Amended in Senate June 24, 2013

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. The bill would also authorize the department to change the current interest rate for any loanbegin delete it originatesend deletebegin insert for which it receives a loan extension request associated with an award of federal or state low-income housing tax credits madeend insert 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.

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

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

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SECTION 1.  

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

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50406.7.  

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

7(1) The development has no other debt with regularly scheduled
8or amortizing debt service payments.

9(2) The development will utilize low-income housing tax credits.

10(3) The sponsor provides evidence acceptable to the department
11that demonstrates that the loan issued by the department is not
12eligible to be treated as debt for federal or state low-income
13housing tax credit purposes without a reduction in the interest rate
14of the loan.

15(b) The department is authorized to change the current interest
16rate for any loanbegin delete it originatesend deletebegin insert for which it receives a loan extension
17request associated with an award of federal or state low-income
18housing tax credits madeend insert
on or after January 1, 2014, to the
19applicable federal rate most recently published by the United States
20Internal Revenue Service. If the total amount of debt and accrued
21interest at the end of the loan term would be greater after making
22this change than it would have been under the original interest
23rate, the department may forgive an amount of accrued interest
24equal to the lesser of either the amount necessary to make the
25expected principal and accrued interest the same as it would have
26been using the original interest rate, or the total amount of interest
27accrued at the time of the sponsor’s request.



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