BILL NUMBER: AB 1699 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 26, 2012
AMENDED IN ASSEMBLY APRIL 17, 2012
INTRODUCED BY Assembly Member Torres
FEBRUARY 15, 2012
An act to amend Section 50515.2 of, and to add Chapter
3.9 (commencing with Section 50560) to Part 2 of Division 31 of
, the Health and Safety Code, relating to affordable housing.
LEGISLATIVE COUNSEL'S DIGEST
AB 1699, as amended, Torres. Affordable housing.
Existing law authorizes the Department of Housing and Community
Development to provide technical assistance to groups and persons
with various housing needs and to administer various housing loan
programs. Existing law authorizes the department to extend the term
of existing multifamily housing loans made under specified programs
upon the request of any borrower, subject to certain conditions, as
provided.
This bill would authorize the department to extend the term of an
existing department loan, subordinate a department loan to new debt,
and authorize an investment of tax credit equity under certain rental
housing finance programs, subject to specified conditions. The
bill would make changes with regard to existing rent subsidies and
rents under existing department housing programs, as
specified. The bill would authorize the department to adopt
guidelines that are not subject to the Administrative Procedures Act,
as specified.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Over the past 30 years, the Legislature has authorized and
funded a variety of affordable rental housing development finance
programs administered by the Department of Housing and Community
Development, each with its own unique requirements for ongoing
operation.
(b) The vast majority of developments funded under these programs
have operated successfully, and remain an important source of
high-quality, highly affordable units for extremely low income and
very low income households. However, some developments need
significant renovation, beyond that which can be covered by existing
project reserves, or are running at a deficit that is not sustainable
on a long-term basis. As developments age, more and more are likely
to fall into this category.
(c) There are decreasing sources of public funding available to
cover needed renovations, and to eliminate operating deficits. For at
least the next few years, private debt and equity generated through
the sale of low-income housing tax credits will likely be the main
source of capital for this purpose.
(d) Accessing private debt and tax credit equity sometimes
requires restructuring the regulatory restrictions applicable to a
development, including increasing rents. Recognizing this, the
Legislature previously enacted legislation, Senate Bill 707 in 2007,
authorizing the restructuring of regulatory restrictions for some of
the oldest developments. This legislation applied only to selected
department programs that were active in the 1980s.
(e) Renovation needs have come to light in a number of projects
financed under another set of department programs, dating from the
early to mid-1990s. To address these needs, authority is needed for a
similar restructuring of regulatory restrictions for these projects.
(f) It is the intent of the Legislature that the regulatory
restructurings needed to facilitate renovations and eliminate
operating deficits minimize the impact on existing tenants,
particularly those with the lowest incomes, and preserve as much
affordability as possible.
(g) Rather than have multiple different restructuring programs, it
is more efficient to have one program, applicable to all of the
department's older programs, with variations only where essential to
address unique situations associated with the existing historical
programs.
SEC. 2. Section 50515.2 of the Health
and Safety Code is amended to read:
50515.2. (a) Notwithstanding any other law, the department may
extend the term of an existing multifamily housing loan made by the
department under the original Rental Housing Construction Program
established by Chapter 9 (commencing with Section 50735); the Special
User Housing Rehabilitation Program established by Section 50670; or
the Deferred Payment Rehabilitation Loan Program established by
Chapter 6.5 (commencing with Section 50660) upon the request of any
borrower subject to the following conditions:
(1) The borrower shall provide to the department a complete report
showing all existing tenants, their incomes, as reported in the most
recent annual income certification, and the rents currently charged
to each tenant.
(2) The borrower shall agree to an extension of the term of the
loan by an additional 55 years from the date of departmental
approval. If the department determines that the remaining useful life
of a project is less than 55 years, the loan may be extended for the
remaining useful life of the project, but not less than 30 years.
The department may convert the existing outstanding principal and any
accrued interest into the new loan amount. The interest rate on the
extended term shall be 3 percent simple interest. All future payments
of principal and interest may be deferred except for a percentage of
interest equal to the percentage charged in the Multifamily Housing
Program (Chapter 6.7 (commencing with Section 50675)) for the
department's ongoing monitoring and management responsibilities.
(3) The borrower shall agree to amend or replace the existing
regulatory agreement to include terms generally equivalent to those
used in the Multifamily Housing Program. In addition, the borrower
shall agree to replace, amend, or revise any other loan documents as
necessary to accomplish the purposes of this section.
(4) (A) The borrower shall agree to a rent schedule that ensures
that all assisted units are affordable to households earning no more
than 60 percent of the area median income and that at least 35
percent of all assisted units shall be reserved for, affordable to,
and occupied by, households earning less than or equal to the
midlevel target used by the Multifamily Housing Program, unless the
department finds both of the following:
(i) That the project income is insufficient to maintain fiscal
integrity, as that term is used in the Multifamily Housing Program,
and is insufficient to maintain the rents required under this
subparagraph pursuant to the terms of the Uniform Multifamily
Regulations, or any successor regulations, except that commercial
vacancy loss shall be projected based on the operating history of the
project, commercial vacancy rates in the neighborhood, and similar
factors typically used by commercial lenders.
(ii) That the borrower has exhausted all available potential
sources of rental subsidies, including, but not limited to, federal,
state, and local funds.
(B) If the department finds that a reduction in the percentage of
assisted units to less than 35 percent of assisted units is
justified, it shall ensure that the largest possible percentage is
reserved for the targeted households.
(C) For the purposes of this paragraph, "midlevel target used by
the Multifamily Housing Program" shall mean the following:
(i) For counties with an area median income of 110 percent or less
of the state median income, it shall mean households earning 30
percent of state median income, expressed as a percentage of area
median income.
(ii) For counties with an area median income that exceeds 110
percent of the state median income, it shall mean households earning
less than 35 percent of state median income, expressed as a
percentage of area median income.
(5) No tenant residing in a project at the time of an extension
authorized by this section may be displaced as a result of the
regulatory revisions authorized by this section, and, for the initial
operating year after approval of the extension, that tenant may not
have his or her rent increased above the amounts specified in his or
her preexisting regulatory agreements, except that no tenant may pay
less than 30 percent of his or her income, calculated pursuant to the
Multifamily Housing Program criteria. If a rent increase authorized
under this section would exceed a 10 percent increase in payment for
a lower income tenant, the project owner shall phase in the increase
so that it does not exceed 10 percent per year. After the initial
operating year after the extension authorized under this section, the
rents for all regulated units that are subject to the new agreement
may be adjusted in the percentage calculated pursuant to the
Multifamily Housing Program criteria, plus the amount necessary to
bring an individual tenant up to the 30-percent-of-income standard,
provided that the total annual increase does not exceed 10 percent.
Rent adjustments for all tenants occupying assisted units at the time
of the extension shall be based on the tenant's initial rent
established under this paragraph. Upon vacancy of an assisted unit
occupied at the time of the extension, the new base rent for that
unit shall be established consistent with the standards used in the
Multifamily Housing Program for the regulated income band, subject to
the reservation of units required under paragraph (4).
(b) The department may approve an extension of a loan made by the
department if it determines that the project has, or will have after
rehabilitation or repairs, a potential remaining useful life of at
least 30 years and that the project is deemed financially feasible
pursuant to the terms of its Uniform Multifamily Regulations or
successor regulations.
(c) The department may subordinate its loan or loans to refinance
existing senior debt and to additional permanent financing if that
additional senior debt is used only for rehabilitation, repairs, or
improvements, or both, including related soft costs, that are modest
in size, scope, and cost, as determined by the department and
necessary to maintain and extend the useful life of the project.
(d) (1) For the purposes of this subdivision, the "agency projects"
are the 26 projects assisted through the original Rental Housing
Construction Program with funds administered by the California
Housing Finance Agency.
(2) Upon the request of a borrower the agency may extend the term
of an existing loan for an agency project by a period that is equal
to the remaining useful life of the project, as determined by the
agency, but not more than 55 years and not less than 30 years from
the date of agency approval, under terms that are substantially
consistent with the purposes of this section, if all of the following
conditions are met:
(A) The borrower shall provide to the agency the report described
in paragraph (1) of subdivision (a).
(B) The extension shall be subject to the conditions set forth in
paragraph (2) of subdivision (a).
(C) The rent levels and tenant protections described in paragraphs
(4) and (5) of subdivision (a) shall be satisfied, except that the
agency, not the department, shall make the determination required
under clause (i) of subparagraph (A) of paragraph (4) of subdivision
(a) that the project income is insufficient to meet the agency's
affordable multifamily lending program requirements.
(3) Any determination or approval under this section regarding the
agency projects shall be by the agency rather than the department.
(4) The borrower and the agency shall amend, replace, or revise
any other loan documents or agreements governing the loans for the
agency projects as necessary to accomplish the purposes of this
section.
(5) All funds received by the agency for the agency projects,
whether by loan repayment, foreclosure, accrued interest, or
otherwise, shall be used to provide assistance to existing or future
projects financed by or through the agency pursuant to terms
consistent with the agency's affordable multifamily lending programs.
(e) It is the intent of the Legislature in enacting this section
that the department should manage its reserves for the original
Rental Housing Construction Program in a manner that will allow for
the continuation of current benefits to current low-income tenants
for the longest period of time possible. Accordingly, rent subsidies
shall be continued only for units occupied by lower income tenants
who were in residence at the time of the extension authorized under
this section.
(f) It is the intent of the Legislature in enacting this section
to provide to the department the flexibility necessary to preserve
the affordable rental units for which the state has already made a
significant public investment. Accordingly, the department may
implement this section through guidelines that shall not be subject
to Chapter 2.5 (commencing with Section 11340) of Part 1 of Title 2
of the Government Code.
(g) This section shall become operative on July 1, 2008.
(h) This section shall not apply to loan extensions and senior
debt subordinations executed by the department and recorded after
December 31, 2012.
SEC. 2. SEC. 3. Chapter 3.9
(commencing with Section 50560) is added to Part 2 of Division 31 of
the Health and Safety Code, to read:
CHAPTER 3.9. PORTFOLIO RESTRUCTURING
50560. (a) The Subject to the
requirements of this chapter, the department may approve an
extension of a department loan, the subordination of a department
loan to new debt, or an investment of tax credit equity under one or
more of the following rental housing finance programs: the original
Rental Housing Construction Program established by Chapter 9
(commencing with Section 50735), the Special User Housing
Rehabilitation Program established by Section 50670, the Deferred
Payment Rehabilitation Loan Program established by Chapter 6.5
(commencing with Section 50660), the rental component of the
California Natural Disaster Assistance Program established by Chapter
6.5 (commencing with Section 50671), the State Earthquake
Rehabilitation Assistance Program established by Chapter 6.5
(commencing with Section 50671), the rental
component of the California Housing Rehabilitation Program
established by Section 50668.5, the component of the Rental Housing
Construction Program funded with bond proceeds governed by Section
50771.1, and the Family Housing Demonstration
Program established by Chapter 15 (commencing with Section 50880)
, and the Families Moving to Work Program established
by Chapter 15 (commencing with Section 50880) .
(b) Once the department has approved a loan extension,
subordination, or tax credit investment pursuant to
subdivision (a) this chapter , the statutes
enumerated in subdivision (a), and the regulations promulgated
pursuant to these statutes, shall no longer apply to
developments restructured pursuant to this chapter .
Developments under subdivision (a) These developments
shall instead be governed by this chapter and guidelines
adopted pursuant to subdivision (c) (h)
.
(c) All projects restructured pursuant to this chapter shall
comply with the affirmative marketing and language accessibility
requirements set forth in Section 50736 of this code and Section
65863 of the Government Code.
(d) The department may approve an extension of a loan if it
determines that the project has, or will have after rehabilitation or
repairs, a potential remaining useful life equal to or greater than
the term of the restructured loan.
(e) The department may subordinate its loan to refinance existing
senior debt only as necessary for project feasibility.
(f) If the extension of a department loan, the subordination of a
department loan to new debt, or an investment of tax credit equity
will result in a rent increase for tenants of a development, the
department may only subordinate a loan to senior debt if needed to
increase the feasibility of a project and if needed to fund
reasonable rehabilitation or improvements including soft costs. The
application to refinance shall include a third-party analysis which
supports the need for refinancing.
(g) The department may approve additional senior debt only as
necessary to finance rehabilitation or repairs, including soft costs,
that are modest in size, scope, and cost, as determined by the
department.
(c)
(h) It is the intent of the Legislature in enacting
this chapter to provide to the department the flexibility necessary
to maintain the quality of the affordable rental housing units for
which the state has already made a significant public investment. The
department may implement this chapter through guidelines that shall
not be subject to Chapter 2.5 (commencing with Section 11340) of Part
1 of Title 2 of the Government Code. These guidelines shall be
developed through a process that allows for public input
prior to their adoption. the following process:
(1) The department shall provide a notice of proposed action as
described in Section 11346.5 of the Government Code to the public at
least 21 days before the close of the public comment period.
(2) The department shall schedule at least one public hearing as
described in Section 11346.8 of the Government Code before the close
of the public comment period.
(3) The department shall maintain a rulemaking file as described
in Section 11347.3 of the Government Code.
(4) The final version of the guidelines shall be accompanied by a
final statement of reason as described in subdivision (a) of Section
11346.9 of the Government Code.
(5) The rules and guidelines shall be effective immediately upon
adoption by the department.
50561. (a) The department may extend the term
approve an extension of an existing rental housing
development loan and the time for repayment for additional
terms , the subordination of a department loan to new
debt, or an investment of tax credit equity as long as the
rental housing development is being operated in a manner consistent
with the regulatory agreement and the development requires an
extension in order to continue to operate in a manner consistent with
this chapter. Each extension shall be for a period of not less than
10 years and the total term of the revised loan
each extension shall not exceed 55 years, or not
more than 58 years if needed to match the term of tax
credit restrictions. The interest rate shall be 3 percent simple
interest. All future payments of principal and interest may be
deferred except for a percentage of interest equal to the percentage
charged annually in the Multifamily Housing Program (Chapter 6.7
(commencing with Section 50671)). The department may allow a
capitalized loan payment or capitalization of a fund to
facilitate annual loan payments. The department may defer
payments of principal and interest, including the percentage of
interest equal to the percentage charged annually in the Multifamily
Housing Program (Chapter 6.7 (commencing with Section 50671)), if the
restructured project does not include additional debt service. If
the department makes this determination to defer annual loan
payments, the required interest payment shall be a priority use of
cash flow after payment of operating expenses and required
reserves but prior to any payment to the borrower or associated
entities . As necessary to generate sufficient revenue to cover
the cost of processing loan transactions and long-term monitoring of
program requirements, the department may also assess loan processing
and monitoring fees , require periodic or capitalized loan
payments, and require that cashflow be applied on a priority basis
toward department loan payments . In determining the fees
and payments to be charged, the department shall seek to minimize the
impact on tenants with the lowest incomes and on the capacity of the
developments to support private debt or secure tax credit
investments.
(b) To the minimum extent needed to support new debt or
to secure tax credit equity to pay for necessary
rehabilitation costs, as determined by the department based on
third-party assessments, rents for assisted units may be increased
rehabilitation, rents for assisted units in these
developments may be adjusted. This rehabilitation shall be de
termined by the department to be demonstrably necessary, based
on third-party assessment and on the department's own inspection.
Assisted units in developments with a specific, department-approved
plan to undertake the needed rehabilitation, at a level that equals
or exceeds the minimum per-unit rehabilitation cost standards under
the low-income housing tax credit program, may be adjusted as
follows:
(1) For developments originally financed under the bond-funded
component of the Rental Housing Construction Program pursuant to
Section 50771.1, rents may be increased up to a maximum of 30 percent
of 60 percent of area median income, for units designated in the
development's original regulatory agreement as lower income units,
and up to a maximum of 30 percent of 35 percent of area median
income, for units designated in the development's original regulatory
agreement as very low income units.
(2) For developments originally financed under other programs, and
located in counties with an area median income of 110 percent or
less of state median income, rents for at least 35 percent of
assisted units shall be restricted to no more than 30 percent of 30
percent of state median income, expressed as a percentage of area
median income. For developments originally financed under other
programs, and located in other counties, rents for at least 35
percent of assisted units shall be restricted to no more than 30
percent of 35 percent of state median income, expressed as a
percentage of area median income. Rents for the balance of the
assisted units may be increased up to a maximum of 30 percent of 60
percent of area median income.
(2) For developments originally financed under other programs,
rents for at least 35 percent of the assisted units, or as specified
in the original regulatory agreement governing the development,
whichever is greater, shall be restricted to the midlevel target used
by the Multifamily Housing Program. Rents for the balance of the
assisted units may be increased up to a maximum of 30 percent of 60
percent of area median income. For purposes of this paragraph,
"midlevel target used by the Multifamily Housing Program" shall mean
either of the following:
(A) For counties with an area median income of 110 percent or less
of state median income, it shall mean 30 percent of 30 percent of
state median income, expressed as a percentage of area median income.
(B) For counties with an area median income that exceeds 110
percent of the state median income, it shall mean, 30 percent of 35
percent of state median income, expressed as a percentage of area
median income.
(c) Rent increases for tenants living in assisted units at the
time of restructuring pursuant to this chapter shall be limited as
follows:
(3)
(1) For existing tenants with incomes not exceeding 35
percent of area median income, increases shall be limited to 5
percent per year, until the rents reach the levels specified
in paragraphs (1) and (2) of set in accordance with
subdivision (b) of Section 50561 .
For
(2) For existing tenants with
incomes exceeding 35 percent of area median income, increases shall
be limited to 10 percent per year, until they reach the levels
specified in paragraphs (1) and (2) of subdivision (b) of Section
50561. When existing tenants move, the rent for their units may be
increased immediately up to the levels specified in
set in accordance with paragraphs (1) and (2) of
subdivision (b) of Section 50561 .
(4) Once rents reach their new ultimate restricted level, future
rent increases shall be based on increases in the area median income.
(3) If the refinance of a loan results in a rent increase, the
project sponsor shall provide tenants with the following
notifications:
(A) Notice six months prior to the scheduled rent increase with an
estimate of the amount of the increase.
(B) Notice 90 days prior to the actual increase with the exact
amount of the new rent.
(c)
(d) When existing tenants move, and rents are
adjusted as specified in subdivision (b), the income limit for new
tenants shall correspond with the rent limit the rent
for these units may be increased immediately up to the level
specified in paragraphs (1) and (2) of subdivision (b).
The income limit for new tenants shall correspond with the rent limit
set in accordance with paragraphs (1) and (2) of subdivision (b)
.
(d) When rents are adjusted pursuant to this section, and income
limits reset, income
(e) Once rents achieve the levels set
forth in paragraphs (1) and (2) of subdivision (b)
, income levels and rent limits shall be calculated
consistent with the calculation methodology used under the Low Income
Housing Tax Credit program and the Multifamily Housing Program
, and rent increases shall be based on increases in the area median
income .
(f) Eligible households displaced as a result of rehabilitation
pursuant to this section shall be accorded first priority in
occupying comparable units in the development from which they were
displaced, subsequent to rehabilitation. Tenants of rental housing
developments repaired with assistance provided under this chapter who
are temporarily or permanently displaced as a result of
rehabilitation or other repair work, shall be entitled to relocation
benefits pursuant to, and subject to, the requirements of Section
7260 of the Government Code. Sponsors of assisted rental housing
developments shall be responsible for providing the benefits and
assistance. The costs of the benefits and the assistance provided to
tenants shall be eligible for funding by a loan provided pursuant to
this section.
(g) The guidelines adopted by the department pursuant to
subdivision (c) of Section 50560 shall be patterned after the
regulations governing the Multifamily Housing Program, including the
Uniform Multifamily Regulations, except that the department may adopt
different standards for the following factors:
(1) Commercial vacancy loss assumptions must reflect project
operating history.
(2) Debt service coverage ratios.
(3) Payment terms and principal amount of senior debt, considering
financial market conditions, including costs and department risk, as
determined by the department.
(4) Developer fee limitations shall be consistent with California
Tax Credit Allocation Committee regulations for inclusion in the
basis for projects receiving 9 percent tax credits.
(5) Replacement reserve deposit amounts must be
based on projected costs over 20 years, adjusted for inflation, and
as shown in an independent replacement reserve analysis.
(h) It is the intent of the Legislature in enacting this section
that the department should manage its reserves for the original
Rental Housing Construction Program in a manner that will allow for
the continuation of benefits to current low-income tenants for the
longest period of time possible up to the term of the original
regulatory agreement or the depletion of the annuity funds, whichever
occurs first. Accordingly, rents for those households in units
subsidized by the annuity fund established pursuant to Section 50748
may be increased to 30 percent of household income. Any household
affected by the rent increase permitted by this subdivision, shall be
given at least 90 days advanced notice of the increase.
50562. (a) When a department loan is extended or subordinated, or
when a new tax credit investment occurs, the department shall enter
into a new regulatory agreement with the development's owner, or
amend the existing agreement. The agreement shall be
binding upon the development's owner and successors in interest upon
sale or transfer of the development property, regardless of any
prepayment of the loan. The agreement shall be recorded in the office
of the county recorder in the county in which the development is
located. The new or amended regulatory agreement shall:
(1) Set standards for tenant selection to ensure occupancy by the
eligible households.
(2) Govern the terms of occupancy agreements.
(3) Restrict rents for assisted units, consistent with this
chapter.
(4) Provide for periodic inspections , occupancy and
financial reports, and financial audits for the development
by the department .
(5) Require occupancy and financial reports, and financial audits
for the development.
(5)
(6) Govern the use of operating income for the
development.
(6)
(7) Govern the use of reserves for the development.
(7)
(8) Have a term for not less than the term of the loan,
including any extension.
(8)
(9) Include other provisions necessary to carry out the
purposes of this chapter.
(b) The agreement shall be binding upon the development's owner
and successors in interest upon sale or transfer of the development
property, and regardless of any prepayment of the loan.
(c) The agreement shall be recorded in the office of the county
recorder in the county in which the development is located.
(b) The development's owner shall agree to replace or amend any
other loan documents to accomplish the purposes of this chapter.
50563. (a) Sections 50560 and 50562 shall apply to the
restructuring of loans for group homes except as modified in this
section.
(b) The department may approve an extension of a department loan
at the end of the current loan term to an existing owner of a group
home as long as the group home is being operated in a manner
consistent with the regulatory agreement and the group home requires
an extension in order to operate in a manner consistent with this
chapter. The extension may be for a period of no less than 10 years
and up to 30 years.
(c) The guidelines adopted by the department pursuant to
subdivision (c) of Section 50560 may simplify requirements as
appropriate to group homes and may include a limitation on occupancy
of vacant units or rooms to extremely low-income households, rent
limitations appropriate to required income levels, requirements that
property be maintained, financial reporting, and other provisions as
determined necessary by the department.
(d) Loan terms contained in the existing promissory note shall
apply during the period of the loan extension. All unpaid principal
and interest shall be due at the end of the extension. However, the
department may require periodic payments of principal or interest, or
both, during the extension period. If the borrower repays the loan
prior to the end of the extension, regulatory requirements shall be
removed. As necessary to generate sufficient revenue to cover the
cost of processing loan transactions and long-term monitoring of
program requirements, the department may also assess loan processing
and monitoring fees. This subdivision shall not authorize a rent
increase that exceeds 30 percent of the household's actual income,
based upon the most recent income certification.
(e) Rent increases for tenants living in assisted units at the
time of restructuring pursuant to this chapter shall be limited as
follows:
(1) For existing tenants with incomes not exceeding 30 percent of
area median income, rent increases shall be limited to 5 percent per
year until rents reach the levels for targeted income levels
specified in the regulatory agreement.
(2) For existing tenants with incomes exceeding 30 percent of area
median income, rent increases shall be limited to 10 percent per
year until rents reach the levels for targeted income levels
specified in the regulatory agreement.
(f) It is the intent of the Legislature in enacting this chapter
that the department should manage its reserves for the original
Rental Housing Construction Program in a manner that will allow for
the continuation of benefits to current low-income tenants for the
longest period of time possible up to the term of the original
regulatory agreement or the depletion of the annuity funds.
Accordingly, rent subsidies shall be continued only for units
occupied by lower income tenants who were in residence at the time of
the extension authorized under this section and rents for those
households shall be increased to 30 percent of household income.
50564. (a) Notwithstanding any other law, the department may
approve the extension of a loan to an owner who occupies his or her
housing unit funded by the department under any of the following loan
programs: the owner component of the California Natural Disaster
Assistance Act Program established by Chapter 6.5 (commencing with
Section 50660), the California Homeownership Assistance Program
established by Chapter 10 (commencing with Section 50775), the owner
component of the California Housing Rehabilitation Program
established by Chapter 6.5 (commencing with 50668), the owner
component of the Deferred Payment Rehabilitation Loan Program
established by Chapter 6.5 (commencing with Section 50660), the owner
component of the State Earthquake Rehabilitation Assistance Program
established by Chapter 6.5 (commencing with Section 50671), and the
owner component of the Mobilehome Park Resident Ownership Program
established by Chapter 11 (commencing with Section 50780).
(b) A loan extension for a period of 10 years may be granted when
the loan is due if the owner demonstrates that his or her household
income is no more 50 percent of area median income, adjusted for
family size, or if the department determines that it is not in the
department's interest to call the loan due.
(c) Loan terms contained in the existing promissory note shall
apply during the period of the loan extension. All unpaid principal
and interest shall be due at the end of the extension. However, the
department may require periodic payments of principal or interest, or
both, during the extension period. If the borrower repays the loan
prior to the end of the extension, program restrictions shall be
removed. As necessary to generate sufficient revenue to cover the
cost of processing loan transactions and long-term monitoring of
program requirements, the department may also assess loan processing
and monitoring fees.
(d) The department may implement this section through guidelines
that shall not be subject to Chapter 2.5 (commencing with Section
11340) of Part 1 of Title 2 of the Government Code.