected and the specific reasons for the rejection.
(b) If the applicant is dissatisfied with any action of the Director regarding the disposition of the pre-application, it may within thirty (30) days of the date of the Director's decision, request, in writing, a reconsideration of the decision, stating the items to be reconsidered and fully supporting the grounds for the reconsideration.
(c) With respect to any request for reconsideration pursuant to subdivision (b), the Director shall:
(1) within twenty (20) days of the date of documented receipt of the request hold an open hearing at which the applicant, sponsor, program staff and any interested person may make oral or written submissions as to the action the Department should take, and
(2) within thirty (30) days of the date of documented receipt of the request notify in writing the applicant of the Director's determination of the request.
(d) The Director's determination of the appeal shall be final.


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








s 7846. Disbursements.
(a) At the time of Department approval of pre-application, the Department shall reserve a sum of no more than 120% of the amount of assistance approved for a specific development for a period not to exceed one year. The Department shall disburse funds to the local finance entity or housing authority after closing of the loan and execution of the state contract or any amendment thereto, provided that all terms and conditions of the approved application are met, pursuant to the terms of the State contract.
(b) Upon receipt of funds from the Department, the responsible agency shall establish an appropriate project account and, pending further disbursements by the responsible agency, shall invest the funds and remit interest thereon to the Department at the time specified by the state contract. Funds from the account shall not be disbursed for the development except as permitted by this subchapter and the state contract, development contract, or regulatory agreement.
(c) With the written approval of the responsible agency the Department may disburse payments directly to the sponsor or its designee. However, the responsible agency shall ensure that all conditions precedent to such payment are to be met.


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








s 7850. Reporting.
(a) The regulatory agreement between the sponsor and the responsible agency shall contain a requirement that the sponsor report to the responsible agency in a form approved by the Department at least annually.
(b) The state contract between the responsible agency and the Department shall contain a requirement that the responsible agency monitor the rental housing development and report annually to the Department in a form approved by the Department. Each report shall deal separately with each rental housing development for which the responsible agency is responsible and shall be submitted to the Department no later than ninety (90) days after the beginning of each fiscal year established for the rental housing development. The report shall contain such information as the Department may require, including but not limited to:
(1) the fiscal condition of the rental housing development, including an audited financial statement indicating surplus or deficits in operating accounts and the amount of any fiscal reserves,
(2) the substantial physical defects in the rental housing development, including a description of any major repair or maintenance work undertaken in the reporting year,
(3) the occupancy of the rental housing development indicating,
(A) the number and sizes of assisted units available to or occupied by eligible households,
(B) the distribution of incomes of eligible households,

(C) the ethnic groups to which eligible households belong, and
(D) the numbers of eligible very low income and other lower income households on waiting list for assisted units.
(4) general management performance, including tenant relations and other relevant information.
(c) The state contract between the responsible agency and the Department shall contain a requirement that no later than ninety (90) days before the beginning of each fiscal year established for the rental housing development the responsible agency shall submit to the Department a proposed budget for each rental housing development for which such agency is responsible. Such budget shall be in a form approved by the Department and shall include information as to projected rents, operating expenses and utility costs for the next fiscal year and carrying charges, including excess rents from the previous fiscal year, and shall be accompanied by a request for use of annuity funds or an application for management reserve or feasibility funds, if such funds are required to maintain the fiscal integrity of the rental housing development.
(d) The responsible agency shall immediately report to the Department any actual or impending default by the Sponsor under the Regulatory Agreement or deed of trust.
(e) Each rental housing development shall operate on a fiscal year determined by the Department and specified in the regulatory agreement.


Note: Authority cited: Section 50737, Health and Safety Code. Reference: Sections 50743, 50746, 50756, and 50766, Health and Safety Code.








s 7852. Contract and Agreement Amendments.
(a) The Department may approve an amendment to the state contract to reflect any change in development funds only:
(1) to correct substantial errors by the Department, the Agency, the local finance entity or the local housing authority in the original processing which would otherwise result in serious inequities,
(2) to reflect differing costs which result from new requirements imposed by local government, the Department, the Agency, local finance entities, the local housing authority, or federal agencies which are beyond the control of the owner, which have been approved by the Department, and which could not have been anticipated at the time the state contract was executed, or
(3) to reflect differing costs which result from a change in contractor which is necessary because the original contractor became bankrupt, was terminated by the sponsor due to inadequate performance or abandoned the job.
(b) Amendments pursuant to subdivision (a) will be limited to the amount necessary to cover the specific cost increase associated with the applicable item cited in the request and limited to a pro rata share based on the portion of the difference attributable to the assisted units. The Department shall not authorize a change in funding until such time as the local finance entity or housing authority has approved a proportional adjustment in development costs for the non-assisted units.
(c) Amendments of the state contract and regulatory agreement to increase or decrease the amount of annuity fund payments and/or increase or decrease the number of assisted units shall be fully supported by circumstances requiring the adjustment, including the extent to which the cost changes were within the control of the sponsor. Such amendments shall be considered by the Department concurrently.
(d) Other amendments of the state contract and regulatory agreement to change any terms of the approved application shall be fully supported by circumstances requiring the amendment.
(e) Requests for any amendments permitted by this section shall be submitted to the Department at least three weeks prior to a scheduled meeting of the Committee.


Note: Authority cited: Section 50737, Health and Safety Code. Reference: Sections 50746, 50756, 50759, and 50765, Health and Safety Code.








s 7854. Tenant Occupancy Standards.
(a) The regulatory agreement between the sponsor and the responsible agency shall require standards for occupancy of assisted units. Included in such standards shall be the requirement that one bedroom units shall be assigned ordinarily to single person households only when there are no efficiency units available.
(b) The general standards for determination of a tenant's unit size are as follows:


Unit Minimum No. of Maximum No. of
Size Persons in Household Persons in Household
0-BR 1 1
1-BR 1 2
2-BR 2 4
3-6R 4 6
4-BR 6 8
5-BR 8 10


(c) Flexibility for assignment to a different sized unit is permitted if special circumstances warrant such an assignment and its reason are documented in the tenant's file.


Note: Authority cited: Section 50737, Health and Safety Code. Reference: Sections 50746, 50749, 50757, and 50766, Health and Safety Code.








s 7856. Tenant Selection Procedures.
The regulatory agreement between the responsible agency and the sponsor shall require the development of tenant selection procedures which shall require at least the following plans and procedures with respect to the selection and admission of households applying to occupy assisted units and which, after approval by the responsible agency, shall form part of the regulatory agreement and be binding on the sponsor while the assistance remains in effect.
(a) An affirmative marketing plan shall be established which must include the following:

(1) Local residency requirements are prohibited. Local residency preferences are discouraged except as required by subdivision (b).
(2) Policies to achieve greater access to housing opportunities created by the Program for all persons regardless of race, sex, marital status, color, religion, national origin, handicap, other arbitrary factors.
(3) In general, all the requirements of the affirmative fair housing marketing plan required by Title 24, Code of Federal Regulations Section 883.315 and the Affirmative Fair Housing Marketing Regulations in Title 24, Code of Federal Regulations Sections 200.600 et seq., whether or not federal assistance is received.
(b) A tenant preference plan shall detail the manner in which the housing sponsor will give preference in the renting of units:
(1) To tenants displaced from housing by this or other government-assisted housing developments or by other governmental actions or natural disasters.
(2) To families with dependent children for multi-bedroom units.
(c) In the case of cooperatives, the tenant selection plan and procedures shall specify the selection criteria for membership, grounds for determination of unsuitability and procedures for appeal. Selection and suitability criteria shall not discriminate on the basis of race, religion, national origin, language, sex, source of income, handicap, family makeup, or any other arbitrary factor.
(d) The sponsor shall advertise and solicit applications from potential tenants in accordance with the approved marketing and selection plans. Applications shall be in a form approved by the Department and shall be available for examination by the responsible agency.
(e) On receipt of the application, the sponsor shall determine the eligibility and, in the case of cooperatives, the suitability of the household under this subchapter; verify the information supplied by the household in the application; and certify the income of the household for the purpose of determining the rent affordable to such household pursuant to Section 7806.
(f) If the sponsor determines that the potential tenant is eligible and, in the case of cooperatives, suitable, the sponsor shall promptly so notify the potential tenant of eligibility and, based on turnover history, when a unit may be available.
(g) If the sponsor determines that the potential tenant is not eligible or, in the case of cooperatives, unsuitable to occupy an assisted unit, the sponsor shall promptly notify the potential tenantin writing stating the reasons for such determination and the procedure for appeal pursuant to Section 7862. (continued)