Amended in Assembly May 24, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 523


Introduced by Assembly Members Ammiano and Brown

(Principal coauthor: Senator Leno)

February 20, 2013


An act to add Section 50406.7 to the Health and Safety Code, relating to housing.

LEGISLATIVE COUNSEL’S DIGEST

AB 523, as amended, Ammiano. Department of Housing and Community Development: loans.

Existing law authorizes the Department of Housing and Community Development to make advance payments to eligible borrowers and grantees under certain loan or grant programs for housing, if the department makes specified determinations.

This bill would additionally authorize the department to reduce the interest rate on any loan issued by the department to a rental housing development to as low as 0% if the development meets specified requirements.begin insert The bill would also authorize the department to change the current interest rate for any loan it originates on or after January 1, 2014, to the most recently published applicable federal rate, as specified, and to forgive an amount of accrued interest if the total amount of debt and accrued interest at the end of the loan term would be greater after making this change than it would have been under the original interest rate.end insert

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 50406.7 is added to the Health and Safety
2Code
, to read:

3

50406.7.  

begin insert(a)end insertbegin insertend insert Notwithstanding any other law, the department
4begin delete mayend deletebegin insert is authorized to end insert reduce the interest rate on any loan issued
5by the department to a rental housing development to as low as 0
6percent if the development meets all of the following requirements:

begin delete

3 7(a)

end delete

8begin insert(1)end insert The development has no other debt with regularly scheduled
9or amortizing debt service payments.

begin delete

5 10(b)

end delete

11begin insert(2)end insert The development will utilize low-income housing tax credits.

begin delete

6 12(c)

end delete

13begin insert(3)end insert The sponsor provides evidence acceptable to the department
14that demonstrates that the loan issued by the department is not
15eligible to be treated as debt for federal or state low-income
16housing tax credit purposes without a reduction in the interest rate
17of the loan.

begin insert

18(b) The department is authorized to change the current interest
19rate for any loan it originates on or after January 1, 2014, to the
20applicable federal rate most recently published by the United States
21Internal Revenue Service. If the total amount of debt and accrued
22interest at the end of the loan term would be greater after making
23this change than it would have been under the original interest
24rate, the department may forgive an amount of accrued interest
25equal to the lesser of either the amount necessary to make the
26expected principal and accrued interest the same as it would have
27been using the original interest rate, or the total amount of interest
28accrued at the time of the sponsor’s request.

end insert


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