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Note: Authority cited: Sections 50406(n), 50884 and 50895, Health and Safety Code. Reference: Sections 50888.3, 50891(a), 50893.3 and 50893.7, Health and Safety Code.









s 8121. Tenancy Standards.
(a) Sponsors shall select only eligible households as tenants of assisted units, and shall annually verify household income and size to determine continued eligibility and appropriate unit size. As part of the management plan required by section 8137(e), the sponsor shall develop a tenant selection plan for assisted units which shall be subject to the approval of the department. Any change to the plan shall be subject to the approval of the department. The plan shall include the following:

(1) an affirmative marketing plan for eligible households which shall include policies and steps to ensure equal access to all housing units in the rental housing development for all persons in any category protected by federal, state or local laws governing discrimination. Where a significant number of persons in the area of the rental housing development have limited fluency in English, the plan shall require that publications implementing the affirmative marketing plan be provided in the native languages of those persons;
(2) reasonable criteria for selection or rejection of applicants which shall not discriminate in violation of any federal, state or local laws or base tenant selection on any other arbitrary factor. Reasonable criteria shall include:
(A) for each rental housing development, a priority to applicants who are employed at nearby facilities or who potentially could be employed at nearby facilities through publicly assisted orother job- training or entry-level employment programs and who are willing to participate in the job training and placement program provided pursuant to section 8128(a); and
(B) for each congregate housing development, the willingness and ability of an applicant to enter into a resident management agreement as described in section 8137;
(C) for each community housing development, a priority to applicants who are employed in the management and operation of the community housing development or its child care center.
(3) a prohibition of local residency requirements; and
(4) tenant selection procedures that include the following requirements:
(A) selection of tenants based on order of application, lottery, or other reasonable method approved by the department;
(B) notification to a tenant applicant of either;
(1) eligibility to occupy an assisted unit and, based on turnover history, the approximate date when a unit may be available;
(2) ineligibility to occupy an assisted unit, the reason for the ineligibility, and the right to appeal this determination pursuant to section 8121(e); and

(C) maintenance of a waiting list of eligible households which have applied to occupy assisted units which if applicable, distinguishes between lower- and very low-income applicants, and elderly households and families with children.
(5) for community housing developments, tenant occupancy standards that shall be used by the sponsor upon both initial occupancy and annual recertification to determine the size of a unit to be occupied by a tenant, as follows:

Unit No. of Persons in Household
Size Minimum Maximum
0-BR 1 2
1-BR 1 3
2-BR 2 5
3-BR 4 7
4-BR 6 9
5-BR 8 11


(A) A sponsor may assign a unit other than that specified above if the sponsor reasonably determines that special circumstances warrant a variance and the reasons are documented in the tenant's file.
(B) If, upon annual recertification, the tenant's household size has changed and no longer meets the occupancy standards of this subdivision, the household shall be required to move to the next available unit which will meet the requirements of this subdivision.
(6) for congregate housing developments, tenant occupancy standards that require no less than one person and no more than three persons per bedroom, except as approved by the department subsequent to review of unique design features, such as flexible walls.
(b) Upon prior written approval by the department, the sponsor may establish income limits for lower-income units at a level below the upper limit for lower-income households.
(c) In housing cooperatives, share purchase terms for assisted units shall be limited as follows:
(1) For each initial member household, the total share purchase price shall not be more than two-and-one-half percent (2.5%) of the prorated development cost of the unit.
(2) For each subsequent member household, the total share purchase price shall not be more than the sum of the total share purchase price previously charged to the member household selling the share and any share appreciation due to the member household selling the share. Share appreciation shall be at a simple interest rate approved by the department, not to exceed eight percent (8%) per annum of the portion of the total share purchase price actually paid in by the member household selling the share.
(3) Upon occupancy by an initial member household or subsequent member household, the required cash contribution to be applied towards the total share purchase price shall not exceed the lesser of either ten percent (10%) of the member household's income for the calendar year prior to occupancy or the total share purchase price; and in no event shall the cash contribution required upon initial occupancy be less than two times the monthly rent for the unit.
(4) The sponsor may loan members of the housing cooperative the difference between the total share purchase price and the member household's cash contribution. The terms and conditions of such loans shall be subject to department approval.
(d) The sponsor shall submit for department approval the form of the rental or occupancy agreement for assisted units prior to its use. The form shall include the following:
(1) provisions requiring good cause for termination of tenancy. One or more of the following constitutes "good cause":
(A) failure by the tenant to maintain eligibility under the program;
(B) noncompliance by the tenant with material provisions of the rental or occupancy agreement, including one or more substantial violations of the rental or occupancy agreement or habitual minor violations of the rental or occupancy agreement which
1. adversely affect the health and safety of any person or the right of any tenant to the quiet enjoyment of the leased premises and related project facilities;
2. substantially interfere with the management, maintenance, or operation of the rental housing development;
3. substantially interfere with the supportive service component or the job training and placement component of the project, other than failure to participate, as set forth in section 8127 and 8128, respectively; or
4. result from the failure or refusal to pay, in a timely fashion, rent or other permitted charges when due. Failure or refusal to pay, in a timely fashion, is a minor violation if payment is made during the three-day notice period;
(C) substantial failure or repeated minor failure by a tenant to carry out material obligations under state or local law;
(D) subletting, by the tenant, of all or any portion of the assisted unit;
(E) substantial failure or repeated minor failure by a tenant in a congregate housing development to comply with material provisions of the resident management agreement described in section 8137 or with any rules established by the mutual agreement of the residentsof the congregate housing development and the sponsor; or

(F) any other action or conduct of the tenant constituting significant problems which can be reasonably resolved only by eviction of the tenant, provided that the sponsor has previously notified the tenant that the conduct or action in question would be considered cause for eviction. Examples of action or conduct in this category include the refusal of a tenant, after written notice, to accept reasonable rules or any reasonable changes in the rental or occupancy agreement or the refusal to recertify income or household size;
(2) a provision requiring that the facts constituting the grounds for any eviction be set forth in the notice to quit provided to the tenant pursuant to state law;
(3) notice of the appeal and grievance procedures established by the sponsor pursuant to subdivision (e) and incorporation of the procedure by reference;
(4) notice of the right to an informal hearing with the sponsor to review any proposed rent increase pursuant to section 8122;
(5) a requirement that the tenant annually recertify household income and size;

(6) for congregate housing developments, a requirement that the tenant comply with the resident management agreement described in 8137(c).
(e) Each sponsor shall adopt an appeal and grievance procedure to resolve grievances filed by tenants and allow appeals of actions taken by the sponsor with respect to tenants' occupancy in the rental housing development and prospective tenants' applications for occupancy.
(1) the appeal and grievance procedure shall be included in the sponsor's management plan described in section 8137(e) and shall, at a minimum, include the following:
(A) a requirement for delivery of a written copy of the appeal and grievance procedure to each tenant and applicant;
(B) procedures for informal dispute resolution;
(C) a right to a hearing before an impartial body, which shall consist of one or more persons, with the power to render a final decision on the appeal or grievance;

(D) procedures for the appointment of the impartial hearing body;
(E) procedures for conducting such hearing, including the right to present evidence without regard to formal rules of evidence, the right to be represented by any other person and the right to a written decision from the hearing body which shall be based solely on evidence presented at the hearing; and
(F) a requirement that the sponsor extend any time period imposed pursuant to a formal eviction procedure, including any filing in a court of competent jurisdiction, during the pendency of the hearing.
(2) Neither utilization of nor participation in any aspect of the appeal and grievance procedure shall constitute a waiver of or affect the rights of the tenant, prospective tenant, or sponsor to a trial de novo or judicial review in any judicial proceeding which may thereafter be brought in the matter.
(f) If, upon annual recertification, a tenant's household income exceeds the eligibility limit for lower-income households, the tenant's rental or occupancy agreement for the unit as an assisted unit shall terminate six months after the notice of termination which sponsor must provide within one month of recertification.
(1) The sponsor may approve one additional six-month extension of the rental or occupancy agreement if the rental housing development is located in a market area where:
(A) the vacancy rate for rental housing is less than five percent; and
(B) the Fair Market Rent exceeds the average of the Fair Market Rents for all metropolitan statistical areas in California. For purposes of this subsection, "Fair Market Rent" means the most current Fair Market Rent for Existing Housing for two-bedroom units, as published annually in the "Federal Register" by the U.S. Department of Housing and Urban Development pursuant to section 8(c)(1) of the United States Housing Act of 1937.
(2) In rental housing developments containing nonassisted units, the tenant shall have the right of first refusal for any available nonassisted unit of a size consistent with the occupancy standards set forth in section 8121(a)(5) and (6). This right shall begin upon recertification and shall expire upon termination of the tenant's rental or occupancy agreement of the assisted unit.

(3) If the tenant provides to the sponsor additional evidence which establishes income eligibility prior to the expiration of the tenant's rental or occupancy agreement, the tenant's lease shall not be terminated.
(4) If the assisted unit is subject to state or federal rules governing low-income housing tax credits as referenced in section 8111(x) or other federal or state housing assistance, those eligibility provisions shall govern continued eligibility for occupancy, if necessary to permit participation in such programs.
(5) If the tenant's income exceeds the limit for lower-income units established by the sponsor pursuant to subdivision (b), that fact alone shall not be cause for termination of the tenant's rental or occupancy agreement or for requiring the tenant to vacate its unit, if the tenant's income remains below the eligibility limit for lower-income households.
(6) In a limited equity housing cooperative where the household income of a cooperative member occupying an assisted unit exceeds the upper limit for lower-income households, the member shall not be required to vacate the assisted unit.

(A) After recertification and determination of ineligibility, the sponsor shall immediately notify the member that the carrying charge will increase to a market rate payment six months after said notification. Market rate payment shall be the carrying charge paid for a comparable nonassisted unit, without an allowance for utilities, or where there are no comparable nonassisted units, the rent charged for comparable units in the area. This market rate payment shall be subject to department approval.
(B) The next available membership share for occupancy in a comparable unit shall be sold to an eligible household until the mix between lower and very low-income units required by the Regulatory Agreement is achieved.
(g) If the income of a household residing in a very low-income unit changes from very low-income to other lower-income at the time of recertification, the following shall apply:
(1) The household shall not be required to vacate the unit;
(2) The sponsor shall charge rent that does not exceed the current rent allowed for any comparable lower-income unit pursuant to section 8122, or where there are no such units, the maximum rent which would be allowed pursuant to section 8122;
(3) The sponsor shall designate the unit as a lower-income unit; and
(4) The sponsor shall designate the next available comparable assisted unit as a very low-income unit until the mix between lower-income and very low-income units required by the Regulatory Agreement as provided in section 8133(c) is achieved.


Note: Authority cited: Sections 50406(n), 50884 and 50895, Health and Safety Code. Reference: Sections 50893.7 and 50894, Health and Safety Code.









s 8122. Rent Standards.
(a) The department shall establish initial rents for assisted units in each community housing development in accordance with the tables in section 6932 and the following:
(1) At the time of initial occupancy of a unit, monthly rents for very low-income units in a community housing development shall not exceed 30 percent of 35 percent of area median income, divided by 12, adjusted by unit size pursuant to subdivision (a)(3), and with an allowance for utility costs pursuant to subdivision (c). The unit size adjustment in subdivision (a)(3) is selected by identifying the size of the unit for which rent must be determined and reading across to determine the applicable household size for that unit. Area median income is determined by selecting from the tables provided in section 6932 for the county in which the unit is located, the amount of income provided as the very low income standard for the "number of persons in the family," which equates with the "applicable household size" identified in subdivision (a)(3).
(2) At the time of initial occupancy of a unit, monthly rents for lower-income units in a community housing development shall not exceed 30 percent of 60 percent of area median income, divided by 12, adjusted by unit size pursuant to subdivision (a)(3), and with an allowance for utility costs pursuant to subdivision (c). The unit size adjustment in subdivision (a)(3) is selected by identifying the size of the unit for which rent must be determined and reading across to determine the applicable household size for that unit. Area median income is determined by selecting from the tables provided in section 6932 for the county in which the unit is located, the amount of income provided as the lower-income standard for the "number of persons in the family," which equates with the "applicable household size" identified in subdivision (a)(3).

(3) Maximum rent calculated pursuant to (a)(1) and (a)(2) above shall be adjusted by unit size as follows:

Unit Size Applicable Household Size
to Determine Rent Limit
0 bedroom 1 person
1 bedroom 2 persons
2 bedrooms 3 persons
3 bedrooms 4 persons
4 bedrooms 6 persons
5 bedrooms 8 persons


(b) The department shall establish initial rents for assisted units in each congregate housing development in accordance with the tables in section 6932 and the following:
(1) At the time of initial occupancy of a unit, monthly rents for very low-income units in a congregate housing development shall not exceed 30 percent of 35 percent of area median income adjusted by unit size pursuant to subdivision (a)(3), divided by 12 and with an allowance for utility costs pursuant to subdivision (d). For the purpose of determining initial rents, the sponsor shall configure the congregate housing development into enough units so that two to ten households can be accommodated in accordance with the occupancy requirements contained in subdivision 8121 (a)(6) and as approved by the department. The unit size adjustment in subdivision (a)(3) is selected by identifying the size of the unit for which rent must be determined and reading across to determine the applicable household size for that unit. Area median income is determined by selecting from the tables provided in section 6932 for the county in which the unit is located, the amount of income provided as the very low-income standard for the "number of persons in the family," which equates with the "applicable household size" identified in subdivision (a)(3).
(2) At the time of initial occupancy of a unit, monthly rents for lower-income units in a congregate housing development shall not exceed 30 percent of 60 percent of area median income adjusted by unit size pursuant to subdivision (a)(3), divided by 12 and with an allowance for utility costs pursuant to subdivision (d). For the purpose of determining initial rents, the sponsor shall configure the congregate housing development into enough units so that two to ten households can be accommodated in accordance with the occupancy requirements contained in subdivision 8121 (a)(6) and as approved by the department. The unit size adjustment in subdivision (a)(3) is selected by identifying the size of the unit for which rent must be determined and reading across to determine the applicable household size for that unit. Area median income is determined by selecting from the tables provided in section 6932 for the county in which the unit is located, the amount of income provided as the lower-income standard for the "number of persons in the family," which equates with the "applicable household size" identified in subdivision (a)(3).
(c) The maximum rent to be charged to tenants in assisted units in community housing developments shall be determined by deducting from the maximum amounts calculated pursuant to (a)(1), (a)(2), and (a)(3) a utility allowance for the appropriate unit size. The utility allowance shall be the allowance for monthly utility costs made or approved by the U.S. Department of Housing and Urban Development pursuant to 24 CFR s 813.102. In order to obtain the current utility allowances for cities and unincorporated areas located in the following counties, please contact the Department of Housing and Community Development, Attention: Housing Assistance Program, Post Office Box 952054, Sacramento, CA 94252-2054 or phone (916) 324-7696:

Amador Calavaras Colusa El Dorado

Glenn Inyo Lassen Lake
Mendocino Modoc Mono Nevada
Placer Sierra Siskiyou Trinity
Tuolumne


Utility allowances for the balance of cities and unincorporated areas in California not located in the above noted counties may be obtained by contacting the Housing Authority established for that county pursuant to section 34240 of the Health and Safety Code.
(1) Where a tenant does not directly pay for utilities, the utility allowance deduction shall be zero.
(2) Upon demonstration by the sponsor that the amount of utility cost per unit anticipated for the proposed project differs from the amount of the utility allowance per unit derived pursuant to subdivision (c), the department shall allow as a utility allowance use of the utility cost per unit demonstrated by the sponsor. The demonstration by the sponsor shall consist of the submittal of actual utility usage cost data per unit for an existing project constructed within the last five years, of the same type of construction as the proposed project, and with the same type of tenant population as the proposed project.
(d) The maximum rent to be charged to tenants in assisted units in congregate housing developments shall be determined by deducting from the maximum amounts calculated pursuant to (b)(1) and (b)(2), a utility allowance determined according to a methodology approved by the department prior to loan closing and based on the allocation of probable actual cost of utilities to households residing in the congregate housing development. Such methodology shall incorporate actual utility usage cost data per unit for an existing project constructed within the last five years, of the same type of construction as the proposed project, and with the same type of tenant population as the proposed project.
(e) For projects involving the rehabilitation of a rental housing development, the after-rehabilitation rent for an assisted unit occupied by an eligible household at the time of initial application to the program may not exceed the greater of the rent charged at the time of initial program application, or twenty-five percent (25%) of the subject tenant household's monthly gross income. In no event is the rent to exceed that which would be charged pursuant to subdivisions (a) and (b), or (c) and (d) above.
(f) As used in this section "rent" does not include any payment to a sponsor under section 8 of the United States Housing Act of 1937 or any comparable federal or state rental assistance program.
(g) After the initial operating year, rents for assisted units may be adjusted no more often than annually. The amount of adjustment shall be in accordance with the following:
(1) Rents may be increased at a rate not to exceed the most recent annual average percentage change in the Western Region for residential rents for all urban consumers as published by the United States Department of Labor, Bureau of Labor Statistics in the monthly publication, "CPI Detailed Report," multiplied by the ratio of the previous year's budgeted operating expenses attributed to assisted units, plus required reserves attributed to assisted units, to the previous year's budgeted operating income attributed to assisted units.
(2) In addition to the rent increase allowed pursuant to subdivision (g)(1), rents for assisted units shall be increased by an amount not to exceed the amount necessary to increase the operating income to cover changes in debt service

(A) on an adjustable rate loan secured by a mortgage on the rental housing development, which was approved by the department as part of the original project; or
(B) resulting from a refinancing of a loan for the project approved by the department pursuant to subsection 8135(c).
(3) Notwithstanding the provisions of subsections (g)(1) and (g)(2), rents shall be decreased, or the amount of the otherwise allowable increase reduced, if there is a reduction in the amount of required payments on an adjustable rate loan secured by a mortgage on the rental housing development due to a decrease in the interest rate for that loan or a reduction in operating costs. The aggregate monthly amount of this rent decrease, or reduction in an otherwise allowable increase, shall be equal to the amount of the monthly payment reduction attributable to assisted units.
(4) Any rent adjustment at the end of the initial operating year shall be prorated based on the length of the initial operating year.
(h) The sponsor shall be allowed to implement a greater rent increase for assisted units than that allowed in subdivision (g) if the sponsor can demonstrate, to the department's satisfaction, that the increase is necessary to pay for unusual or unforeseeable increases in costs related to the assisted units and to preserve fiscal integrity. The sponsor shall not receive a greater rent increase on the grounds that fiscal integrity is threatened by a shortfall in income, unanticipated expenses or other financial problems attributable to commercial space, nonassisted units, any supportive service, or the job training and placement program.
(i) Any allowable rent increase or portion thereof not implemented in assisted units by the sponsor in any given year shall not be accumulated for implementation in subsequent years.
(j) Where the assisted units are rent restricted as a condition of receiving low-income housing tax credits or other state or federal rent subsidy programs, the initial rent for assisted units and subsequent rent increases shall be the lower of those permitted under this section or those permitted under the applicable tax credit or other program.
(k) The sponsor shall submit requests for rent adjustments pursuant to subdivision (g) or (h) above as part of the annual operating budget pursuant to section 8138. If the department doesn't respond within sixty days of receipt of the request, the request is deemed approved.
( l) Sixty days prior to the time any rent adjustment is effective, the sponsor shall provide written notice to eligible households of the adjustment and the availability of informal meetings with the sponsor to review the proposed rent adjustment. Upon request by any affected tenant, the sponsor shall provide, in a timely manner, the information submitted to the department pursuant to subdivision (g), (h) and (k).


Note: Authority cited: Sections 50406(n), 50884 and 50895, Health and Safety Code. Reference: Sections 50881.5(b) and 50893.7(h), Health and Safety Code.









s 8123. Limits on Distributions.
(a) Sponsors other than governmental entities shall be allowed to distribute earnings from the assisted portion of the rental housing development in an annual amount no greater than 8 percent of its actual investment in the assisted portion. A sponsor shall not be subject to any limitation on the amount of distribution it receives from the nonassisted portion of the rental housing development. For purposes of this section, the assisted portion includes assisted units; the prorated share of common space, determined pursuant to section 8114(e)(2); and the child care center, if program funds are used to develop all or any portion of the child care center. The nonassisted portion includes units which are not assisted units; the prorated share of common space attributable to those units, determined pursuant to section 8114(e)(2); any commercial space; and the child care center, if no program funds are used to develop the child care center.
(b) Except as noted in subdivision (c), actual investment, for the purposes of this section, includes cash and the market value of property contributed to the assisted portion of the project by the sponsor. For projects receiving state or federal low-income housing tax credits, the amount of actual investment recognized by the department for the purpose of calculating allowable distributions shall not exceed fifteen percent of the total project development costs of the assisted portion of the project. Actual investment does not include any payments of project funds to the sponsor. In syndicated projects, actual investment shall be net syndication proceeds as defined in section 8124.
(c) For a project involving only rehabilitation and no acquisition or refinancing, actual investment is determined as follows: the market value of the rental housing development prior to rehabilitation, as determined in an appraisal, less outstanding debt prior to rehabilitation, plus any cash contributions to the project made by the sponsor, multiplied by the ratio of the assisted portion to the entire rental housing development.
(d) A sponsor may not accumulate distributions from year to year. A sponsor may deposit all or a portion of the amount permitted for distributions into a project account for distribution in subsequent years. Such future distributions shall not reduce the otherwise permitted distribution in those subsequent years.
(e) In its initial operating budget, the sponsor shall demonstrate to the department the amount of the sponsor's actual investment on which the allowable distribution will be calculated. The actual investment amount shall be increased in subsequent budgets upon a showing of additional actual investment advanced by the sponsor.
(f) Distributions shall be permitted only after the sponsor submits a complete annual report and operating budget and the department determines that the report and budget demonstrate compliance with all program requirements for the applicable year. Circumstances under which no distributions shall be made include:

(1) when written notice of default has been issued by any entity with an equitable or beneficial interest in the rental housing development;
(2) when the department determines that the sponsor has failed to comply with the department's written notice of any reasonable requirement for proper maintenance or operation of the rental housing development;
(3) if all currently due and payable debt service and operating expenses have not been paid; and
(4) if the replacement reserve account, operating reserve account, or any other reserve accounts are not fully funded pursuant to section 8139 and the Regulatory Agreement.
(g) Distributions of income attributed to the nonassisted portion of the rental housing development shall not be subject to the requirements of subdivisions (a) through (d).
(h) When operating income is greater than approved operating expenses, regularly scheduled debt service, scheduled reserve deposits, approved prepayments, approved annual distributions, and any other disbursements approved by the department, then the department shall require that such excess be paid into the Account. For purposes of calculating the amount of excess funds pursuant to this subdivision, operating income and expenses shall not include income or expenses from commercial space or the nonassisted portion of the rental housing development.


Note: Authority cited: Sections 50406(n), 50884 and 50895, Health and Safety Code. Reference: Section 50893.7, Health and Safety Code.









s 8124. Syndication.
(a) In the event that the project is syndicated during the term of the program loan, the total amount of syndication proceeds retained by the sponsor, or any affiliates of the sponsor, in the form of fees or payments of any kind, shall not exceed 25 percent of net syndication proceeds. Net syndication proceeds shall be calculated by deducting from gross syndication proceeds all reasonable and ordinary costs of syndication, including accounting, printing, financial consultant fees, legal fees, interest and fees on gap financing used to pay development costs approved by the department, syndicator fees, and government fees associated with creating a limited partnership and securing tax credit allocations.
(b) Not less than 75 percent of any available net syndication proceeds shall be applied toward project development costs approved by the department, exclusive of any fees or payments retained by the sponsor or its affiliates, and, then, to the extent that funds are available, toward payment or prepayment, as applicable, of program loan interest and principal.
(c) Upon demand by local public agencies that have contributed or loaned funds towards project development costs, net syndication proceeds that would otherwise be applied towards program loan payments may be allocated among these agencies and the department in amounts in direct proportion to the ratio between the amount of their contributions or loans and the amount of the program loan.


Note: Authority cited: Sections 50406(n), 50884 and 50895, Health and Safety Code. Reference: Section 50893.7(d), Health and Safety Code.











s 8125. Relocation Requirements.
(a) For projects involving the new construction of a rental housing development, the following shall apply:
(1) The sponsor of a project resulting in displacement of residential tenants shall be solely responsible for providing the assistance and benefits set forth in this subdivision (a), and shall agree to indemnify and hold harmless the department from any liabilities or claims for relocation related costs.

(2) All tenants in occupancy in a property who are temporarily or permanently displaced as a direct result of the development of the project shall be entitled to relocation benefits and assistance as provided in chapter 16 (commencing with section 7260) of Division 7 of Title 1 of the Government Code. Displaced tenants who are not eligible households under this program shall be provided relocation benefits and assistance from funds other than program funds.
(3) The sponsor shall prepare a relocation plan in conformance with the provisions of section 6038(b) of this Title based on the scope of the project and the extent of anticipated temporary or permanent displacement. The relocation plan shall be subject to the review and approval of the department prior to the disbursement of program funds.
(4) All eligible households who are permanently displaced as a direct result of the development of the project shall be entitled, upon initial occupancy of the rental housing development, to occupy assisted units subject to the tenant occupancy standards set forth in section 8121.
(5) All households which are not eligible households who are permanently displaced as a direct result of the development of the project shall be entitled, upon initial occupancy of the rental housing development, to occupy any available nonassisted units.
(6) Notwithstanding the preceding paragraphs, tenants who are notified in writing prior to their occupancy of an existing unit that such unit may be demolished as a result of funding provided under the program shall not be eligible for relocation benefits and assistance under this section. The form of any notices used for this purpose shall be subject to department approval.
(b) For projects involving the rehabilitation of a rental housing development, the following shall apply:
(1) It shall be the sponsor's responsibility to ensure compliance with the relocation provisions set forth in this subdivision (b). Loan funds may be used for relocation costs attributable to the relocation of lower-income tenants as a result of the rehabilitation activities, including the payment of benefits required by this subdivision. The department may authorize increases in the sponsor's approved loan amount for the purposes of paying eligible relocation costs attributable to lower-income households, which could not be reasonably foreseen by the sponsor at the time of application. Eligibility for relocation benefits and the amount of benefits to be paid shall be determined as set forth in this subdivision, although additional requirements may be imposed by applicable federal, state, or local laws.
(2) All tenants in occupancy in a property who are permanently displaced as direct result of an acquisition funded in whole or in part with program funds shall be entitled to relocation benefits as provided in sections 7260, 7261, 7262, 7264, 7264.5, 7269, 7269.1, 7272, and 7272.3 of the Government Code.
(3) In the case of an acquisition funded in whole or in part with program funds, all existing residential tenants as well as residential tenants who were in occupancy on the date that the sponsor entered into the binding agreement for the purchase of the property shall be provided with a notice as specified herein no later than the date of application to the department for program funds. The notice shall contain all the following statements:
(A) that the sponsor has entered into an agreement to purchase the property;
(B) that the sponsor is applying for public funds for the purpose of acquiring and rehabilitating the property;

(C) that if the sponsor's application is funded and the rehabilitation work requires temporary relocation, all residential tenants will be entitled to return to their units; will be entitled to temporary relocation benefits; and if low and moderate income as defined in section 50093 of the Health and Safety Code, will not have any rent increases during the period of one year from the completion of the rehabilitation work which result in a rent that is greater than twenty-five percent of their incomes.
(D) that all residential tenants who are permanently displaced as a direct result of the acquisition may be entitled to financial benefits, which could include moving expenses and rent differential during the period of displacement as required by law;
(E) that if the application is funded, the sponsor will be required as a condition of funding to conduct a tenant survey including a verification of tenant's incomes and that a tenant's failure to provide complete and accurate information may result in the loss of some of the financial benefits described above; and
(F) whom to contact for further information or to make a claim.

(4) Any residential tenant who was in occupancy at the time of application to the department for funds and who is displaced to accommodate rehabilitation work shall be provided with temporary housing benefits for a period of up to 90 days, and shall be given the option of returning after rehabilitation to the unit from which he or she was displaced.
(5) Any residential tenant whose household income is low or moderate as defined in section 50093 of the Health and Safety Code shall be entitled to the following benefits and shall be subject to the following additional provisions:
(A) After-rehabilitation rents may not be raised to a level which exceeds twenty-five percent of that household's income for 12 months subsequent to the completion of rehabilitation. A tenant whose income is low or moderate, but refuses to provide the income information necessary to establish rents pursuant to this subparagraph, shall not be eligible for relocation benefits due to an increase in rent in excess of that permitted by this subparagraph. Income surveys to ensure compliance with the requirements of this paragraph and applicable relocation laws shall be completed prior to disbursement of program funds.

(B) A residential tenant or household whose income is low or moderate as defined in section 50093 of the Health and Safety Code shall be entitled to all relocation benefits provided pursuant to sections 7260, 7261, 7262, 7264, 7264.5, 7269, 7269.1, 7272, and 7272.3 of the Government Code if such tenant or household is permanently displaced as a direct result of the rehabilitation work.
(C) A residential tenant or household whose income is low or moderate as defined in section 50093 of the Health and Safety Code and whose temporary displacement exceeds 90 days shall be deemed permanently displaced and may elect to receive benefits on a monthly basis while retaining the right to reoccupy the previously occupied unit. When a tenant elects to receive his or her permanent relocation benefits pursuant to this subparagraph on a lump sum basis, the tenant shall be presumed to have waived his or her right to return to the unit upon completion of the rehabilitation.
(6) All residential tenants shall be given a notice which specifies their rights pursuant to this subdivision no later than the time of application to the department for program funds. Any tenant's waiver of a right set forth in this subdivision (b) must be in writing and must specify in detail the relocation rights being waived.

(7) Any nonresidential tenant at the time of application by the sponsor to the department for program funds shall be entitled to relocation assistance and benefits to the extent required by applicable law from funds other than program funds.
(8) The sponsor shall prepare a relocation plan in conformance with the provisions of section 6038(b) of this Title based on the scope of the project and the extent of anticipated displacement. The relocation plan shall be subject to the review and approval of the department prior to the disbursement of program funds.


Note: Authority cited: Sections 50406(n), 50884 and 50895, Health and Safety Code. Reference: chapter 16 (commencing with section 7260), division 7, title 1, Government Code; section 50880, Health and Safety Code.









s 8126. Construction Requirements.
(a) The department shall review and underwrite project plans and specifications to ensure the following objectives:
(1) The rental housing development shall have a minimum useful life at least equal to the term of the loan;
(2) Maintenance, repair, and replacement costs shall be minimized during the useful life of the rental housing development through use of durable, low maintenance material and equipment and design features that minimize wear and tear.
(3) Operating costs shall be minimized during the useful life of the rental housing development.
(4) Tenant security shall be facilitated through features such as those designed to prevent or discourage unauthorized access and to allow for ready monitoring of public areas.
(5) Unit sizes, amenities, and general design features shall not exceed the standard for new developments rented at or below the market rent in the area of the project, and unit density shall not be substantially less than the average for new developments with such units.
(6) The ability of households to care for their children shall be facilitated by unit and site design, such as siting or windows to facilitate watching children, and the use of appliances, such as intercom systems.
(7) Elderly and handicapped accessibility shall be facilitated by features and designs which at a minimum, meet the standards of Title VIII of the Civil Rights Act of 1968, as amended by the Fair Housing Amendments Act of 1988 (42 U.S.C. 3601-3619 as amended by Pub. L. 100-430, approved September 13, 1988), and the regulations promulgated thereunder, regardless of whether the rental housing development is "for first occupancy after March 13, 1991" as provided in those regulations.
(b) The sponsor shall ensure that the construction work for the project shall be performed in a competent, professional manner at the lowest reasonable cost consistent with the project's scope, design and locality and at an aggregate cost not in excess of the total funds available. The sponsor may demonstrate the reasonableness of the proposed cost by soliciting written bids based on a bid package distributed to potential contractors located in the general area of the rental housing development or by the use of other methods which adequately demonstrate to the department's satisfaction that the costs are reasonable. Such bid package or other method shall include at a minimum:
(1) complete plans and specifications for the work; and
(2) a full description of the program requirements for construction, including the required provisions of the construction contract.
(c) The sponsor shall enter into a written contract with the selected contractor. The contract shall be subject to the prior approval of the department to determine compliance with program requirements.
(d) The construction contract shall be a completely integrated agreement containing all the understandings, covenants, conditions and representations between the parties and, at a minimum, contain provisions which:
(1) require that the contractor complete the work in accordance with the plans and specifications approved by the department and applicable local, state and federal laws, regulations and building codes and standards;
(2) require the contractor to proceed with and complete the work in accordance with the schedule for work approved by the department;
(3) specify a total contract price consistent with the project budget approved by the department;
(4) provide for a method of payment to the contractor consistent with program requirements which shall include progress payments and retentions;

(5) require that the contractor provide a payment bond securing payment to persons providing goods or services to the project and a performance bond securing faithful completion of the work. Each bond shall be in an amount equal to 100 percent of the total contract price and include the department as a dual obligee. The department shall waive the payment and performance bond requirements, or reduce their scope, upon the sponsor's either:
(A) providing alternative security for payment and performance under the construction contract which is substantially equivalent to the bond requirements; or
(B) demonstrating that the bonds, or the full amount thereof, are not necessary to protect the interests of the department and ensure completion of the work;
(6) permit the sponsor and the department and their designated agents and employees the right to inspect the project site and all books, records and documents maintained by the contractor in connection with the project;
(7) require the contractor to provide insurance coverage consistent with the program requirements and other applicable law;

(8) obligate the contractor to warrant the work for a period of not less than one year;
(9) require that the contractor pay all amounts when due for labor, work performed under a subcontract, and materials, supplies and equipment provided to the project;
(10) provide for the assignment of the construction contract to the department upon sponsor's breach of the Development Agreement;
(11) when program funds are provided as new construction financing, require that the contractor comply with state prevailing wage law, as set forth in Labor Code section 1720 et seq.; and
(12) include such special conditions applicable to the construction contract as may have been imposed in connection with the department's approval of the project for funding.


Note: Authority cited: Sections 50406(n), 50884 and 50895, Health and Safety Code. Reference: Sections 50888.3, 50893, 50893.5 and 50893.7, Health and Safety Code.









s 8127. Supportive Services Requirements.
(a) Each community housing development shall include the following features:
(1) a child care center which
(A) shall be built in accordance with state law as provided in Chapters 3.4 and 3.5 (commencing with sections 1596.70 and 1596.90 respectively) of Division 2, Health and Safety Code;

(B) shall be operated in compliance with state law as specified in Chapters 3.4 and 3.5 (commencing with sections 1596.70 and 1596.90 respectively) of Division 2, Health and Safety Code, and may be operated either directly by the sponsor or by a separate entity contracting with the sponsor, provided that all contracts or lease agreements for the operation of the child care center shall be subject to department approval;
(C) shall be licensed to care for at least the number of children expected to reside in the rental housing development; this number shall be calculated according to the following:

Unit size # of Children
1 bedroom 0
2 bedroom 1
3 bedroom 2
4 bedroom 3


The sponsor may propose another reasonable method for calculating this number, such as the number of children on an existing waiting list;
(D) provides care at a rate prior to closing, which is affordable to households residing in assisted units based on the household's gross monthly income and family size, as approved by the department. For purpose of this section, a rate shall be considered affordable if the fee charged to the household does not exceed the amount published in the most recent Family Fee Schedule CD-2600 or such other fee schedule utilized by an agency which provides subsidies to the child care center or to households using the child care center to care for their children; The Family Fee Schedule CD-2600 is established pursuant to section 8263(f), Education Code and is available by written request to the California Department of Education, Child Development Division, P.O. Box 944272, Sacramento CA 94244-2720, or by phone (916)322-6233.
(E) gives priority for space in the child care center as follows:
1. first to residents with children in assisted units who require child care because of current or impending employment or to participate in the job training and placement program described in section 8128; and
2. secondly to other residents with children who require child care because of current or impending employments;
(2) a children's play area which can accommodate at least the estimated number of children residing in the rental housing development calculated pursuant to (a)(1)(C) above in accordance with chapter 3.5 (commencing with section 1596.90), division 2, Health and Safety Code;
(3) a common facility which is available on a reasonable basis to all residents of the community housing development for community purposes, such as shared meals,job training programs, or social functions. The common facility may also be used as the child care center. (continued)