BILL NUMBER: SB 454	ENROLLED
	BILL TEXT

	PASSED THE SENATE  AUGUST 19, 2010
	PASSED THE ASSEMBLY  AUGUST 16, 2010
	AMENDED IN ASSEMBLY  MAY 27, 2010
	AMENDED IN SENATE  DECEMBER 17, 2009

INTRODUCED BY   Senator Lowenthal

                        FEBRUARY 26, 2009

   An act to amend Sections 65863.10, 65863.11, and 65863.13 of the
Government Code, relating to land use.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 454, Lowenthal. Land use: zoning regulations.
   The Planning and Zoning Law authorizes the legislative body of a
city or county to adopt zoning ordinances regulating, among other
things, the use of buildings, structures, and land as between
industry, business, residences, open space, and other uses.
   Existing law, until January 1, 2011, imposes notice and procedural
requirements on an owner of specified types of government-subsidized
rental housing regarding the owner's decision not to extend or renew
participation in specified government-subsidized housing programs,
including the requirement that the owner, in specified circumstances
relating to the property's status as government-subsidized rental
housing, give notice of the opportunity to submit an offer to
purchase the property to specified entities. Existing law requires
the initial notice of a bona fide opportunity to submit an offer to
purchase to include specified information.
   This bill would delete the repeal of these provisions, thereby
extending their operation indefinitely, and modify the information
required to be included in the initial notice of a bona fide
opportunity to submit an offer to purchase.



THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 65863.10 of the Government Code is amended to
read:
   65863.10.  (a)  As used in this section, the following terms have
the following meaning:
   (1)  "Affected public entities" means the mayor of the city in
which the assisted housing development is located, or, if located in
an unincorporated area, the chair of the board of supervisors of the
county; the appropriate local public housing authority, if any; and
the Department of Housing and Community Development.
   (2)  "Affected tenant" means a tenant household residing in an
assisted housing development, as defined in paragraph (3), at the
time notice is required to be provided pursuant to this section, that
benefits from the government assistance.
   (3)  "Assisted housing development" means a multifamily rental
housing development that receives governmental assistance under any
of the following programs:
   (A)  New construction, substantial rehabilitation, moderate
rehabilitation, property disposition, and loan management set-aside
programs, or any other program providing project-based assistance,
under Section 8 of the United States Housing Act of 1937, as amended
(42 U.S.C. Sec. 1437f).
   (B)  The following federal programs:
   (i)  The Below-Market-Interest-Rate Program under Section 221(d)
(3) of the National Housing Act (12 U.S.C. Sec. 1715  l (d)
(3) and (5)).
   (ii)  Section 236 of the National Housing Act (12 U.S.C. Sec.
1715z-1).
   (iii)  Section 202 of the Housing Act of 1959 (12 U.S.C. Sec.
1701q).
   (C)  Programs for rent supplement assistance under Section 101 of
the Housing and Urban Development Act of 1965, as amended (12 U.S.C.
Sec. 1701s).
   (D)  Programs under Sections 514, 515, 516, 533, and 538 of the
Housing Act of 1949, as amended (42 U.S.C. Sec. 1485).
   (E)  Section 42 of the Internal Revenue Code.
   (F)  Section 142(d) of the Internal Revenue Code (tax-exempt
private activity mortgage revenue bonds).
   (G)  Section 147 of the Internal Revenue Code (Section 501(c)(3)
bonds).
   (H)  Title I of the Housing and Community Development Act of 1974,
as amended (Community Development Block Grant Program).
   (I)  Title II of the Cranston-Gonzales National Affordable Housing
Act of 1990, as amended (HOME Investment Partnership Program).
   (J)  Titles IV and V of the McKinney-Vento Homeless Assistance Act
of 1987, as amended, including the Department of Housing and Urban
Development's Supportive Housing Program, Shelter Plus Care Program,
and surplus federal property disposition program.
   (K)  Grants and loans made by the Department of Housing and
Community Development, including the Rental Housing Construction
Program, CHRP-R, and other rental housing finance programs.
   (L)  Chapter 1138 of the Statutes of 1987.
   (M)  The following assistance provided by counties or cities in
exchange for restrictions on the maximum rents that may be charged
for units within a multifamily rental housing development and on the
maximum tenant income as a condition of eligibility for occupancy of
the unit subject to the rent restriction, as reflected by a recorded
agreement with a county or city:
   (i)  Loans or grants provided using tax increment financing
pursuant to the Community Redevelopment Law (Part 1 (commencing with
Section 33000) of Division 24 of the Health and Safety Code).
   (ii)  Local housing trust funds, as referred to in paragraph (3)
of subdivision (a) of Section 50843 of the Health and Safety Code.
   (iii)  The sale or lease of public property at or below market
rates.
   (iv)  The granting of density bonuses, or concessions or
incentives, including fee waivers, parking variances, or amendments
to general plans, zoning, or redevelopment project area plans,
pursuant to Chapter 4.3 (commencing with Section 65915).
   Assistance pursuant to this subparagraph shall not include the use
of tenant-based Housing Choice Vouchers (Section 8(o) of the United
States Housing Act of 1937, 42 U.S.C. Sec. 1437f(o), excluding
subparagraph (13) relating to project-based assistance). Restrictions
shall not include any rent control or rent stabilization ordinance
imposed by a county, city, or city and county.
   (4)  "City" means a general law city, a charter city, or a city
and county.
   (5)  "Expiration of rental restrictions" means the expiration of
rental restrictions for an assisted housing development described in
paragraph (3) unless the development has other recorded agreements
restricting the rent to the same or lesser levels for at least 50
percent of the units.
   (6)  "Low or moderate income" means having an income as defined in
Section 50093 of the Health and Safety Code.
   (7)  "Prepayment" means the payment in full or refinancing of the
federally insured or federally held mortgage indebtedness prior to
its original maturity date, or the voluntary cancellation of mortgage
insurance, on an assisted housing development described in paragraph
(3) that would have the effect of removing the current rent or
occupancy or rent and occupancy restrictions contained in the
applicable laws and the regulatory agreement.
   (8)  "Termination" means an owner's decision not to extend or
renew its participation in a federal, state, or local government
subsidy program or private, nongovernmental subsidy program for an
assisted housing development described in paragraph (3), either at or
prior to the scheduled date of the expiration of the contract, that
may result in an increase in tenant rents or a change in the form of
the subsidy from project-based to tenant-based.
   (9)  "Very low income" means having an income as defined in
Section 50052.5 of the Health and Safety Code.
   (b)  (1)  At least 12 months prior to the anticipated date of the
termination of a subsidy contract, the expiration of rental
restrictions, or prepayment on an assisted housing development, the
owner proposing the termination or prepayment of governmental
assistance or the owner of an assisted housing development in which
there will be the expiration of rental restrictions shall provide a
notice of the proposed change to each affected tenant household
residing in the assisted housing development at the time the notice
is provided and to the affected public entities. An owner who meets
the requirements of Section 65863.13 shall be exempt from providing
that notice. The notice shall contain all of the following:
   (A)  In the event of termination, a statement that the owner
intends to terminate the subsidy contract or rental restrictions upon
its expiration date, or the expiration date of any contract
extension thereto.
   (B)  In the event of the expiration of rental restrictions, a
statement that the restrictions will expire, and in the event of
prepayment, termination, or the expiration of rental restrictions
whether the owner intends to increase rents during the 12 months
following prepayment, termination, or the expiration of rental
restrictions to a level greater than permitted under Section 42 of
the Internal Revenue Code.
   (C)  In the event of prepayment, a statement that the owner
intends to pay in full or refinance the federally insured or
federally held mortgage indebtedness prior to its original maturity
date, or voluntarily cancel the mortgage insurance.
   (D)  The anticipated date of the termination, prepayment of the
federal or other program or expiration of rental restrictions, and
the identity of the federal or other program described in subdivision
(a).
   (E)  A statement that the proposed change would have the effect of
removing the current low-income affordability restrictions in the
applicable contract or regulatory agreement.
   (F)  A statement of the possibility that the housing may remain in
the federal or other program after the proposed date of termination
of the subsidy contract or prepayment if the owner elects to do so
under the terms of the federal government's or other program operator'
s offer.
   (G)  A statement whether other governmental assistance will be
provided to tenants residing in the development at the time of the
termination of the subsidy contract or prepayment.
   (H)  A statement that a subsequent notice of the proposed change,
including anticipated changes in rents, if any, for the development,
will be provided at least six months prior to the anticipated date of
termination of the subsidy contract, or expiration of rental
restrictions, or prepayment.
   (I)  A statement of notice of opportunity to submit an offer to
purchase, as required in Section 65863.11.
   (2)  Notwithstanding paragraph (1), if an owner provides a copy of
a federally required notice of termination of a subsidy contract or
prepayment at least 12 months prior to the proposed change to each
affected tenant household residing in the assisted housing
development at the time the notice is provided and to the affected
public entities, the owner shall be deemed in compliance with this
subdivision, if the notice is in compliance with all federal laws.
However, the federally required notice does not satisfy the
requirements of Section 65863.11.
   (c)  (1)  At least six months prior to the anticipated date of
termination of a subsidy contract, expiration of rental restrictions
or prepayment on an assisted housing development, the owner proposing
the termination or prepayment of governmental assistance or the
owner of an assisted housing development in which there will be the
expiration of rental restrictions shall provide a notice of the
proposed change to each affected tenant household residing in the
assisted housing development at the time the notice is provided and
to the affected public entities. An owner who meets the requirements
of Section 65863.13 shall be exempt from providing that notice.
   (2)  The notice to the tenants shall contain all of the following:

   (A)  The anticipated date of the termination or prepayment of the
federal or other program, or the expiration of rental restrictions,
and the identity of the federal or other program, as described in
subdivision (a).
   (B)  The current rent and rent anticipated for the unit during the
12 months immediately following the date of the prepayment or
termination of the federal or other program, or expiration of rental
restrictions.
   (C)  A statement that a copy of the notice will be sent to the
city, county, or city and county, where the assisted housing
development is located, to the appropriate local public housing
authority, if any, and to the Department of Housing and Community
Development.
   (D)  A statement of the possibility that the housing may remain in
the federal or other program after the proposed date of subsidy
termination or prepayment if the owner elects to do so under the
terms of the federal government's or other program administrator's
offer or that a rent increase may not take place due to the
expiration of rental restrictions.
   (E)  A statement of the owner's intention to participate in any
current replacement subsidy program made available to the affected
tenants.
   (F)  The name and telephone number of the city, county, or city
and county, the appropriate local public housing authority, if any,
the Department of Housing and Community Development, and a legal
services organization, that can be contacted to request additional
written information about an owner's responsibilities and the rights
and options of an affected tenant.
   (3)  In addition to the information provided in the notice to the
affected tenant, the notice to the affected public entities shall
contain information regarding the number of affected tenants in the
project, the number of units that are government assisted and the
type of assistance, the number of the units that are not government
assisted, the number of bedrooms in each unit that is government
assisted, and the ages and income of the affected tenants. The notice
shall briefly describe the owner's plans for the project, including
any timetables or deadlines for actions to be taken and specific
governmental approvals that are required to be obtained, the reason
the owner seeks to terminate the subsidy contract or prepay the
mortgage, and any contacts the owner has made or is making with other
governmental agencies or other interested parties in connection with
the notice. The owner shall also attach a copy of any federally
required notice of the termination of the subsidy contract or
prepayment that was provided at least six months prior to the
proposed change. The information contained in the notice shall be
based on data that is reasonably available from existing written
tenant and project records.
   (d)  The owner proposing the termination or prepayment of
governmental assistance or the owner of an assisted housing
development in which there will be the expiration of rental
restrictions shall provide additional notice of any significant
changes to the notice required by subdivision (c) within seven
business days to each affected tenant household residing in the
assisted housing development at the time the notice is provided and
to the affected public entities. "Significant changes" shall include,
but not be limited to, any changes to the date of termination or
prepayment, or expiration of rental restrictions or the anticipated
new rent.
   (e)  An owner who is subject to the requirements of this section
shall also provide a copy of any notices issued to existing tenants
pursuant to subdivision (b), (c), or (d) to any prospective tenant at
the time he or she is interviewed for eligibility.
   (f)  This section shall not require the owner to obtain or acquire
additional information that is not contained in the existing tenant
and project records, or to update any information in his or her
records. The owner shall not be held liable for any inaccuracies
contained in these records or from other sources, nor shall the owner
be liable to any party for providing this information.
   (g)  For purposes of this section, service of the notice to the
affected tenants, the city, county, or city and county, the
appropriate local public housing authority, if any, and the
Department of Housing and Community Development by the owner pursuant
to subdivisions (b) to (e), inclusive, shall be made by first-class
mail postage prepaid.
   (h)  Nothing in this section shall enlarge or diminish the
authority, if any, that a city, county, city and county, affected
tenant, or owner may have, independent of this section.
   (i)  If, prior to January 1, 2001, the owner has already accepted
a bona fide offer from a qualified entity, as defined in subdivision
(c) of Section 65863.11, and has complied with this section as it
existed prior to January 1, 2001, at the time the owner decides to
sell or otherwise dispose of the development, the owner shall be
deemed in compliance with this section.
   (j)  Injunctive relief shall be available to any party identified
in paragraph (1) or (2) of subdivision (a) who is aggrieved by a
violation of this section.
   (k)  The Director of Housing and Community Development shall
approve forms to be used by owners to comply with subdivisions (b)
and (c). Once the director has approved the forms, an owner shall use
the approved forms to comply with subdivisions (b) and (c).
  SEC. 2.  Section 65863.11 of the Government Code is amended to
read:
   65863.11.  (a)  Terms used in this section shall be defined as
follows:
   (1)  "Assisted housing development" and "development" mean a
multifamily rental housing development as defined in paragraph (3) of
subdivision (a) of Section 65863.10.
   (2)  "Owner" means an individual, corporation, association,
partnership, joint venture, or business entity that holds title to an
assisted housing development.
   (3)  "Tenant" means a tenant, subtenant, lessee, sublessee, or
other person legally in possession or occupying the assisted housing
development.
   (4)  "Tenant association" means a group of tenants who have formed
a nonprofit corporation, cooperative corporation, or other entity or
organization, or a local nonprofit, regional, or national
organization whose purpose includes the acquisition of an assisted
housing development and that represents the interest of at least a
majority of the tenants in the assisted housing development.
   (5)  "Low or moderate income" means having an income as defined in
Section 50093 of the Health and Safety Code.
   (6)  "Very low income" means having an income as defined in
Section 50105 of the Health and Safety Code.
   (7)  "Local nonprofit organizations" means not-for-profit
corporations organized pursuant to Division 2 (commencing with
Section 5000) of Title 1 of the Corporations Code, that have as their
principal purpose the ownership, development, or management of
housing or community development projects for persons and families of
low or moderate income and very low income, and which have a broadly
representative board, a majority of whose members are community
based and have a proven track record of local community service.
   (8)  "Local public agencies" means housing authorities,
redevelopment agencies, or any other agency of a city, county, or
city and county, whether general law or chartered, which are
authorized to own, develop, or manage housing or community
development projects for persons and families of low or moderate
income and very low income.
   (9)  "Regional or national organizations" means not-for-profit,
charitable corporations organized on a multicounty, state, or
multistate basis that have as their principal purpose the ownership,
development, or management of housing or community development
projects for persons and families of low or moderate income and very
low income.
   (10)  "Regional or national public agencies" means multicounty,
state, or multistate agencies that are authorized to own, develop, or
manage housing or community development projects for persons and
families of low or moderate income and very low income.
   (11)  "Use restriction" means any federal, state, or local
statute, regulation, ordinance, or contract that, as a condition of
receipt of any housing assistance, including a rental subsidy,
mortgage subsidy, or mortgage insurance, to an assisted housing
development, establishes maximum limitations on tenant income as a
condition of eligibility for occupancy of the units within a
development, imposes any restrictions on the maximum rents that could
be charged for any of the units within a development; or requires
that rents for any of the units within a development be reviewed by
any governmental body or agency before the rents are implemented.
   (12)  "Profit-motivated organizations and individuals" means
individuals or two or more persons organized pursuant to Division 1
(commencing with Section 100) of Title 1 of, Division 3 (commencing
with Section 1200) of Title 1 of, or Division 1 (commencing with
Section 15001) of Title 2 of, the Corporations Code, that carry on as
a business for profit.
   (13)  "Department" means the Department of Housing and Community
Development.
   (14)  "Offer to purchase" means an offer from a qualified or
nonqualified entity that is nonbinding on the owner.
   (15)  "Expiration of rental restrictions" has the meaning given in
paragraph (5) of subdivision (a) of Section 65863.10.
   (b)  An owner of an assisted housing development shall not
terminate a subsidy contract or prepay the mortgage pursuant to
Section 65863.10, unless the owner or its agent shall first have
provided each of the entities listed in subdivision (d) an
opportunity to submit an offer to purchase the development, in
compliance with subdivisions (g) and (h). An owner of an assisted
housing development in which there will be the expiration of rental
restrictions must also provide each of the entities listed in
subdivision (d) an opportunity to submit an offer to purchase the
development, in compliance with subdivisions (g) and (h). An owner
who meets the requirements of Section 65863.13 shall be exempt from
this requirement.
   (c)  An owner of an assisted housing development shall not sell,
or otherwise dispose of, the development at any time within the five
years prior to the expiration of rental restrictions or at any time
if the owner is eligible for prepayment or termination within five
years unless the owner or its agent shall first have provided each of
the entities listed in subdivision (d) an opportunity to submit an
offer to purchase the development, in compliance with this section.
An owner who meets the requirements of Section 65863.13 shall be
exempt from this requirement.
   (d)  The entities to whom an opportunity to purchase shall be
provided include only the following:
   (1)  The tenant association of the development.
   (2)  Local nonprofit organizations and public agencies.
   (3)  Regional or national nonprofit organizations and regional or
national public agencies.
   (4)  Profit-motivated organizations or individuals.
   (e)  For the purposes of this section, to qualify as a purchaser
of an assisted housing development, an entity listed in subdivision
(d) shall do all of the following:
   (1)  Be capable of managing the housing and related facilities for
its remaining useful life, either by itself or through a management
agent.
   (2)  Agree to obligate itself and any successors in interest to
maintain the affordability of the assisted housing development for
households of very low, low, or moderate income for either a 30-year
period from the date that the purchaser took legal possession of the
housing or the remaining term of the existing federal government
assistance specified in subdivision (a) of Section 65863.10,
whichever is greater. The development shall be continuously occupied
in the approximate percentages that those households who have
occupied that development on the date the owner gave notice of intent
or the approximate percentages specified in existing use
restrictions, whichever is higher. This obligation shall be recorded
prior to the close of escrow in the office of the county recorder of
the county in which the development is located and shall contain a
legal description of the property, indexed to the name of the owner
as grantor. An owner that obligates itself to an enforceable
regulatory agreement that will ensure for a period of not less than
30 years that rents for units occupied by low- and very low income
households or that are vacant at the time of executing a purchase
agreement will conform with restrictions imposed by Section 42(f) of
the Internal Revenue Code shall be deemed in compliance with this
paragraph. In addition, the regulatory agreement shall contain
provisions requiring the renewal of rental subsidies, should they be
available, provided that assistance is at a level to maintain the
project's fiscal viability.
   (3)  Local nonprofit organizations and public agencies shall have
no member among their officers or directorate with a financial
interest in assisted housing developments that have terminated a
subsidy contract or prepaid a mortgage on the development without
continuing the low-income restrictions.
   (f)  If an assisted housing development is not economically
feasible, as defined in paragraph (3) of subdivision (h) of Section
17058 of the Revenue and Taxation Code, a purchaser shall be entitled
to remove one or more units from the rent and occupancy requirements
as is necessary for the development to become economically feasible,
provided that once the development is again economically feasible,
the purchaser shall designate the next available units as low-income
units up to the original number of those units.
   (g)  (1)  If an owner decides to terminate a subsidy contract, or
prepay the mortgage pursuant to Section 65863.10, or sell or
otherwise dispose of the assisted housing development pursuant to
subdivision (b) or (c), or if the owner has an assisted housing
development in which there will be the expiration of rental
restrictions, the owner shall first give notice of the opportunity to
offer to purchase to each qualified entity on the list provided to
the owner by the department, in accordance with subdivision (o), as
well as to those qualified entities that directly contact the owner.
The notice of the opportunity to offer to purchase must be given
prior to or concurrently with the notice required pursuant to Section
65863.10 for a period of at least 12 months. The owner shall contact
the department to obtain the list of qualified entities. The notice
shall conform to the requirements of subdivision (h) and shall be
sent to the entities by registered or certified mail, return receipt
requested. The owner shall also post a copy of the notice in a
conspicuous place in the common area of the development.
   (2)  If the owner already has a bona fide offer to purchase from
an entity prior to January 1, 2001, at the time the owner decides to
sell or otherwise dispose of the development, the owner shall not be
required to comply with this subdivision. However, the owner shall
notify the department of this exemption and provide the department a
copy of the offer.
   (h)  The initial notice of a bona fide opportunity to submit an
offer to purchase shall contain all of the following:
   (1) A statement addressing all of the following:
   (A) Whether the owner intends to maintain the current number of
affordable units and level of affordability.
   (B) Whether the owner has an interest in selling the property.
   (C) Whether the owner has executed a contract or agreement of at
least five years' duration with a public entity to continue or
replace subsidies to the property and to maintain an equal or greater
number of units at an equal or deeper level of affordability and, if
so, the length of the contract or agreement.
   (2)  A statement that each of the type of entities listed in
subdivision (d) has the right to purchase the development under this
section.
   (3) (A) Except as provided in subparagraph (B), a statement that
the owner will make available to each of the types of entities listed
in subdivision (d), within 15 business days of receiving a request
therefor, that includes all of the following:
   (i) Itemized lists of monthly operating expenses for the property.

   (ii) Capital improvements, as determined by the owner, made within
each of the two preceding calendar years at the property.
   (iii) The amount of project property reserves.
   (iv) Copies of the two most recent financial and physical
inspection reports on the property, if any, filed with a federal,
state, or local agency.
   (v) The most recent rent roll for the property listing the rent
paid for each unit and the subsidy, if any, paid by a governmental
agency as of the date the notice of intent was made pursuant to
Section 65863.10.
                                    (vi) A statement of the vacancy
rate at the property for each of the two preceding calendar years.
   (vii) The terms of assumable financing, if any, the terms of the
subsidy contract, if any, and proposed improvements to the property
to be made by the owner in connection with the sale, if any.
   (B) Subparagraph (A) shall not apply if 25 percent or less of the
units on the property are subject to affordability restrictions or a
rent or mortgage subsidy contract.
   (C) A corporation authorized pursuant to Section 52550 of the
Health and Safety Code or a public entity may share information
obtained pursuant to subparagraph (A) with other prospective
purchasers, and shall not be required to sign a confidentiality
agreement as a condition of receiving or sharing this information,
provided that the information is used for the purpose of attempting
to preserve the affordability of the property.
   (4)  A statement that the owner has satisfied all notice
requirements pursuant to subdivision (b) of Section 65863.10, unless
the notice of opportunity to submit an offer to purchase is delivered
more than 12 months prior to the anticipated date of termination,
prepayment, or expiration of rental restrictions.
   (i)  If a qualified entity elects to purchase an assisted housing
development, it shall make a bona fide offer to purchase the
development. A qualified entity's bona fide offer to purchase shall
identify whether it is a tenant association, nonprofit organization,
public agency, or profit-motivated organizations or individuals and
shall certify, under penalty of perjury, that it is qualified
pursuant to subdivision (e). During the first 180 days from the date
of an owner's bona fide notice of the opportunity to submit an offer
to purchase, an owner shall accept a bona fide offer to purchase only
from a qualified entity. During this 180-day period, the owner shall
not accept offers from any other entity.
   (j)  When a bona fide offer to purchase has been made to an owner,
and the offer is accepted, a purchase agreement shall be executed.
   (k)  Either the owner or the qualified entity may request that the
fair market value of the property, as a development, be determined
by an independent appraiser qualified to perform multifamily housing
appraisals, who shall be selected and paid by the requesting party.
All appraisers shall possess qualifications equivalent to those
required by the members of the Appraisers Institute. This appraisal
shall be nonbinding on either party with respect to the sales price
of the development offered in the bona fide offer to purchase, or the
acceptance or rejection of the offer.
   (  l  )  During the 180-day period following the initial
180-day period required pursuant to subdivision (i), an owner may
accept an offer from a person or an entity that does not qualify
under subdivision (e). This acceptance shall be made subject to the
owner providing each qualified entity that made a bona fide offer to
purchase the first opportunity to purchase the development at the
same terms and conditions as the pending offer to purchase, unless
these terms and conditions are modified by mutual consent. The owner
shall notify in writing those qualified entities of the terms and
conditions of the pending offer to purchase, sent by registered or
certified mail, return receipt requested. The qualified entity shall
have 30 days from the date the notice is mailed to submit a bona fide
offer to purchase and that offer shall be accepted by the owner. The
owner shall not be required to comply with the provisions of this
subdivision if the person or the entity making the offer during this
time period agrees to maintain the development for persons and
families of very low, low, and moderate income in accordance with
paragraph (2) of subdivision (e). The owner shall notify the
department regarding how the buyer is meeting the requirements of
paragraph (2) of subdivision (e).
   (m)  This section shall not apply to any of the following: a
government taking by eminent domain or negotiated purchase; a forced
sale pursuant to a foreclosure; a transfer by gift, devise, or
operation of law; a sale to a person who would be included within the
table of descent and distribution if there were to be a death
intestate of an owner; or an owner who certifies, under penalty of
perjury, the existence of a financial emergency during the period
covered by the first right of refusal requiring immediate access to
the proceeds of the sale of the development. The certification shall
be made pursuant to subdivision (p).
   (n)  Prior to the close of escrow, an owner selling, leasing, or
otherwise disposing of a development to a purchaser who does not
qualify under subdivision (e) shall certify under penalty of perjury
that the owner has complied with all provisions of this section and
Section 65863.10. This certification shall be recorded and shall
contain a legal description of the property, shall be indexed to the
name of the owner as grantor, and may be relied upon by good faith
purchasers and encumbrances for value and without notice of a failure
to comply with the provisions of this section.
   Any person or entity acting solely in the capacity of an escrow
agent for the transfer of real property subject to this section shall
not be liable for any failure to comply with this section unless the
escrow agent either had actual knowledge of the requirements of this
section or acted contrary to written escrow instructions concerning
the provisions of this section.
   (o)  The department shall undertake the following responsibilities
and duties:
   (1)  Maintain a form containing a summary of rights and
obligations under this section and make that information available to
owners of assisted housing developments as well as to tenant
associations, local nonprofit organizations, regional or national
nonprofit organizations, public agencies, and other entities with an
interest in preserving the state's subsidized housing.
   (2)  Compile, maintain, and update a list of entities in
subdivision (d) that have either contacted the department with an
expressed interest in purchasing a development in the subject area or
have been identified by the department as potentially having an
interest in participating in a right-of-first-refusal program. The
department shall publicize the existence of the list statewide. Upon
receipt of a notice of intent under Section 65863.10, the department
shall make the list available to the owner proposing the termination,
prepayment, or removal of government assistance or to the owner of
an assisted housing development in which there will be the expiration
of rental restrictions. If the department does not make the list
available at any time, the owner shall only be required to send a
written copy of the opportunity to submit an offer to purchase notice
to the qualified entities which directly contact the owner and to
post a copy of the notice in the common area pursuant to subdivision
(g).
   (p)  (1)  The provisions of this section may be enforced either in
law or in equity by any qualified entity entitled to exercise the
opportunity to purchase and right of first refusal under this
section, that has been adversely affected by an owner's failure to
comply with this section.
   (2)  An owner may rely on the statements, claims, or
representations of any person or entity that the person or entity is
a qualified entity as specified in subdivision (d), unless the owner
has actual knowledge that the purchaser is not a qualified entity.
   (3)  If the person or entity is not an entity as specified in
subdivision (d), that fact, in the absence of actual knowledge as
described in paragraph (2), shall not give rise to any claim against
the owner for a violation of this section.
   (q)  It is the intent of the Legislature that the provisions of
this section are in addition to, but not preemptive of, applicable
federal laws governing the sale, or other disposition of a
development that would result in either (1) a discontinuance of its
use as an assisted housing development or (2) the termination or
expiration of any low-income use restrictions that apply to the
development.
  SEC. 3.  Section 65863.13 of the Government Code is amended to
read:
   65863.13.  (a)  An owner shall not be required to provide a notice
as required by Section 65863.10 or 65863.11 if all of the following
conditions are contained in a regulatory agreement that has been or
will be recorded against the property at the close of escrow of the
sale of the property and the owner of the property complies with the
requirements below during the escrow period:
   (1)  No low-income tenant whose rent was restricted and or
subsidized and who resides in the development within 12 months of the
date that the rent restrictions are, or subsidy is, scheduled to
expire or terminate shall be involuntarily displaced on a permanent
basis as a result of the action by the owner unless the tenant has
breached the terms of the lease.
   (2)  The owner shall accept and fully utilize all renewals of
project-based assistance under Section 8 of the United States Housing
Act of 1937, if available, and if that assistance is at a level to
maintain the project's fiscal viability. The property shall be deemed
fiscally viable if the rents permitted under the terms of the
assistance are not less than the regulated rent levels established
pursuant to paragraph (7).
   (3)  The owner shall accept all enhanced Section 8 vouchers, if
the tenants receive them, and all other Section 8 vouchers for future
vacancies.
   (4)  The owner shall not terminate a tenancy of a low-income
household at the end of a lease term without demonstrating a breach
of the lease.
   (5)  The owner may, in selecting eligible applicants for
admission, utilize criteria that permit consideration of the amount
of income, as long as the owner adequately considers other factors
relevant to an applicant's ability to pay rent.
   (6)  For assisted housing developments described in paragraph (3)
of subdivision (a) of Section 65863.10, a new regulatory agreement,
consistent with this section, is recorded that restricts the rents
and incomes of the previously restricted units, except as provided in
paragraph (7), (8), or (9), to an equal or greater level of
affordability than previously required so that the units are
affordable to households at the same or a lower percentage of area
median income.
   (7)  For housing developments that have units with project-based
rental assistance upon the effective date of prepayment and
subsequently become unassisted by any form of rental assistance,
rents shall not exceed 30 percent of 60 percent of the area median
income. If any form of rental assistance is or becomes available, the
owner shall apply for and accept, if awarded, the rental assistance.
Rent and occupancy levels shall then be set in accordance with
federal regulations for the rental assistance program.
   (8)  For units that do not have project-based rental assistance
upon the effective date of prepayment of a federally insured,
federally held, or formerly federally insured or held mortgage and
subsequently remain unassisted or become unassisted by any form of
rental assistance, rents shall not exceed the greater of (i) 30
percent of 50 percent of the area median income, or (ii) for projects
insured under Section 241(f) of the National Housing Act, the
regulated rents, expressed as a percentage of area median income. If
any form of rental assistance is or becomes available, the owner
shall apply for and accept, if awarded, the rental assistance. Rent
and occupancy levels shall then be set in accordance with federal
regulations governing the rental assistance program.
   (9)   If, upon the recordation of the new regulatory agreement,
any unit governed by regulatory agreement is occupied by a household
whose income exceeds the applicable limit, the rent for that
household shall not exceed 30 percent of that household's adjusted
income, provided that household's rent shall not be increased by more
than 10 percent annually.
   (b)  As used in this section, "regulatory agreement" means an
agreement with a governmental agency for the purposes of any
governmental program, which agreement applies to the development that
would be subject to the notice requirement in Section 65863.10 and
which obligates the owner and any successors in interest to maintain
the affordability of the assisted housing development for households
of very low, low, or moderate income for the greater of the term of
the existing federal, state, or local government assistance specified
in subdivision (a) of Section 65863.10 or 30 years.
   (c)  Section 65863.11 shall not apply to any development for which
the owner is exempt from the notice requirements of Section 65863.10
pursuant to this section.