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(continued)
(9) deferred payment loan terms and conditions;
(10) fund disbursement requirements, including provisions for receipt, use, and accounting of department funds pursuant to section 8058;
(11) rehabilitation work requirements such as drawings, construction schedules, rehabilitation specifications and standards, work write-ups, cost breakdowns, bid procedures, construction contracts, inspections, licenses, insurance, lien releases, cost accounting and documentation, and owner-performed work;
(12) requirements that the local entity not discriminate or permit discrimination on account of race, color, religion, ancestry, sex, age, national origin, marital status, and mental or physical handicap, in accordance with all local, State, and Federal laws governing and restricting such discrimination or requiring affirmative action. To further ensure that deferred payment loans are made in a nondiscriminatory manner, the local entity shall agree to abide by the restrictions placed upon financial institutions under the Holden Act (Health and Safety Code division 24, part 6, "Financial Discrimination" commencing with section 35800);
(13) remedies available to the department in the event of a violation, breach, or default of the Standard Agreement to ensure compliance with program requirements for the full term of the agreement, including repayment of all costs of enforcement;
(14) requirements for the execution and, where appropriate, the recordation of the agreements and documents required under the program;
(15) requirement that the local entity assign the borrower loan agreement to the department;
(16) any terms and conditions as required by local, State, or Federal law; and
(17) other provisions necessary to ensure compliance with the requirements of this program.
(b) A borrower shall enter into a loan agreement with the local entity governing the rehabilitation and loan terms. The loan agreement shall contain the following terms and conditions:
(1) the deferred payment loan amount, term, and rate of interest, including specific terms of repayment of interest and principal pursuant to sections 8047, 8048, and 8049;
(2) a timeframe for the work to be performed;
(3) the approved cost of the work to be performed;
(4) method of contractor selection, including terms and conditions of nondiscrimination as required by law;
(5) the method and schedule for disbursement of funds to borrowers and/or contractors;
(6) compliance with local, State, or Federal laws, ordinances, and regulations applicable to rehabilitation of the property, including zoning ordinances, building codes, planning, historical preservation, and environmental regulations;
(7) requirements regarding contractor performance, construction agreements, and borrower-performed rehabilitation activities;
(8) provisions allowing the local entity or department, or its designees or employees, after reasonable notice to the borrower, to enter upon and inspect the property at any time during or after rehabilitation; or to inspect the books and records of the borrower related to the deferred payment loan funds at any time during or after rehabilitation of the property which is assisted by the deferred payment loan;
(9) provisions relating to deferred payment loan extensions, refinancing, and subordination;
(10) provisions relating to sales, transfers, and encumbrances pursuant to section 8051;
(11) terms and conditions relating to defaults in repayment or breach of the loan agreement and remedies available to the parties thereto, pursuant to section 8052;
(12) property insurance requirements pursuant to section 8057(e)(2)(b);
(13) provisions that indemnify the State for all claims and losses in performance of this agreement;
(14) a provision for the loan agreement to be assignable to the department; and
(15) any other provisions necessary to ensure compliance with the requirements of this program.
(c) A borrower shall execute the following deferred payment loan documents prior to transfer of any funds to the local entity:
(1) a promissory note naming the department as payee;
(2) a deed of trust naming the department as beneficiary and sufficient to secure the obligations of the promissory note;
(3) a truth-in-lending disclosure statement;
(4) a notice of right to cancel; and
(5) any other documents as required by the department to protect the interests of the State.
Note: Authority cited: Section 50668.5(g), Health and Safety Code. Reference: Sections 35800, 50661, 50664, 50668 and 50668.5(a), Health and Safety Code; and Section 12990, Government Code.
s 8057. Loan Approvals.
(a) The local entity shall review and evaluate each prospective borrower's application for a deferred payment loan to determine whether the requirements of this subchapter would be met if the loan were funded. In performing this review, the local entity shall evaluate whether the State's security interest would be protected and whether the loan funds will be repaid. The local entity's evaluation shall also include a determination on each of the specific criteria set forth below in subdivision (d) of this section.
(b) For those loans which it recommends for funding, the local entity shall submit loan files to the department, which contain copies of the documents described in subdivision (e)(1) of this section, as well as the local entity's determination on each of the specific criteria set forth in subdivision (d) of this section. The department may disapprove a deferred payment loan submitted by the local entity if the deferred payment loan does not meet the requirements of this subchapter, and shall notify the local entity in writing within 30 working days following receipt of the deferred payment loan file of the reasons for denial.
(c) Where there are indications that the prospective borrower may not meet the deferred payment loan requirements of subdivision (a) of this section, the local entity may request departmental approval of the deferred payment loan, providing there are mitigating circumstances, which apply to the prospective borrower.
(d) When reviewing loans for approval, the local entity evaluation shall include determinations on each of the following criteria:
(1) The prospective borrower's loan application is consistent with the performance goals set forth in the Standard Agreement;
(2) the prospective borrower's loan application is complete and accurate;
(3) the deferred payment loan amount is consistent with the requirements of section 8048;
(4) the prospective borrower is eligible pursuant to section 8043;
(5) the loan security shall meet the requirements as specified in section 8050;
(6) the prospective borrower's credit report indicates an ability to repay all debts, including:
(A) no credit accounts past due at the time the prospective borrower's deferred payment loan is recorded;
(B) no outstanding unpaid judgments or involuntary liens; and
(C) no bankruptcies, which have not been dismissed prior to deferred payment loan recordation;
(7) the preliminary title report shows:
(A) proper vesting of title with the prospective borrower;
1. If the prospective borrower holds title with another party also who is not applying for the loan, the other party shall sign all required loan documents.
2. In cases where a joint tenancy or tenants-in-common is dissolved, the title documents must be corrected to reflect the change.
(B) the legal description of property;
(C) all encumbrances on the property. Any encumbrances which have been repaid shall be reconveyed and recorded prior to recording of the deferred payment loan; and
(D) no judgments, mechanic liens, or property tax liens due on the property.
(8) the mortgage verification for each existing encumbrance on the property indicates:
(A) a date not more than three months prior to deferred payment loan approval;
(B) that payments are current at the time of verification and, in the past, have not been more than 60 days delinquent;
(C) the financing terms including, but not limited to, variable interest rate, balloon payments, or negatively amortizing loans, which may jeopardize the state's security and the borrower's ability to repay the deferred payment loan; and
(D) the current balance of the mortgage and of any impound accounts for taxes and assessments.
(9) the prospective borrower has demonstrated an ability to maintain the property;
(10) the proposed uses of funds are eligible pursuant to section 8044(a);
(11) the cost estimates and work write-ups adequately describe the existing conditions and problems which require rehabilitation and accurately specify the rehabilitation work, room additions and improvements and accurately specify the work necessary to correct the deficiencies;
(12) the selected contractor's bid proposal is reasonable and meets the requirements of section 8046(e); and
(13) all other provisions of this subchapter have been met.
(e) The local entity shall maintain a loan file for each deferred payment loan application which shall contain, at a minimum, the following documents which shall be obtained in accordance with the following schedule:
(1) prior to loan approval:
(A) loan application;
(B) verification of the prospective borrower's income;
(C) a credit report;
(D) a preliminary title report;
(E) mortgage verifications;
(F) property appraisal;
(G) a cost estimate and work write-up;
(H) a contractors' selection statement which indicates all bids received and the contractor selected;
(I) the selected contractor's bid proposal, drawings, specifications, and proposed contract;
(J) commitment letters from other funding sources used to leverage state funds in completing a rehabilitation project;
(K) map of the property location;
(L) any other documents or justifications necessary to determine the eligibility of the borrower and to approve the deferred payment loan.
(2) After loan approval, but prior, or concurrent with, loan recordation:
(A) the properly executed and recorded deferred payment loan documents pursuant to section 8056(c);
(B) proof of hazard insurance, which names the department as loss payee, in an amount sufficient to cover the amount of the deferred payment loan and all liens recorded in a senior position, or the replacement value of the property, whichever is less;
(C) a title insurance policy insuring the department in the amount of the deferred payment loan, which shall also include a legal description of the property, the property street address, the county tax assessor's value, property tax information, the deferred payment loan as recorded, and any superior liens recorded against the property;
(D) the construction contract between the contractor and the borrower;
(E) verification of the worker's compensation and liability insurance maintained by the contractor and verification of the contractor's license as required in the construction agreement; and
(F) evidence of commitment of other funds that are leveraging state funds to complete the rehabilitation.
(3) After loan closing and prior to disbursement of final contractor retention payment:
(A) all records of contractor progress payments;
(B) all change orders;
(C) all building permits with appropriate approvals;
(D) a copy of the properly recorded Notice of Completion;
(E) copies of lien releases from the general contractor or general contractors; and
(F) a title update, which reflects all trust deeds, liens, judgements, attachments and all encumbrances, voluntary or involuntary, on title.
(f) Notwithstanding the requirement specified in subdivision (b) of this section that the local entity shall submit deferred payment loan files for department approval, the department may authorize the local entity to directly approve deferred payment loan files in accordance with the following requirements;
(1) The department shall review at least the first five deferred payment loans containing the documents specified in subdivision (e)(1) of this section and provide written comments on each file to the local entity regarding its compliance with program requirements pursuant to this subchapter. The department has the sole decision on the number of deferred payment loans to be reviewed prior to granting authorization to a local entity to approve deferred payment loans and shall base that decision on evidence that the local entity is fully capable of meeting all applicable requirements of this subchapter. Upon written request by the local entity and determination by the department that the local entity has the capability to evaluate and package deferred payment loans, the department shall certify the local entity and delegate approval authority.
(2) After certifying the local entity and delegating approval authority, the department shall periodically review deferred payment loans that have closed and provide a written review to the local entity on compliance with the program and contract requirements. The department shall randomly select any loan files for review. The local entity shall be notified that continued problems in the local entity's evaluation and approval of deferred payment loans pursuant to subdivision (a) of this section shall result in the discontinuation of the authorization and certification.
(3) The department shall condition its certification of the local entity and authorization to approve deferred payment loans on the basis of certification of specific loan officers employed by the local entity. If the certified loan officer ceases to serve in the capacity of approving loans, the local entity must notify the department and the authorization to approve deferred payment loans shall be discontinued by the department until such time as a new loan officer employed by the local entity is certified by the department.
(4) When the local entity has been certified to approve deferred payment loans, the local entity shall request department approval of the deferred payment loan if the borrower is seeking an exception to the deferred payment loan limits or loan-to-value requirements.
(g) Notwithstanding subdivision (f) of this section, local entity approval authority may be rescinded, and future deferred payment loans shall be subject to department approval prior to the disbursement of funds. Rescission of deferred payment loan approval authority shall occur if the department determines that local entity performance no longer indicates capability to make deferred payment loans in accordance with the requirements of this subchapter. The local entity may appeal the rescission of authority to the director.
(h) The local entity shall transmit to the department for monitoring and management each completed deferred payment loan file containing the original documents specified in subdivision (e) of this section within forty-five days following completion of construction and disbursement of the final retention payment. Local entities shall keep copies of all deferred payment loan files for five years after completion of rehabilitation work and recordation of the notice of completion. The department shall require the local entity to rectify any errors or omissions discovered in the deferred payment loan files.
Note: Authority cited: Section 50668.5(g), Health and Safety Code. Reference: Sections 50662, 50668.5 and 50668.5(a), Health and Safety Code.
s 8058. Disbursement of Loan Funds.
(a) Upon deferred payment loan approval and request by the local entity, the department shall disburse funds for deferred payment loans loan account approved by the department.
(b) Requests for deferred payment loan funds shall be on Form HCD O-003, California Housing Rehabilitation Program for Owner-Occupied Housing (CHRP-O), Request for Funds, dated 8/90, as set forth in subdivision (c) of this section. This request for funds form is provided by the department. The information on any request shall be subject to verification by the department.
(c) Copy of Form HCD O-003, California Housing Rehabilitation Program for Owner-Occupied Housing (CHRP-O), Request for Funds, dated 8/90.
CALIFORNIA HOUSING REHABILITATION PROGRAM
For Owner-Occupied Housing (CHRP-O)
REQUEST FOR FUNDS
To: FROM:
Department of Housing and Community Development (Local Entity):_____________
Division of Community Affairs, CHRP-O (Address):__________
P.O. Box 952054 ______________
Sacramento, CA 94252-2054 _______________
ATTN: Senior Program Manager _____________
Loan Funds Grant Funds
Requested Requested
Contact No:______________ $________ $__________
( )Draw #1 ( ) Draw #2
Borrower Name:___________________ Payee Name/Address:
Borrower Loan No:_______________ __________________
___________________
___________________
___________________
Cumulative Date:
Total Balance
Total Fund Total Loan Funds Grant Funds Approved this Remaining
Amount
Commitment of Prior Requested Requested Request for in Funds
for for
by HCD Drawdowns Disbursement Disbursement Disbursement Commitment
$______ $ ______ $ ______ $______ $______ $_______
I, the undersigned, do hereby certify that the abovecosts were/will be incurred in the performance of the above-numbered contract and, if address is not payee, do also certify that the above addressee is authorized to act as agent of the payee for the purpose of receiving and depositing the above stated sum.
SIGNED _________________________ TITLE _________________________
BY _____________________________ DATED _________________________
____________DO NOT WRITE BELOW THIS LINE____________
The work performed for which this billing is prepared in accordance with all provisions of Contract #____________ between ____________ and HCD and is approved for payment. Please disburse funds in the total amount of $__________________, payable to payee indicated above. Please phone 323-3178 when the warrent is received by HCD Accounting.
Date: _________ _____________________________
Senior Program Manager
PCA/Index: ____ Fund No. ____________________
(d) Deferred payment loan funds shall only be disbursed for approved deferred payment loans in accordance with the following:
(1) In the event the local entity is not certified to approve deferred payment loans, the local entity shall submit to the department with Form HCD O-003, California Housing Rehabilitation Program for Owner-Occupied Housing (CHRP-O), Request for Funds, dated 8/90, the loan file completed pursuant to Subdivision 8057(e)(1) for which funds are being requested.
(2) In the event the local entity is certified to approve deferred payment loans, the local entity shall submit to the department with Form HCD O-003, California Housing Rehabilitation Program for Owner-Occupied Housing (CHRP-O), Request for Funds, dated 8/90, a description of the deferred payment loan for which funds are being requested.
(e) Deferred payment loan funds shall be deposited and maintained in a separate, interest-bearing escrow account, which shall include only funds transferred pursuant to this subchapter.
(f) Prior to the disbursement of deferred payment loan funds, the local entity shall ensure that the documents specified in section 8056(c) are completed, executed and recorded.
Note: Authority cited: Section 50668.5(g), Health and Safety Code. Reference: Sections 50661, 50662 and 50663, Health and Safety Code.
s 8059. Disbursement of Administrative Grants.
(a) Administrative grants will be paid upon request by the local entity in two installments: 50 percent payable at deferred payment loan recordation and 50 percent payable upon receipt by the department of the deferred payment loan file pursuant to Section 8057(h). The final administrative grant payment will be contingent upon the department's determination that the deferred payment loan file is complete and accurate.
(b) Requests for administrative grant funds shall be on Form HCD O-003, California Housing Rehabilitation Program for Owner-Occupied Housing (CHRP-O), Request for Funds, dated 8/90, as set forth in section 8058(c). This Request for Funds form is provided by the department.
Note: Authority cited: Section 50668.5(g), Health and Safety Code. Reference: Section 50661(a), Health and Safety Code.
s 8060. Reporting Requirements.
(a) During the term of the Standard Agreement and, no later than 30 days after the end of each calendar quarter, the local entity shall submit to the department a performance report on Form HCD O-002, Quarterly Report, California Housing Rehabilitation Program for Owner-Occupied Housing (CHRP-O), dated 8/90, as set forth in subdivision (b) of this section. This form is provided by the department.
(b) Copy of form HCD O-002, Quarterly Report, California Housing Rehabilitation Program for Owner-Occupied Housing (CHRP-O), dated 8/90.
Date:_______________________________
QUARTERLY REPORT
CALIFORNIA HOUSING REHABILITATION PROGRAM
FOR OWNER-OCCUPIED HOUSING (CHRP0O)
For the quarter beginning_________________ and ending_________
LOCAL ENTITY___________________CONTACT___________________
ADDRESS:_________________________TELEPHONE (___)____________
Marketing
1. Have you established a waiting list and, if so, how many households are on the list? _____________
2. How have you armketed the CHRP-O) during this quarter?______
3. Have you experienced any difficulties the CHRP-O during this quarter and, if so, what are they and how are you receiving them? ____________________________________________________________
Loan Processing
1. How many loan packages have you initiated during this quarter? _____________________________________________________
2. How many loan packages or requests for funds have you submitted to HCD during this quarter?____________________________________
3. Have you experienced any difficulties in processing CHRP-O known during this quarter and, if so, what are they and how are you receiving them? ______________________________________________
4. How many CHRP-O loans do you expect to initiate during the next quarter? _____________________
5. How mahy CHRP-O loans or requests for funds do you expect to submit to HCD during the next quarter? ______________________
Loans Closed and in Construction
1. Deescribe any delays or problems you are experiencing in your loan closing procedures and any steps you are making to mitigate them. _____________________________________________
2. Describe any problems you are experiencing in contractor participation and performance any any steps you are taking to mitigate them. _____________________________________
Contract Fund Status This Quarter Only Cumulative
1. CHRP-O loan funds requested: ----------------- ----------
2. CHRP-O administrative funds requested: ----------------- ----------
3. Balance of administrative funds due: ----------------- ----------
TOTAL ----------------- ----------
Program Administration
1. Have you had any staffing changes during this quarter? If so, please describe.
_________________________________________________________
2. Please provide any general comments or problems you have experienced and your suggestions for improvements to the program.
___________________________________________________________
3. Please provide the amount of CHRP-O funds and other funds committed, as well as loan and construction data for each loan received during this quarter (itemize on attached Quarterly Data form).
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QUARTERLY DATA
-------------------------------------------------------------------------
Loans % of Loan
Initiated median Request
(Date income Denial $ Amount Date Date Date
Received/ /No of /Apprv. Loan Const. Const.
Borrower's bedroom (D ate) CHRP-O Closed Began Completed
Name)
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TOTALS
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1...+...10....+...20....+...30....+...40....+...50....+...60....+...70...
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Funds
Combined
Final with CHRP-O
Docs
--------------
to HCD $ Amount Type
(Dat-
e)
------------------------
------------------------
74...80....+...90....+..
(c) At any time during the operation of the local program, the department may perform or cause to be performed a financial audit of any and all phases of local program operations. At the department's request, the local entity shall provide, at its own expense, a financial audit prepared by a certified public accountant.
Note: Authority cited: Section 50668.5(g), Health and Safety Code. Reference: Section 50668.5(a), Health and Safety Code.
s 8061. Cancellation and Termination.
(a) Commitments from the account to local entities shall be cancelled and Standard Agreements shall be terminated by the department under any one of the following conditions:
(1) local program operations are not in compliance with the program or the Standard Agreement;
(2) implementation of the local program is not in compliance with the timeframes and goals stated in the local entity's application and Standard Agreement; or
(3) special conditions for funding as stated in the Standard Agreement have not been fulfilled.
(b) The department shall provide written notice to the local entity of its intent to cancel the fund commitment. Upon receipt of a notice of intent to cancel the fund commitment, the local entity shall have the right to appeal the decision to the director.
(c) In the event a commitment is cancelled and the Standard Agreement is terminated, all loans and construction in process shall be monitored and supervised by the department or its agent in accordance with the requirements of this subchapter.
Note: Authority cited: Section 50668.5(g), Health and Safety Code. Reference: Section 50668.5(a), Health and Safety Code.
s 8062. Default Reserve Subaccount.
(a) The department shall establish an owner-occupied housing default reserve subaccount in the account. The default reserve subaccount shall be maintained at an amount equivalent to three percent of the amount of encumbrances from the account for deferred payment loans made pursuant to this subchapter.
(b) The department may use amounts available in the default reserve subaccount for the purpose of curing or avoiding a borrower's defaults on the terms of any loan or other obligation which jeopardizes the department's security in property securing the deferred payment loan. These defaults include defaults or impending defaults in payments on mortgages, failures to pay taxes, failures to maintain insurance, or any combination thereof.
(c) Where it becomes necessary to use monies pursuant to this section to protect the department's security in a particular borrower's property, the department shall take those actions necessary, including, but not limited to, foreclosing or forced sale of the borrower's property, to prevent similar occurrences and ensure compliance with the terms of the applicable agreements.
Note: Authority cited: Section 50668.5(g), Health and Safety Code. Reference: Section 50668.5(a), Health and Safety Code.
s 8075. Purpose and Scope.
(a) This subchapter establishes the Proposition 84 Rental Housing Construction Program and implements and interprets chapter 9 (commencing with section 50735) of part 2 of division 31, Health and Safety Code, as amended by chapter 30 of the Statutes of 1988 and chapter 1103 of the Statutes of 1989.
(b) These regulations establish procedures for the award and disbursement of loans and establish policies and procedures for use of funds allocated to the Rental Housing Construction Program by sections 53130(a)(1) and 53130(b)(1) of the Health and Safety Code.
Note: Authority cited: Section 50771.1, Health and Safety Code. Reference: Sections 33007.5, 50010, 50079.5, 50735, 50736, 50766, 50771.1, 50771.2, 50894, 53130 and 53133, Health and Safety Code. Sections 7260, 7261, 7262, 7264, 7264.5, 7269, 7269.1, 7272 and 7272.3, Government Code.
s 8076. Definitions.
In addition to the definitions found in chapter 2 (commencing with section 50050), of part 1 of division 1 of the Health and Safety Code and subchapter 2 (commencing with section 6910) of chapter 6.5 of this title, the following definitions shall apply to this subchapter. In the event of a conflict between the following definitions and those recited above, the following definitions prevail for the purposes of this subchapter:
(a) "Article XXXIV approval" means the approval by local electors which must be obtained before a low rent housing project can be developed, constructed, or acquired in any city, town or county in California. This approval is required by section 1 of article XXXIV of the Constitution of California.
(b) "Assisted unit" means a dwelling unit, or a residential hotel unit, or a bedroom in a group home, designated for occupancy or occupied by eligible households in accordance with a Regulatory Agreement between the department and the sponsor entered into pursuant to section 8096(c).
(c) "Debt service coverage ratio" means the ratio of (1) operating income less operating expenses to (2) debt service payments, excluding voluntary prepayments.
(d) "Department" means the Department of Housing and Community Development.
(e) "Director" means the Director of the Department of Housing and Community Development.
(f) "Distributions" means the amount of cash or other benefits received from the operation of the rental housing development and available to be distributed pursuant to section 8089 to the sponsor or any party having a beneficial interest in the sponsor entity, after payment of all due and outstanding obligations incurred in connection with the rental housing development. Distributions do not include payments for debt service, voluntary loan prepayments, operations, maintenance, payments to required reserve accounts, incentive payments pursuant to section 8082, land lease payments to parties that do not have a beneficial interest in the sponsor entity, or payments for property management or other services as set forth in the Regulatory Agreement for the rental housing development.
(g) "Eligible households" means very low-income households or other lower income households.
(h) "Fiscal integrity" means that the total of operating income plus funds released pursuant to the Regulatory Agreement from the operating reserve account is sufficient to:
(1) pay all current operating expenses,
(2) pay all current debt service (excluding deferred interest),
(3) fully fund all reserve accounts (other than the operating reserve account) established pursuant to the Regulatory Agreement,
(4) maintain a debt service coverage ratio, where specified in the Regulatory Agreement, and
(5) pay other extraordinary costs permitted by the Regulatory Agreement. The ability to pay any or all of the annual permitted distribution shall not be considered in determining fiscal integrity.
(i) "Fund" means the Rental Housing Construction Fund.
(j) "Group home" means a residential structure or structures, including a residential hotel, where five or more handicapped persons or households reside, share common facilities and receive direct and supportive services provided under the supervision or oversight of the local public official responsible for services to the designated tenant population, including a residential facility as defined by section 1502 of the Health and Safety Code. Intermediate care or skilled nursing facilities are not considered group homes and are not eligible for funding.
(k) "Handicapped" means a family in which the head of the household is suffering from an orthopedic disability impairing personal mobility or a physical disability affecting his or her ability to obtain employment or a single person with such an orthopedic disability or a physical disability, where the family or person requires special care or facilities in the home. "Handicapped" also includes a family in which the head of household suffers from a developmental disability specified in subdivision (a) of section 38010 of the Health and Safety Code or a mental disorder which would render him or her eligible to participate in programs of rehabilitation or social services conducted by or on behalf of a public agency, or a single person with such a developmental disability or mental disorder.
( l) "Household income" means the same as "gross income" as defined in section 6914 of this title.
(m) "Initial operating year" means the initial period of operation of the rental housing development, beginning at the time of the initial occupancy of the first assisted unit in the development and ending on the last day of the fiscal year of the development.
(n) "Limited equity housing cooperative" means an entity defined by section 50076.5 of the Health and Safety Code. Except as otherwise provided, all requirements in this subchapter shall be applicable to limited equity housing cooperatives assisted pursuant to this subchapter.
(o) "Lower income household" means persons or families as defined in section 50079.5 of the Health and Safety Code.
(p) "Lower income nonassisted unit" means a dwelling unit, or a residential hotel unit, or a bedroom in a group home, other than an assisted unit, which is regulated by virtue of participation in the federal tax credit program (section 42, title 26 U.S.C.) or state tax credit program (chapter 166, California Statutes of 1990), the HUD section 202 program (section 1701q, title 12 U.S.C.), the HUD section 8 program (section 1437f, title 42 U.S.C.), or other governmental program where the occupancy and rent requirements, and the term of the occupancy and rent requirements are equal to or greater than the requirements of the federal tax credit program referenced above.
(q) "Lower income unit" means an assisted unit designated for occupancy or occupied by any lower income household.
(r) "Nonprofit corporation" means the same as defined in section 50091 of the Health and Safety Code.
(s) "Operating expenses" means the amount approved by the department that is necessary to pay for the recurring expenses of the project, such as utilities, maintenance, management, taxes, and licenses, but not including debt service, required reserve account deposits, or costs for direct or supportive tenant services that tenants are not required to pay for as a condition of occupancy.
(t) "Operating income" means all income generated in connection with operation of the rental housing development including rental income for assisted and nonassisted units, rental income for commercial space, laundry and equipment rental fees, rental subsidy payments, and interest on any accounts related to the rental housing development. "Operating income" does not include security and equipment deposits, payments for direct or supportive tenant services that tenants are not required to pay for as a condition of occupancy, or tax benefits received by the sponsor.
(u) "Other lower income household" means persons or families as defined in section 6928 of title 25.
(v) "Program" means the Rental Housing Construction Program.
(w) "Project" means a rental housing development, the development, construction and operation thereof, using program funds, and the financing structure and all agreements and documentation approved in connection therewith.
(x) "Rent" means all mandatory charges, other than deposits, paid by the tenant for the use and occupancy of an assisted unit. In a group home, when mandatory charges include direct and supportive tenant services, "rent" means that portion of the tenant's payment required to pay for debt service, reserves required by the department, and operating expenses, excluding expenses for the mandatory direct and supportive tenant services. Direct and supportive tenant services means meals, transportation, housekeeping services, recreational and social activities, independent living training, vocational training, counseling, and similar services provided or organized by the sponsor or its agent.
(y) "Rent-up costs" means costs incurred in connection with marketing and preparing an assisted unit for occupancy while the unit is on the housing market but not rented to its first tenant.
(z) "Rental housing development" means a development of five or more rental or limited equity housing cooperative units on one or more sites and includes a mobilehome park with five or more mobilehome units, a group home, and a residential hotel.
(aa) "Residential hotel" means any building which contains six or more residential hotel units where a majority of the units are residential hotel units.
(bb) "Residential hotel unit", also referred to as a "single room occupancy" unit or an SRO, means a room used for sleeping purposes that:
(1) is occupied as a primary residence,
(2) lacks, in the unit itself, either or both a kitchen or bathroom, and
(3) is subject to state landlord-tenant law pursuant to chapter 2 (commencing with section 1940) of title 5 of part 4 of division 3 of the Civil Code.
(cc) "RHCP" means the Rental Housing Construction Program.
(dd) "Rural area" means the same as defined in section 50101 of the Health and Safety Code.
(ee) "Single room occupancy" unit or "SRO" means the same as "residential hotel unit."
(ff) "Very low-income household" means persons or families as defined in section 50105 of the Health and Safety Code.
(gg) "Very low-income nonassisted unit" means a lower income nonassisted unit in which occupancy is limited to very low-income households and rents are limited to an amount not exceeding thirty percent of the maximum income for a very low-income household, less a reasonable utility allowance.
(hh) "Very low-income unit" means an assisted unit designated for occupancy or occupied by a very low-income household.
Note: Authority cited: Section 50771.1, Health and Safety Code. Reference: Sections 33007.5, 50010, 50079.5, 50735, 50736, 50766, 50771.1, 50771.2, 50894, 53130 and 53133, Health and Safety Code. Sections 7260, 7261, 7262, 7264, 7264.5, 7269, 7269.1, 7272 and 7272.3, Government Code.
s 8077. Eligible Project.
(a) To be eligible for funding, a proposed project must involve the development and construction of a new rental housing development.
(b) Except as specified in subdivision (c), proposed projects are ineligible if construction work, excluding:
(1) site improvements intended for public dedication,
(2) demolition,
(3) site preparation, and
(4) grading, has begun prior to the date that the department awards a commitment of program funds.
(c) Where construction work, other than that allowed pursuant to subdivision (b), has begun on the rental housing development prior to the date that the Department awards a commitment of program funds, proposed projects are eligible only under the following circumstances:
(1) construction has been halted, and the project property has been foreclosed upon or is in foreclosure;
(2) construction has been halted, and the project property has been deeded to a lender in lieu of foreclosure; or
(3) construction has been halted, and there is a substantial likelihood that a lender will initiate foreclosure due to the inability of the project's developer to complete construction.
(d) Proposed projects involving the demolition of residential rental units are eligible only under the following circumstances:
(1) the units to be demolished are substandard, and not economically feasible to rehabilitate or if the number of assisted units in the new project is at least twice the total number of units in the demolished structures; and
(2) the sponsor complies with the relocation requirements set forth in section 8091.
(e) To be eligible for funding, a proposed group home project must have the support of the local official responsible for services to the designated tenant population, such as the Mental Health Director or Regional Center Director, in the jurisdiction in which the proposed project is located, and must be designated by the local official as being an intrinsic part of that agency's established social service delivery system.
Note: Authority cited: Section 50771.1, Health and Safety Code. Reference: Sections 50010, 50735 and 50771.1, Health and Safety Code.
s 8078. Eligible Sponsor.
(a) A sponsor shall be any individual, joint venture, partnership, limited partnership, trust, corporation, limited equity housing cooperative, local public entity, duly constituted governing body of an Indian reservation or rancheria, or other legal entity, or any combination thereof which is certified by the department as meeting the requirements of subdivision (c).
(b) A sponsor shall be organized on a for-profit, including limited profit, or nonprofit basis.
(c) In order to be certified as eligible for funding, an applicant must be a sponsor who must:
(1) demonstrate ability or experience relevant to owning, developing, constructing, and operating rental housing through any of the following:
(A) prior ownership, development, construction and operation of rental housing;
(B) employment of a staff with demonstrated ability or experience owning, developing, constructing and operating rental housing; or
(C) contracting with a consultant or consultants with demonstrated ability or experience assisting with the owning, development, construction and operation of rental housing; and
(2) have site control of the proposed project property by one of the following:
(A) fee title;
(B) a leasehold interest on the project property with provisions that enable the lessee to make improvements on and encumber the property provided that the terms and conditions of any proposed lease shall permit compliance with all program requirements;
(C) an option to purchase or lease;
(D) a disposition and development agreement with a public agency;
(E) a land sales contract, or other enforceable agreement for the acquisition of the property.
Note: Authority cited: Section 50771.1, Health and Safety Code. Reference: Sections 50010, 50735 and 50771.1, Health and Safety Code.
s 8079. Eligible Uses of Funds.
(a) Funds shall be used only for approved eligible costs that are incurred on the project as set forth in this section. In addition, the costs must be necessary and must be consistent with the lowest reasonable cost consistent with the project's scope and area.
(b) Eligible categories of costs include the following:
(1) land acquisition;
(2) acquisition of projects under construction satisfying the requirements of section 8077(c);
(3) land lease payments;
(4) construction work;
(5) offsite improvements, such as sewers, utilities and streets, related to the rental housing development;
(6) onsite improvements related to the rental housing development;
(7) architectural, appraisal, engineering, legal and other consulting costs and fees, which are directly related to the planning and execution of the project and which are incurred through third-party contracts;
(8) administrative expenses pursuant to section 8085;
(9) rent-up costs;
(10) carrying costs during construction, including insurance, construction financing fees and interest, taxes, and any other expenses necessary to hold the property while the rental housing development is under construction;
(11) building permits and state and local fees;
(12) initial operating reserve balances required pursuant to section 8102;
(13) escrow, title insurance, recording and other related costs;
(14) costs for items intended to assure the completion of construction, such as contractor bond premiums; and
(15) environmental hazard reports, surveys, and investigations.
(c) Except where required to secure local government approvals essential to completion of the project, costs associated with the following items are ineligible for funding with program loan proceeds, and cannot be paid for from syndication proceeds or loans supported by rents from assisted units:
(1) building and roof shapes, ornamentation, and exterior finish schemes whose costs are in excess of the typical costs of these features in modestly designed rental housing;
(2) fireplaces, tennis courts, and similar amenities not typically found in modestly designed rental housing;
(3) shake and tile roofs, custom-made windows, ceramic tile floors and counters, hardwood floors, and similar features using materials not typically found in modestly designed rental housing, except where such materials have lower life-cycle costs due to lower operating, maintenance and replacement costs.
(d) No program funds shall be used for costs associated exclusively with nonassisted units or commercial space. If only a portion of the rental housing development consists of assisted units, the program loan amount shall not exceed the sum of the following:
(1) the costs of all items specified in subdivision (b) associated exclusively with the assisted units;
(2) a share of the costs of common areas used primarily by residential tenants. This share shall be in direct proportion to the ratio between the gross floor area of the assisted units and the gross floor areas of all residential units; and
(3) a share of the cost of other items, such as roofs, that cannot specifically be allocated to assisted units, nonassisted units, or commercial space. This share shall be in direct proportion to the ratio between
(A) the gross floor area of the assisted units, plus a share of the gross floor area of common areas used primarily by residential tenants in direct proportion to the ratio between the gross floor area of the assisted units and the gross floor area of all units; and
(B) the total gross floor area of the structure or structures.
Note: Authority cited: Section 50771.1, Health and Safety Code. Reference: Sections 50735, 50736, 50771.1 and 53133, Health and Safety Code.
s 8080. Type and Term of Loan.
(a) Sponsors shall elect to receive program financing as either combination construction and permanent loans or permanent loans only.
(b) The initial term of the loan shall be 40 years, commencing on the date of initial occupancy of an assisted unit.
(c) Upon request by the sponsor, the department shall approve an initial loan term longer than that set forth in subdivision (b) provided that such longer term does not exceed the useful life of the rental housing development as determined by the department utilizing assessments provided by professionals from the construction and real estate industries, such as the conclusions of an appraiser or a structural engineer.
(d) Upon request by the sponsor, the department may approve a ten-year extension of the loan term if the department determines both of the following are met:
(1) The sponsor is in compliance with the Regulatory Agreement and agrees to continue to comply during the extended term; and
(2) The extension is necessary to continue operations consistent with program requirements.
(e) The department may condition the extension on such terms as it deems necessary to ensure compliance with the requirements of this program.
Note: Authority cited: Section 50771.1, Health and Safety Code. Reference: Sections 50766 and 50771.1, Health and Safety Code.
s 8081. Maximum Loan Amounts.
The loan amount is limited to the total amount of eligible costs required, when considered with other available financing and assistance, in order to achieve all of the following:
(a) to enable the development and construction of the rental housing development;
(b) to ensure that rents for assisted units are in accordance with program requirements;
(c) to operate in compliance with all other program requirements; and
(d) to allow a debt service coverage ratio in an amount sufficient to satisfy the requirements of other lenders providing financing for the rental housing development, but not to exceed 115 percent.
Note: Authority cited: Section 50771.1, Health and Safety Code. Reference: Section 50771.1, Health and Safety Code.
s 8082. Interest Rate and Loan Repayments.
(a) Loans shall bear simple interest of three percent per annum on the unpaid principal balance. Interest shall accrue from the date that funds are disbursed by the department to or on behalf of the sponsor. (continued)