CCLME.ORG - DIVISION 1. HOUSING AND COMMUNITY DEVELOPMENT

(continued)
(5) The name, address and telephone number of a contact person within each DLB, who can provide further information and an application package.
(6) The grant selection criteria described in subsection 7967(b).
(c) In addition to the items listed in subsection (a), a regional NOFA shall include:
(1) The amount of the regional allocation;
(2) Any restrictions imposed upon the use of the funds by the terms of the Statewide NOFA;
(3) Any priorities or restrictions imposed upon the use of the funds pursuant to the approved LESS;
(4) The name, address and phone number of a contact person, who can provide a copy of the LESS and the regional application;
(5) The grant selection criteria described in section 7967(c).
(d) A regional NOFA shall be provided by a DLB to all providers of client housing and/or client services, within its region, including the providers on the list attached to the LESS, pursuant to subsection 7955(i)(1).

Note: Authority cited: Sections 50402, 50801.5(a) and 50806.5, Health and Safety Code. Reference: Section 50802.5, Health and Safety Code.

s 7959. Eligibility Requirements for Applicants and Grantees.
(a) An agency of local government or a nonprofit corporation, which provides or contracts with community organizations to provide emergency shelter or transitional housing, or both, is eligible to apply for program funds, if the application demonstrates compliance with the eligibility requirements of this section.
(b) A grantee shall maintain continuous compliance with the requirements of this subchapter.
(c) As of the publication date of the Statewide NOFA, an applicant or a grantee shall have provided client housing continuously each day throughout the prior twelve months or, for cold-weather shelter providers, each day throughout the region's prior cold-weather season.
(d) An applicant or a grantee shall not require, as a condition of client housing, participation by clients in any religious or philosophical ritual, service, meeting, or rite.
(e) An applicant or a grantee shall not provide client housing in a manner which denies benefits on the basis of race, religion, age, sex, marital status, ethnicity, place of origin, physical or mental disability, or any other arbitrary basis. This section shall not be construed to preclude the provision of client housing designed to accommodate women or men only.
(f) An applicant or a grantee shall not provide client housing or rental assistance in a structure which contains any of the conditions of a substandard building listed in section 17920.3 of the Health and Safety Code and shall comply with all applicable State and local construction, maintenance and occupancy standards.
(g) An applicant or a grantee which provides emergency shelter and related client services shall provide access to the shelter and services on a first-come, first-served basis, for whatever time periods are established by the grantee.
(h) An applicant or a grantee providing emergency shelter to clients shall not:
(1) Condition the provision of emergency shelter on the receipt of public or private payment vouchers or cash payment from the client;
(2) Reserve space in the emergency shelter for any person(s) except as allowed by statute and described in subsection (i); or
(3) Deny shelter or services to any client due to the inability to pay.
(i) Notwithstanding the provisions of subsections (g) and (h), a grantee may accept payment vouchers provided through any other public or private program for clients in emergency shelters so long as no shelter beds are reserved beyond sundown for that purpose.
(j) An applicant or a grantee providing emergency shelter shall establish rules for client occupancy which shall:
(1) Include a statement of the maximum consecutive number of days during which a client is eligible to occupy the shelter;
(2) Be conspicuously posted at the emergency shelter.
(k) An applicant or a grantee providing transitional housing may charge rent only if a minimum of ten percent of all monies collected for each client are reserved to assist that client in moving to permanent housing. In addition:
(1) The reserve of monies for each client must be accounted for separately; and,
(2) If monies reserved for a client remain unused due to the absence of the client for a year or more, the monies shall be used to assist another client in moving to permanent housing.
(l) An applicant or grantee providing transitional housing shall demonstrate that the housing meets all of the following tests:

(1) Occupancy is limited to a maximum of two years; and,
(2) Every client is offered at least three types of self-sufficiency development services such as job counseling or instruction, personal budgeting or home economics instruction, tenant skills instruction, landlord/tenant law, victim's rights counseling, or apartment search skills instruction; and,
(3) Any client must participate in at least one self-sufficiency development service offered by the client housing provider as a condition for receiving client housing; and,
(4) Every client accumulates funds to be applied to first and last months' rent for permanent housing pursuant to subsection 7959(k); and,
(5) Every client is provided referrals or placements to permanent housing.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Sections 50801(e) and (h) and 50801.5, Health and Safety Code.

s 7960. Eligible Application.
(a) In order to be eligible for selection, an application shall:
(1) Be submitted by the deadline stated in the applicable NOFA;
(2) Be submitted to the address noted in the applicable NOFA;
(3) Be complete, pursuant to subsection (b); and
(4) Contain a certification by the applicant that all information within the application is a true and accurate representation of the eligible organization.
(b) A complete application shall consist of the following:
(1) An authorizing resolution by the applicant's governing board of directors;
(2) A fully completed application accompanied by all applicable attachments and any additional information requested in the respective NOFA; and
(3) Any other information the DLB or the Department requires to determine the eligibility of the applicant and the proposed activities, to evaluate or rate and rank the application, or to confirm that the applicant is capable of successfully completing all activities.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Sections 50801.5(a) and 50802.5(b), Health and Safety Code.

s 7961. Eligible Use of Funds.
The use of grants of program funds shall be restricted to the following eligible activities and allowable costs.
(a) Eligible activities for which grant funds may be used to defray the costs of providing direct client housing include:
(1) Operating facilities to provide emergency shelter or transitional housing;
(2) Acquiring, constructing, converting, expanding, or rehabilitating emergency shelter or transitional housing sites pursuant to section 7966;

(3) Leasing facilities for emergency shelter or transitional housing;
(4) Administrative costs up to five percent of the total grant amount;
(5) Supervising and counseling clients;
(6) Residential rental assistance;
(7) Housing vouchers;
(8) Purchase of equipment; and
(9) Subcontracting with other eligible organizations to provide vouchers for temporary shelter and/or to provide residential rental assistance.
(b) Allowable costs within operating facility grants include, but are not limited to, costs of:
(1) Supervisory and line staff who provide services directly to clients;

(2) Counseling clients and supervising the counseling services;
(3) Utilities, telephone, office supplies, document duplication, printing and mailing;
(4) Routine maintenance and repair (such as interior painting and cleaning; repairs to heating, ventilating, air-conditioning, plumbing, and electrical systems; repairs of tenant damages; and other items not constituting a capital expenditure);
(5) Debt reduction, limited to no more than the one year's principle and interest on fully-amortized installment loans, excluding any balloon payments;
(6) Rent or lease payments for a shelter or transitional housing facility;
(7) Insurance and taxes;
(8) Administration (administrative staff and overhead costs up to five percent of the grant amount);
(9) Costs of paying rents in arrears and costs of paying initial rents for residential rental assistance in compliance with section 7964;
(10) Issuing vouchers for the purpose of leasing or renting individual units, hotel rooms, or motel rooms for use as emergency shelter, pursuant to subsection (a)(7), section 7965 and subject to the limitations of Health and Safety Code section 50803(b) (i.e., no more than 15% of an urban county's allocation).
(11) Up to $20,000 per site for costs of capital development-type activities and equipment such as described in subsection (c).
(c) Allowable costs within capital development grants include, but are not limited to costs of:
(1) Site acquisition, such as purchasing land and improvements, purchasing and moving an existing structure to the site, purchasing and moving a modular or manufactured structure to the site, necessary architectural and engineering services, and escrow, title and other standard closing costs;
(2) Site construction, rehabilitation or conversion, such as materials, labor, local government fees, and architectural and engineering services;

(3) Equipment required in the provision of client housing.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Sections 50801.5 and 50803, Health and Safety Code.

s 7962. Ineligible Use of Funds.
The grant of program funds shall not be used for costs associated with activities in violation of any law nor for the following:
(a) The purchase of radios, televisions, and other appliances or equipment for recreational purposes;
(b) Occupancy fees for clients in emergency shelters;
(c) Off-site costs, special requirements, assessments, or anything more than is directly necessary for the development of emergency shelter or transitional housing;
(d) On-site improvements beyond those directly necessary for the development of emergency shelter or transitional housing (such as walls, fencing, parking lots, and landscaping);
(e) To provide temporary housing for minor children separated from their families due to a court order or an administrative order;
(f) To provide activities which do not directly provide client housing such as drop-in or day centers, food and food services, general relief, medical care, and transportation or child care (except as required by clients to participate in the self-sufficiency development services, or seek employment or permanent housing).
(g) Staff, other than the allowable administrative costs, not directly related to the provision of client housing such as security guards, food handlers, and landscape personnel.
(h) To provide activities determined by the Department or a DLB to be an ineligible, inefficient or ineffective use of grant funds as stated in the applicable NOFA.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Section 50803, Health and Safety Code.

s 7963. Operating Facility Grants.
(a) An operating facility grant includes any single eligible activity or combination of eligible grant activities described in section 7961(a) including combined capital development-type activities of up to $20,000 per site.
(b) Allowable costs for an operating facility grant are those identified in subsection 7961(b), and limited to expenditures approved for eligible activities completed within the term of the Standard Agreement.
(c) The maximum operating facility grant shall be $50,000 per site.
(d) The term of an operating facility grant is 14 months from the effective date of the contract, and no extensions will be given.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Section 50803, Health and Safety Code.

s 7964. Residential Rental Assistance.
The following requirements apply to the use of program funds under an operating grant to provide residential rental assistance to clients.
(a) The payment of rent in arrears shall not exceed one month's rent plus a reasonable late charge. Program funds shall be used only if:
(1) The client is unable to pay the rent in arrears and is threatened with eviction; and
(2) No other resources or assistance are available to pay the rent in arrears; and
(3) The client has not received more than one EHAP payment of rent arrears in the immediate past two years.
(b) The payment of initial rent shall consist of no more than the first month's rent or the last month's rent, or both if required as a condition of the occupancy of permanent housing. Program funds shall be used only if:
(1) No other resources or assistance are available to pay the initial rent; and
(2) The client has not received more than one EHAP payment of initial rent in the immediate past two years.
(c) Grant funds to be used for residential rental assistance shall be accounted for separately.
(d) Interest earned on the grant funds set aside for rental assistance shall be continuously credited to the rental assistance account.
(e) Prior to providing residential rental assistance, the grantee shall verify that:
(1) The client is eligible to participate in the program and has income sufficient to pay the monthly rent; and
(2) An appropriately sized and priced rental unit is available and suitable for occupancy by the client.
(f) The client shall not have direct use of grant funds. Grant funds shall be distributed directly from the grantee to the landlord.
(g) A grantee providing residential rental assistance shall:
(1) Make determinations regarding the eligibility of clients based upon a written application from the client;
(2) Provide information to clients on the tenant-landlord relationship, on the appropriate treatment of rental property, on appropriate behavior within the neighborhood, and on the importance of timely rental payments; and
(3) Provide staff who shall be reasonably available to landlords and tenants to answer questions or complaints about the program.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Section 50803, Health and Safety Code.

s 7965. Leasing or Renting Rooms with Vouchers.
The following requirements apply to the use of program funds to provide vouchers to lease or rent temporary housing for clients:
(a) Eligible temporary housing includes apartments, motel rooms, hotel rooms, rental rooms in a single-room occupancy structure, single-family homes, and manufactured homes or mobilhomes.
(b) Vouchers for temporary housing may also be use to pay rental fees for spaces at a special occupancy park which is defined by section 18216.1 of the Health and Safety Code as a recreational vehicle park, temporary recreational vehicle park, incidental camping area, or tent camp.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Sections 18216.1 and 50803, Health and Safety Code.

s 7966. Capital Development Grants.
(a) A capital development grant includes any single eligible activity or combination of eligible activities described in section 7961(a)(2) and (8), for which these combined costs at a single site exceed $20,000.
(b) Allowable costs for a capital development grant are those identified in subsection 7961(c), and limited to expenditures for approved eligible activities completed within the term of the standard agreement.
(c) The maximum capital development grant shall be $150,00 per site.
(d) The term of a capital development grant is 24 months from the effective date of the contract, with the possibility of a one-year extension pursuant to section 7970(c)(2).
(e) Applications for capital development grants must be made separately from applications for operating facilities grants.
(f) For regions where the DLB is authorized to select capital development grant applications, such applications shall be submitted to the DLB for selection pursuant to this subchapter and the approved LESS.
(g) For regions where there is no DLB, or the DLB is not authorized to select capital development grants, capital development grant applications shall be submitted to the Department for determination of eligibility, rating and ranking. These applications shall provide the information necessary for the Department's evaluation pursuant to subsections (i) and 7967(b).
(h) For regions where the DLB is not authorized to select capital development grants, the DLB may elect to preclude applications for capital development grants, provided this determination and the treatment of any capital development grant allocation is identified in the LESS.
(i) A capital development project shall be deemed feasible, where an evaluation by the RTE, as applicable, demonstrates and certifies to all of the following:
(1) The legal status, finances and projected cash-flow, technical feasibility, and the accuracy of the project's schedule demonstrate the probability of a successful completion of the project;
(2) The project's design and materials and the proposed labor needs and costs demonstrate that the project is devoid of non-essential or luxury design or materials;
(3) The current ownership and potential ownership of the real property demonstrate that control of the real property is sufficient to enable the project to be completed and to be operated for at least five years beyond completion, without jeopardizing the Department's security;
(4) The proposed schedule corresponds with the scope of the project and demonstrates that the project shall be completed within the term of the grant.

(5) The management team proposed for the project has the experience and ability to efficiently and successfully complete the project as proposed.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Sections 50802.5, 50803 and 50804.5, Health and Safety Code.

s 7967. Grant Selection Process.
(a) A grant selection process shall involve eligible applications received by a DLB or the Department in response to the applicable NOFA.
(b) Each of the following selection criteria shall be specified in the Statewide NOFA:
(1) The applicant's capability of achieving the activities and results proposed in the application. An applicant's capability will be evaluated based on such items as its history of providing client housing; organizational structure and staffing; experience of establishing, administering, and successfully completing homeless programs; experience of public and private fundraising and resource development; established financial management systems; financial stability and solvency; and demonstrated ability and readiness for accomplishing its proposed activities.
(2) The impact and effectiveness of the client housing provided and proposed to be provided by the applicant. Impact and effectiveness will be evaluated based on such items as the range and quality of client housing provided, including the self-sufficiency development services provided with transitional housing; how the proposed activity(ies) address community needs; and the demonstrated effectiveness of the applicants' current and proposed programs to move homeless persons into a self-supporting environment.
(3) The cost-efficiency of the proposed use of grant funds for providing client housing. Cost efficiency will be evaluated based on such items as the type and amount of client housing provided compared to the project budget; the demonstrated availability of other financial resources besides EHAP to support achievement of the proposed activity(ies); the need for EHAP funds; leveraging of EHAP with other funds; non-duplication of services; and coordination with other organizations.
(c) Each of the following selection criteria shall be specified in the regional NOFA:
(1) The applicant's capability of achieving the activities and results proposed in the application;
(2) The impact and effectiveness of the client housing provided and to be provided by the applicant;
(3) The cost-efficiency of the proposed use of grant funds for providing client housing;
(4) The extent to which the local needs, goals and priorities identified in the LESS are met and achieved, respectively, by the applicant's proposed activities; and
(5) Any additional criteria as identified in the LESS approved by the Department pursuant to section 7956.
(d) The Department or DLB, respectively, shall provide in the NOFA the subcriteria and the point system to be used for selecting grantees for awards from that allocation.
(e) Applications shall be individually rated and then ranked in descending order. Funds will be awarded to eligible applicants in each region in descending rank order for the amount requested in the corresponding eligible application, until the remaining funds are insufficient to fully fund the next highest ranked application(s). Then,
(1) The next highest rated and ranked unfunded application following the full funding of the highest rated and ranked applications shall be partially funded if the funded activities can be adequately completed with the EHAP funds awarded.
(2) In the event of a tie for applicants in the lowest-ranked position to be funded, the Department or DLB, as applicable, will review the tied applications again and break the tie before continuing the award process.
(f) Each application submitted to a DLB for a capital development grant shall be evaluated by an RTE, which shall:

(1) Determine whether the application is feasible, pursuant to a competent, comprehensive evaluation pursuant to the standards provided in subsection 7966(i); and
(2) Provide a written and certified summary of its evaluation and determination, and append this to the application.
(g) A DLB shall make the final rating and ranking of eligible applications in sufficient time to allow for appeals prior to the date the DLB transmits the subsequent initial grant selections to the Department for confirmation.
(h) A DLB shall transmit the initial grant selections to the Department for confirmation no later than 150 days after the date the LESSes are due for the annual allocations from which the selections were made. Up to a 30-day extension of the deadline may be granted by the Department upon written request by the DLB for circumstances beyond DLB control.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Section 50802.5, Health and Safety Code.

s 7968. Appeal Process.
(a) Any applicant shall be entitled to appeal the grant selection activities or other activities of the DLB for the region it serves and to which it applied, by submitting a written petition for a hearing to the DLB within seven days following the date the DLB makes the final rating and ranking of eligible applications available to the public.
(1) The written petition shall:
(A) Provide the name, address and telephone number of the petitioner;

(B) Clearly describe each activity disputed;
(C) Clearly explain why the activity is disputed; and
(D) State the remedy the petitioner is seeking.
(2) Upon receipt of the complete petition, the DLB shall set a time and place for a hearing and shall provide the petitioner with written notice of the scheduled hearing. The hearing shall be scheduled for a date no more than fifteen days following the date of the petition.
(3) The hearing shall provide the petitioner with the opportunity to be heard and to show cause why the DLB's grant selection or other activity is disputed and why the remedy sought is appropriate.
(4) Within seven days following the hearing, the DLB shall provide the petitioner with a written determination of the appeal.
(b) A petitioner who has received a negative determination from a DLB shall be entitled to appeal to the Department for a review of the determination if the appeal is regarding the DLB's failure to follow the procedures established in the LESS or for violating the program regulations or statute. The petitioner's written petition must be received for review by the Department, within ten days after the petitioner's receipt of the DLB's determination of its appeal, or upon failure of the DLB to follow the appeal procedures contained in the LESS.
(1) The written petition shall:
(A) Include the information listed in subsection (a)(1);
(B) Clearly explain why the activity continues to be disputed; and
(C) Include copies of the original petition to the DLB, the determination issued by the DLB, and all documentation the petitioner possesses that is relevant to the appeal.
(2) Upon receipt of the petition, the Department shall determine whether the petition challenges the judgment or the procedures of the DLB.
(A) If the Department determines that the petition challenges the judgment of the DLB, or challenges the procedures established in the approved LESS approved by the Department, the Department shall deny the petition.
(B) If the Department determines that the challenge in the petition is that the procedures used by the DLB were not established in the LESS approved by the Department, the Department shall review the records and the petition and shall issue a written determination within 21 days of the receipt of the appeal petition.
(C) If the Department determines that the procedures established in the LESS approved by the Department were not followed, the Department shall issue a written determination to that effect and shall initiate corrective action.
(3) Corrective action shall include, as appropriate, imposing restrictions on the activities of the DLB or requiring the DLB to repeat the grant selection process and/or revoking the designation of the local board.
(c) Any applicant from a region without a DLB shall be entitled to appeal the grant selection activities of the Department by submitting a written petition to the Department. The petition must be received within ten days following the date the Department makes the final rating and ranking of eligible applications available to the public.

(1) The written petition shall include the information listed in subsection (a)(1),
(2) Within 21 days of receipt of the petition, the Department shall respond in writing to the petition and make a determination based on the information available.
(3) Each determination shall clearly state the findings upon which the Department's determination is based, and identify any corrective action to be taken.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Sections 50801.5, 50802.5 and 50803.5, Health and Safety Code.

s 7969. Confirmation Process for Initial Grant Selections of a Designated Local Board.
(a) All grant selections made by DLBs shall be subject to confirmation by the Director.
(b) The transmittal of initial grant selections by a DLB to the Department shall include all of the following:
(1) An overview of the DLB actions taken on all applications,

(A) Organized into three groups: those applications deemed ineligible, those deemed eligible and selected for funding, and those deemed eligible but not selected for funding; and
(B) Identifying each application by applicant name, grant type, grant amount requested, eligibility, the rate and rank achieved by each eligible application during the selection process, and the DLB's initial funding determination; and
(C) Providing, for each application deemed ineligible, an explanation of the basis for that determination; or
(D) Providing, for each application deemed eligible a summary of the score achieved on each criterion, and the proposed grant amount.
(2) A certification by the DLB that it complied with the LESS as approved by the Department;
(3) For each application for a capital development grant, certified copies of the evaluations and determination of the RTE as required by subsection 7966(h), including copies of all supporting documentation upon which the evaluations and determination are based;

(4) For all applications recommended for funding, certification that the DLB reviewed and identified no irregularities with,
(A) The eligibility of the applicants, applications, and activities recommended for funding;
(B) The applicant's fiscal records for the prior fiscal year;
(C) The proposed client housing and/or client services and intake procedures;
(D) The availability of the additional operating funds necessary to provide the proposed client housing; and
(E) Conformance with regulations.
(c) If the transmittal is incomplete, the Department shall notify the DLB in writing within 20 days and shall include specific requests for additional documentation.
(d) If the transmittal is complete but a portion of one or more of the selected applications is found to be ineligible (such as an ineligible activity), the Department shall notify the DLB and may adjust the application to eliminate the problem if this adjustment does not affect the DLB's overall funding recommendations.
(e) Within 45 days of the receipt of a complete transmittal of initial grant selections from a DLB, the Department shall provide written notification to the DLB and to each applicant selected by the DLB of one of the following determinations:
(1) The selection by the DLB is confirmed; or
(2) The DLB's application selection is confirmed with specified conditions; or
(3) The DLB's applicant selection is not confirmed.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Section 50802.5, Health and Safety Code.

s 7970. Grantee Contract Requirements.
(a) Following a grant award by the Director, the Department shall contract directly with the grantee. The contract shall be known as the "standard agreement" and shall include the items specified in this section.
(b) The following information shall appear in each standard agreement:
(1) A clear and accurate identification of the grantee and the Department;
(2) The timeframe for the performance of the approved project activities;

(3) The amount of the grant, clearly expressed as the maximum amount, and the basis upon which payment is to be made; and
(4) A clear and complete statement of the activities and services the grantee will perform and provide.
(c) Timeframes for the performance of approved project activities shall be as follows:
(1) Approved project activities for operating facility grants shall commence within two months of the effective date of the standard agreement and shall be completed within fourteen months of the effective date of the standard agreement. No extension of this contract term shall be granted.
(2) Approved project activities for a capital development grant shall commence within six months of the effective date of the standard agreement and shall be completed within two years of the effective date of the standard agreement.
(A) The commencement of project activities for a capital development grant shall mean either closing escrow on the purchase of a facility or acquiring a building permit for construction, conversion or rehabilitation.
(B) The completion of project activities for a capital development grant shall mean acquiring a certificate of occupancy, where applicable.
(C) If requested by the grantee, the Department may approve an extension to a standard agreement for a capital development grant not to exceed twelve months, if the Department finds that such an extension is essential for the successful completion of approved project activities.
(d) Each standard agreement shall provide that a grantee shall request and receive grant payments only under conditions which protect the Department's interests.
(e) The following performance requirements shall appear in each standard agreement and shall include additional provisions specific to each grantee:
(1) That the grantee shall submit to the Department and the DLB, as applicable, reports on the progress toward the completion of approved activities during the term of the standard agreement;

(2) That the grantee shall maintain accounting books and records in accordance with generally accepted accounting standards;
(3) That the capital development grantee shall provide the Department with a security interest in any real or personal property acquired or improved with program funds. The security interest shall be sufficient to secure the continued compliance by the grantee with specified terms of the standard agreement.
(f) The standard agreement may require monitoring utilizing a workplan prepared by the grantee as part of its application and incorporated by reference as part of the standard agreement.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Section 50802.5(e), Health and Safety Code.

s 7971. Procedures and Requirements for Procuring Contracts for Services or Materials Under a Capital Development Grant.
(a) Each grantee awarded a capital development grant shall ensure that the requirements of this section are complied with
(1) In all its contracts or subcontracts for services and materials to be paid for with grant proceeds; and
(2) By all its contractors and/or subcontractors providing or contracting for services and/or materials to be paid for with grant proceeds.
(b) Prior to the disbursement of grant funds for any contract for services or materials required for eligible activities under a capital development grant, all construction or service contractors or subcontractors shall provide evidence satisfactory to the Department, of compliance with the requirements of this section.
(1) The grantee shall provide to the Department copies of the proposals from consultants and/or contractors for the Department's review and approval.
(2) The Department's review and approval shall be based on the proposed budget, the applicant's experience, the price of the services, and related factors, and shall be completed within 15 days of receipt of complete information from the grantee.
(c) No contract or subcontract using EHAP funds in excess of $25,000 shall be awarded without the prior review of the Department and without written approval from the Department. The Department shall not unreasonably withhold approval of said contracts.
(d) Each grantee entering into contracts for construction or rehabilitation services or materials shall have:
(1) Written bidding procedures and shall have invited bids from as many prospective bidders as is practical;
(2) Awarded the contract to the lowest responsible bidder or shall have rejected all bids;
(3) Established a method of monitoring the contract; and
(4) Maintained and make available to the Department detailed records and accounts of contracts for services and or the purchase of materials.
(e) Each contract for construction or rehabilitation services or materials shall comply with all applicable program requirements and all applicable terms and provisions of the standard agreement.
(f) Each contract shall include a provision stating that the records of the contracting parties shall be subject to audit by the Department for a period of five years after the termination of the Standard Agreement.
(g) Each contract shall include a provision stating the method and schedule of payments and shall provide for the retention of an amount of not less than ten percent from each progress payment, until such time as the lien-free completion of the project is ensured.
(h) Each construction or rehabilitation contract of $25,000 or more shall include a security provision requiring the contractor to provide a performance and payment bond or an alternate, yet equivalent, form of security, such as a letter of credit.
(1) Any form of security, required of such a contractor and/or a subcontractor, other than a performance and payment bond, is subject to the prior review and approval of the Department.
(2) The security shall be in an amount equal to one-hundred percent of the amount of the successful bid.
(i) Each construction or service contractor or subcontractor shall be appropriately licensed by the California State Contractors Licensing Board and shall be insured as required by State law.
(j) The grantee shall establish procedures which ensure that disbursements are properly expended by, or on behalf of, the grantee. Such procedures shall include:
(1) Performing on-site inspections of the construction or rehabilitation work; and
(2) Using progress inspection reports as the basis for issuing payments to contractors or subcontractors.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Section 50802.5, Health and Safety Code.

s 7972. Requirements for Construction, Conversion or Rehabilitation Performed by the Grantee.
(a) A grantee, which chooses to perform all or part of the labor and/or to provide all or part of the materials necessary to construct or rehabilitate the approved project, shall comply with the requirements of this section.
(b) Grant proceeds shall not be used to pay any family member of any person on the board of directors or staff of the grantee.
(c) The grantee shall enter into a written contract with each subcontractor, pursuant to the requirements of section 7971.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Sections 50802.5 and 50803, Health and Safety Code.

s 7973. Budget Changes.
(a) After the award is made, the Department may approve changes to a project budget provided the requested budget change complies with either subsection (b) or (c).
(b) The proposed budget change:
(1) Does not substantially change the specific clients served by the approved project activities; and

(2) Continues to meet the priorities and criteria imposed during the respective grant selection process; and
(3) Results in a product, substantially the same as the originally-approved product, that costs the same as or less than the originally proposed product; and
(4) Will be completed by substantially the same date as allowed for the originally proposed product.
(5) In competitive regions, does not affect the list of awarded applications in a manner which would cause any application to be added to or removed from the list.
(c) The proposed budget change will result in a significant increase in benefits related to the local program.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Sections 50802.5 and 50804.5, Health and Safety Code.

s 7974. Disbursement Procedures.
(a) Funds shall be disbursed on the basis described in the standard agreement.
(b) For capital development grants, the Department may require the grantee have an escrow account, a construction fund control account, or a comparable type of account for acquisition, construction, conversion and rehabilitation activity, as applicable.
(c) The Department may rely on the grantee's certification that expenditures claimed in a request for disbursement are eligible and necessary, provided that the grantee also certifies that detailed supporting documentation verifying each expenditure is available and shall be retained by the grantee for five years after the termination of the standard agreement.
(d) Upon receipt and review of acceptable documentation the Department may provide an initial advance disbursement of up to fifty percent of the grant amount for operating expenditures. Advances are not permitted for capital development-type expenditures.
(e) As necessary, the Department shall establish minimum disbursement amounts or other related procedures necessary for the efficient administration of the program.
(f) If a grantee uses program funds for the costs of ineligible activities, the grantee shall be required to reimburse the funds to the EHAF and shall be prohibited from applying for subsequent allocations until fully repaid.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Sections 50802.5 and 50803, Health and Safety Code.

s 7975. Monitoring Grant Activities and Closing-out Grants.
(a) Each DLB shall monitor the subsequent activities funded by grants from an allocation to the DLB's region.
(b) The Department shall monitor activities funded by grants selected and awarded by the Department pursuant to a Statewide NOFA or where the DLB's designation has been terminated and it has transferred its records to the Department per section 7953(j) and may monitor grantees in DLB regions pursuant to the terms of the standard agreement.
(c) When a DLB is responsible for monitoring grant performance, the DLB may review and approve each request for disbursement from grant funds prior to submittal to the Department for review, approval, and payment.
(d) A DLB shall report immediately to the Department
(1) Any failure by a grantee to comply with the requirements of the program and/or the standard agreement; and
(2) Any need for the Department to halt the disbursement of grant funds or to halt activities funded by a grant.
(e) In order to close-out a grant the grantee shall:
(1) Provide a summary of the activities serving clients during the period of the grant, an estimate of the number of clients served with EHAP funds, and the corresponding expenditures for each approved eligible activity; and
(2) Demonstrate that all expenditures are supported by invoices and receipts.
(f) If a DLB supervises the close-out activities, the DLB shall provide a written certification that all grant-supported activities were conducted in compliance with program requirements.
(g) If it is determined that a grantee falsified any certification, application information, financial or contract reporting, the grantee shall be required to reimburse the full amount of the grant to the EHAF and shall be prohibited from any further participation in the EHAP.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Section 50802.5, Health and Safety Code.

s 7976. Performance Evaluation of a Designated Local Board.
(a) The Department shall evaluate the performance of each DLB on an annual basis.
(b) This process shall involve an evaluation of the degree to which:
(1) Eligible recipients in the region participate in the development of the LESS:
(2) The performance of the DLB conforms to the procedures and requirements of the LESS and the requirements of this subchapter;
(3) The DLB achieves the goals and objectives established in the LESS, as measured by the eligible applications received and selected within the region;
(4) The participation of the DLB resulted in the increased efficient and effective use of program funds allocated to the region; and
(5) Program grant activities within the region are monitored and, consequently, the degree to which grant activities conform to program requirements.

Note: Authority cited: Sections 50402, 50801.5 and 50806.5, Health and Safety Code. Reference: Sections 50801.5 and 50802.5, Health and Safety Code.

s 8000. Scope and Authority.
These regulations establish the Mobilehome Park Resident Ownership Program and the policies and procedures for the allocation and use of financial assistance from the Mobilehome Park Purchase Fund consistent with the objectives and requirements of the statutes. The department may provide financing from the fund for the following types of program loans:
(a) conversion loans, pursuant to Section 8006;
(b) blanket loans, pursuant to Section 8008; and
(c) individual loans, pursuant to Section 8010.

Note: Authority cited: Sections 50406(n) and 50786(a), Health and Safety Code. Reference: Sections 50406, 50406.2 50780, 50781, 50783 and 50784, Health and Safety Code.

s 8002. Definitions.
In addition to the definitions found in Section 50781 and Chapter 2 (commencing with Section 50050) of the Health and Safety Code, the following terms and definitions shall apply to this subchapter.
"Affordable housing costs" means that the housing costs for a low-income resident shall not exceed 30% of that resident's monthly gross income unless the department approves an amount exceeding this standard based on one or more of the following conditions which provide overriding and special reasons for exceeding this goal:
(a) the project would be financially infeasible without housing costs in excess of this standard due to factors such as lenders' more stringent underwriting requirements for park conversions, lack of adequate financial assistance, unique factors which limit project rental income, exceptional conversion costs beyond the control of the residents, or other similar extraordinary factors approved by the department; or
(b) a satisfactory credit record has been maintained by the household, and the household has demonstrated an ability to sustain the proposed housing expense; or the department determines that the eligible household can assume such greater responsibility based on an analysis of future anticipated income or reduction in debt.
If the 30% of income standard cannot be achieved, under no circumstances shall the housing costs of a low-income resident exceed the greater of 40% of the resident's gross monthly income or the resident's housing prior to the conversion.
"Code" means the California Health and Safety Code.
"Committee" means the committee designated by the director pursuant to Subchapter 1 (commencing with Section 6900) of Chapter 6.5 of this Part.
"Equity" means a cash contribution or interest in the property pledged as collateral, but does not include secured debt junior to the department's loan.
"Gross income" means all income as defined by Section 6914 of this Part received by a resident except that the value of net family assets shall be limited to the actual amount of income derived from those assets.
"Housing costs" means the housing cost of a purchaser as defined in Section 6920 of this Part.
"Individual interest" means an individual interest in a mobilehome park as defined in Section 50781 (f) of the Code.
"Loan Originator" means an entity approved by the department to underwrite or originate loans, or evaluate the eligibility of applicants for program assistance.
"Local public entity" has the same meaning as set forth in Section 50079 of the Code.
"Low-income resident" means a person or household who is a resident of the mobilehome park and who is a lower- income household as defined in Section 50079.5 of the Code and Subchapter 2 of Chapter 6.5 of this Part, with the exception that gross income shall be calculated pursuant to the definition in this subchapter.
"Mobilehome" means any of the following:
(a) a mobilehome as defined in Section 18008 of the Code.
(b) a manufactured home as defined in Section 18007 of the Code.
(c) a recreational vehicle as defined in Section 18010 of the Code.
(d) factory-built housing as defined in Section 19971 of the Code.
"Mobilehome park" means mobilehome park as defined in Section 50781(i) of the code.
"Mortgage lender" means a bank or trust company, mortgage banker, federal or state chartered savings and loan association, credit union or other financial institution, or a local public entity.
"Need for Assistance" means the amount of program assistance required to achieve affordable housing costs for low-income residents.
"Program" means the Mobilehome Park Resident Ownership Program.
"Project" means a mobilehome park which has received a loan commitment or loan pursuant to this subchapter.
"Qualified nonprofit housing sponsor" means a nonprofit housing sponsor as defined in Section 50781(k) of the Code.
"Rehabilitation" means substantial repairs and improvements to the project which are necessary to a) conform with legally authorized requirements of state or local government in order to receive approval to convert the park to resident ownership, b) meet reasonable and minimum property standards established by a lender for the project, and c) alleviate all substandard conditions which violate the Mobilehome Parks Act, Section 18200, et. seq., of the Code.
"Resident" means an individual or household who actually resides in a mobilehome park as that person's principal residence.
"Resident organization" means an organization of mobilehome park residents which has all of the following characteristics:
(a) is a legally recognized entity;
(b) is able to enter into a contract;
(c) is capable of suing or being sued;
(d) may include residents from more than one park; and
(e) has as members no less than two-thirds of the residents from each park that is represented by the organization.
"Resident ownership" means the ownership of an interest in a mobilehome park by a resident organization, which entitles the resident organization to regulate the operations of the mobilehome park for a term of no less than 15 years, or the ownership of individual interests by residents in a mobilehome park, or both.
"Rural area" means an area as defined in Section 50199.21 of the Code.

Note: Authority cited: Sections 50406(n) and 50786(a), Health and Safety Code. Reference: Sections 18008, 18007, 18010, 18200, et. seq., 19971, 50050-50105, 50406, 50780, 50781, 50782, 50783, 50784, 50785, 50786 and 50786.5, Health and Safety Code; and Sections 6900 et seq., Title 25, Administrative Code.

s 8004. General Provisions.
(a) The department shall make loans to eligible borrowers for eligible projects pursuant to this subchapter. Program loans shall be subject to terms and conditions which meet the requirements of the Code and this subchapter. Loans shall be secured by the best available security. In all cases, the term of any loan shall not exceed the lesser of either the term of the ownership interest or the economic life of the property. Program loans shall bear interest at the rate of three percent (3%) simple interest per annum, unless a different statutory rate is specified. Monthly payments shall be required for all loans unless an alternative repayment schedule is approved pursuant to subsection (d). The department may assess late fees or penalties for late payments not to exceed more than 5% of the scheduled payment. Loans provided pursuant to this subchapter shall not be assumable by another borrower, except where the department determines that an assumption by another eligible borrower is necessary to prevent a financial loss. The terms of assumption may be different than originally underwritten and offer the greatest opportunity for full repayment as determined by the department. (continued)