BILL NUMBER: AB 1109 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Bonilla
FEBRUARY 22, 2013
An act to amend Section 50515.2 of the Health and Safety Code,
relating to housing.
LEGISLATIVE COUNSEL'S DIGEST
AB 1109, as introduced, Bonilla. 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, including the Joe Serna, Jr. Farmworker Housing Grant
Program.
This bill would make technical, nonsubstantive changes to a
provision of the Joe Serna, Jr. Farmworker Housing Grant Program.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. 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 document 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
means 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 A tenant residing
in a project at the time of an extension authorized by this section
may not 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 the
effective date of the guidelines adopted by the department pursuant
to subdivision (h) of Section 50560.