Amended in Senate September 3, 2013

Amended in Senate June 24, 2013

Amended in Assembly May 24, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 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 begin delete 0% end delete begin insert 0.42% per annum, or a rate determined by the department that is sufficient to cover the costs of project monitoring, as specified, end insert if the development meets specified requirements. The bill would also authorize the department to change the current interest rate for any loan for which it receives a loan extension request associated with an award of federal or state low-income housing tax credits made 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. begin insert The bill would also authorize the department to charge a fee sufficient to cover administrative costs associated with a loan modification requested by a borrower. 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:

SECTION 1.  

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

50406.7.  

(a) Notwithstanding any other law, the department
is authorized to reduce the interest rate on any loan issued by the
department to a rental housing development to as low as begin delete 0 percent end delete
begin insert forty-two hundredths of 1 percent (0.42%) per annum, or a rate
determined by the department that is sufficient to cover the costs
of project monitoring described in subdivision (c) of Section
50675.6, whichever is greater, end insert if the development meets all of the
following requirements:

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

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

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

(b) The department is authorized to change the current interest
rate for any loan for which it receives a loan extension request
associated with an award of federal or state low-income housing
tax credits made on or after January 1, 2014, to the applicable
federal rate most recently published by the United States Internal
Revenue Service. 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,
the department may forgive an amount of accrued interest equal
to the lesser of either the amount necessary to make the expected
principal and accrued interest the same as it would have been using
the original interest rate, or the total amount of interest accrued at
the time of the sponsor’s request.

begin insert

(c) The department may charge a fee in an amount sufficient to
cover administrative costs associated with a loan modification
requested by a borrower pursuant to this section.

end insert