BILL NUMBER: SB 1121 CHAPTERED 10/10/99 CHAPTER 637 FILED WITH SECRETARY OF STATE OCTOBER 10, 1999 APPROVED BY GOVERNOR OCTOBER 5, 1999 PASSED THE SENATE SEPTEMBER 8, 1999 PASSED THE ASSEMBLY SEPTEMBER 3, 1999 AMENDED IN ASSEMBLY SEPTEMBER 1, 1999 AMENDED IN ASSEMBLY AUGUST 30, 1999 AMENDED IN ASSEMBLY AUGUST 18, 1999 AMENDED IN ASSEMBLY JULY 13, 1999 AMENDED IN ASSEMBLY JUNE 28, 1999 INTRODUCED BY Senator Alarcon (Coauthor: Assembly Member Lowenthal) FEBRUARY 26, 1999 An act to amend Section 8869.83 of the Government Code, and to amend Sections 50880, 50881, 50881.5, 50882, and 50888.3 of, to add Chapter 6.7 (commencing with Section 50675) to Part 2 of Division 31 of, and to repeal Sections 50887, 50888.5, 50888.7, 50889.5, 50893.5, 50893.7, and 50893.9 of, the Health and Safety Code, relating to housing, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST SB 1121, Alarcon. California Debt Limit Allocation Committee: rental housing. (1) Existing law establishes the membership of the California Debt Limit Allocation Committee and requires the Treasurer to serve as the chairperson of the committee and requires the office of Treasurer to provide any administrative assistance and support staff that is needed for the committee to operate. This bill would also require the office of Treasurer to provide an executive director for the committee and would authorize the committee to authorize the executive director to enter into contracts on behalf of the committee. (2) Existing law establishes various programs under the Department of Housing and Community Development, including the California Housing Rehabilitation Program for the development of low-income and multifamily rental housing in the state. This bill would create the Multifamily Housing Program under the department to provide a standardized set of program rules and features applicable to all housing types based on the existing California Housing Rehabilitation Program. The bill would provide financial assistance in the form of a deferred payment loan to fund projects for, among other things, the development and construction of new, and rehabilitation, or acquisition and rehabilitation, of existing, transitional or rental housing developments. The bill would establish a project selection process for loans for these projects. The bill would also require a regulatory agreement between the department and the housing sponsor and would set up a default reserve fund to protect the department's security interest in any project funded under these provisions. (3) Existing law establishes the Families Moving to Work Program administered by the Department of Housing and Community Development as a component of the Rental Housing Construction Program. This bill would require the Families Moving to Work Program to be administered as a component of the Multifamily Housing Program, and would make related changes. The bill would require specified funds transferred by the Budget Act of 1999 to the Housing Rehabilitation Loan Fund to be used for the Multifamily Housing Program. Because that fund is continuously appropriated for specified purposes, this bill would make an appropriation by expanding the purposes of the fund. (4) Existing law contains provisions relating to assisting the development of community housing developments. This bill would repeal those provisions. Appropriation: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 8869.83 of the Government Code is amended to read: 8869.83. (a) There is in state government the California Debt Limit Allocation Committee, consisting of six members as follows: (1) The Treasurer, or his or her designee. (2) The Controller, or his or her designee. (3) The Governor, or his or her designee. (4) The Director of Housing and Community Development, who shall be a nonvoting member. (5) The Executive Director of the California Housing Finance Agency, who shall be a nonvoting member. (6) A representative from local government who shall be a nonvoting member, selected by two voting members of the committee. (b) The Treasurer shall serve as chairperson of the committee and the office of the Treasurer shall provide an executive director and any administrative assistance and support staff that is needed for the committee to operate. The chairperson shall keep, or cause to be kept, minutes and other records and documents of the committee. The committee may authorize the executive director to enter into contracts on behalf of the committee. (c) Members of the committee shall serve without compensation. (d) Two voting members of the committee shall constitute a quorum. The affirmative vote of two voting members of the committee shall be necessary for any action taken by the committee. However, the committee may, by unanimous vote, delegate to its chairperson the authority to carry out any acts empowered to it under this chapter. SEC. 2. Chapter 6.7 (commencing with Section 50675) is added to Part 2 of Division 31 of the Health and Safety Code, to read: CHAPTER 6.7. MULTIFAMILY HOUSING PROGRAM 50675. The Legislature finds and declares all of the following: (a) Large numbers of California's renters face excessive housing costs and live in overcrowded or substandard units. Many of these renters also have special housing needs arising from their employment status, age, or disability, and live in communities suffering from a lack of investment. (b) In previous years, the state has attempted to address the needs of California renters through a series of small programs operated by the Department of Housing and Community Development, each offering financing targeted at a specific population or building type. These programs were typically highly successful in addressing local housing and community development needs. However, because each individual program came with a unique set of rules, the programs were often costly and time consuming to administer, for both the state and program users. (c) A more efficient method to address renter housing needs would be to operate one omnibus multifamily housing program modeled upon an existing successful program. This omnibus program would provide a standardized set of program rules and features applicable to all housing types. As particular needs are identified, it may be easily and quickly customized to meet those needs. (d) It is the intent of the Legislature that the Multifamily Housing Program created by this chapter constitute this omnibus multifamily housing program, and that it be based on the department's existing California Housing Rehabilitation Program as established and described in Subchapter 8 (commencing with Section 7670) of Chapter 7 of Part 1 of Title 25 of the California Code of Regulations. (e) The Multifamily Housing Program is intended to take the place of the following department programs: (1) The Deferred-Payment Rehabilitation Loan Program established by Chapter 6.5 (commencing with Section 50660). (2) The Rental Housing Construction Program established by Chapter 9 (commencing with Section 50735). (3) The Family Housing Demonstration Program established by Section 5 of Chapter 30 of the Statutes of 1988. Repeal of the statutes establishing these programs would be administratively problematic because the department still administers a portfolio of loans from these programs. Therefore, in lieu of repeal, it is the Legislature's intent that no further allocation of funds be made to these programs and that any and all future funds that would have been appropriated to these programs shall be appropriated instead to the Multifamily Housing Program. 50675.1. (a) This chapter shall be known and may be cited as the Multifamily Housing Program. (b) Assistance provided to a project pursuant to this chapter shall be provided in the form of a deferred payment loan to pay for the eligible costs of development as hereafter described. (c) This chapter shall be administered by the department and the department shall establish the terms upon which loans may be made consistent with the provisions of this chapter. 50675.2. The definitions of this section shall apply to all activities conducted pursuant to this chapter. Except as otherwise provided in this chapter, or unless the context requires otherwise, the definitions contained in Chapter 2 (commencing with Section 50050) of Part 1 shall also apply to this chapter. (a) "Affordable rent" shall be established by the department to be consistent with the rent limitations imposed by the Low Income Housing Tax Credit Program, as administered by the California Tax Credit Allocation Committee. (b) "Assisted unit" means a unit that is affordable to a lower income household as a result of a loan provided pursuant to this chapter. In order to ensure consistency with the Low Income Housing Tax Credit Program, occupancy of assisted units shall be limited to households whose income does not exceed the limits specified by the California Tax Credit Allocation Committee. (c) "Maintain affordable rent levels" means rents may be increased by the sponsor on an annual basis in the amount that would be allowed if the project was subject to the requirements of the Low Income Housing Tax Credit Program established pursuant to Section 42 of the federal Internal Revenue Code. (d) "Rental housing development" means a structure or set of structures with common financing, ownership, and management, and which collectively contain five or more dwelling units, including efficiency units. No more than one of the dwelling units may be occupied as a primary residence by a person or household who is the owner of the structure or structures. (e) "Rehabilitation," in addition to the meaning set forth in Section 50096, includes improvements and repairs made to a residential structure acquired for the purpose of preserving its affordability. (f) "Rent-up costs" means costs incurred while a unit is on the housing market but not rented to its first tenant. (g) "Sponsor" has the same meaning as defined in subdivision (c) of Section 50669, and also includes a limited partnership in which the sponsor or an affiliate of the sponsor is a general partner. (h) "Transitional housing" and "transitional housing development" means buildings configured as rental housing developments, but operated under program requirements that call for the termination of assistance and recirculation of the assisted unit to another eligible program recipient at some predetermined future point in time, which shall be no less than six months. 50675.3. Any moneys appropriated and made available by the Legislature for the purposes of this chapter and all moneys received by the department in repayment of loans made pursuant to this chapter, including interest and payments in advance in lieu of future interest, shall be deposited in the Housing Rehabilitation Loan Fund established by Section 50661. These moneys shall be used for the purposes of this chapter, including the implementation and operation of the program created by this chapter, and the administrative expenses of the department shall not exceed 5 percent of the funds appropriated by the Legislature for the purposes of this chapter. 50675.4. (a) To be eligible to receive a loan, a proposed project shall involve one or more of the following activities: (1) The development and construction of a new transitional or rental housing development. (2) The rehabilitation, or acquisition and rehabilitation, of a transitional or rental housing development. (3) The conversion of a nonresidential structure to a transitional or rental housing development. (b) In the case of rehabilitation projects, to be eligible to receive a loan, the loan shall be necessary to avoid increases in monthly debt service that have either of the following effects: (1) Result in rent increases causing permanent displacement of persons of lower income residing in the development prior to rehabilitation. (2) Make it economically infeasible to accept subsidies available to provide affordable rents to persons of lower income, if the sponsor agrees to accept the subsidies. (c) To be eligible to receive a loan, the sponsor shall agree to set and maintain affordable rent levels for assisted units. 50675.5. (a) Eligible costs shall include the cost of developing dwelling units, transitional housing, and child care, and after school care and social service facilities integrally linked to the assisted dwelling units. (b) Eligible cost categories shall include all of the following: (1) Real property acquisition, including refinancing of existing debt to the extent necessary to reduce debt service to a level consistent with the provision of affordable rents and the fiscal integrity of the project. (2) New construction or rehabilitation, including the conversion of nonresidential structures to residential use. (3) General property improvements that are necessary to correct unsafe, unhealthy, or unsanitary conditions, including renovations and remodeling, including, but not limited to, remodeling of kitchens and bathrooms, installation of new appliances, landscaping, and purchase or installation of central air conditioning. (4) Necessary and related onsite and offsite improvements. (5) Reasonable developer fees. (6) Reasonable consulting costs. (7) Initial operating costs for housing units. (8) Capitalized reserves for replacement and operation. The department may allow capitalized operating reserves to be used for rent subsidies for assisted units reserved for occupancy by households with incomes below limits determined by the department, which shall not exceed the income limit for very low income households. (9) Any other costs of rehabilitation or new construction authorized by the department. 50675.6. (a) A sponsor may apply for loans for one or more rental or transitional housing developments. A housing development may utilize any combination of federal, state, local, and private financial resources necessary to make the development affordable, for the term of the state's regulatory agreement, to the eligible households. (b) (1) Loans made pursuant to subdivision (f) of Section 50675.7 to sponsors by a local public entity as part of its code enforcement efforts for rental housing developments involving rehabilitation shall only be for terms of not less than 20 years. All other loans shall be for a term of not less than 55 years. (2) The term of a loan and the time for repayment may be extended for additional 10-year terms as long as the rental housing development is operated in a manner consistent with the regulatory agreement and the sponsor requires an extension in order to continue to operate in a manner consistent with this chapter. (c) Principal and accumulated interest is due and payable upon completion of the term of the loan. The loan shall bear simple interest at the rate of 3 percent per annum on the unpaid principal balance. The department may forgive that portion of that loan that is used to cover costs of developing child care facilities. The department shall require annual loan payments in the minimum amount necessary to cover the costs of project monitoring. For the first 30 years of the loan term, the amount of the required loan payments shall not exceed forty-two hundredths of 1 percent (.42%) per annum. (d) The department may establish maximum loan-to-value requirements for some or all of the types of projects that are eligible for funding under this chapter. (e) The department shall establish per-unit and per-project loan limits for all project types. 50675.7. Loans shall be provided using a project selection process established by the department that meets all of the following requirements: (a) To the extent feasible, this process shall be coordinated with the processes of other major housing funding sources, including that of the California Tax Credit Allocation Committee, and shall ensure a reasonable geographic distribution of funds. (b) The process shall require that applications for projects meet minimum threshold requirements, including, but not limited to, all of the following: (1) The proposed project shall be located within reasonable proximity to public transportation and services. (2) Development costs for the proposed project shall be reasonable compared to costs of comparable projects in the local area. (3) The proposed project shall be feasible. (4) The sponsor shall have the capacity to own and develop the proposed project. (c) Projects that meet threshold requirements shall be evaluated for funding based on weighted underwriting and evaluative criteria that give consideration to projects that meet the following criteria: (1) Serve households at the lowest income levels, consistent with long-term feasibility, considering regional variations. (2) Address the most serious identified local housing needs. (3) Will be developed and owned by entities with substantial and successful experience. (4) Contain a significant percentage of units for families or special needs populations. (5) Leverage other funds in those jurisdictions where they are available. (d) The department may establish alternate project selection processes, threshold requirements, and priorities for funds appropriated for special purposes. These alternate processes, requirements, and priorities shall be tied to the specific needs and objectives for which the funds have been appropriated. (e) Loans for rental housing developments and transitional housing may be reviewed, approved, and funded by the department directly to the sponsor. The department shall ensure that the sponsor notifies the local legislative body of the sponsor's loan application prior to application submission. (f) The department may make grants to local public entities using funds reserved by the Legislature for rehabilitation, or acquisition and rehabilitation, in support of code enforcement. The local entities shall then make the funds available as loans, and they may be allowed to collect and retain loan repayments, provided that these repayments are reloaned in accordance with the requirements of this chapter, as it relates to funds used in support of code enforcement. 50675.8. (a) Prior to disbursement of any funds for loans to rental housing developments made pursuant to this chapter, the department shall enter into a regulatory agreement with the sponsor that provides for all of the following: (1) Sets standards for tenant selection to ensure occupancy of assisted units by eligible households of very low and low income for the term of the agreement. (2) Governs the terms of occupancy agreements. (3) Contains provisions to maintain affordable rent levels to serve eligible households. (4) Provides for periodic inspections and review of yearend fiscal audits and related reports by the department. (5) Permits a sponsor to distribute earnings in an amount established by the department and based on the number of units in the rental housing development. (6) Has a term for not less than the original term of the loan. (7) Contains any other provisions necessary to carry out the purposes of this chapter. (b) The agreement shall be binding upon the sponsor and successors in interest upon sale or transfer of the rental housing development 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 real property subject to the agreement is located. 50675.9. Where the requirements of federal funding for a project, or the requirements of the low-income housing tax credits used in a project, would cause a violation of the requirements of this chapter, the requirements of this chapter may be modified as necessary to ensure program compatibility. Where the requirements of federal funding or tax credits create what are deemed to be minor inconsistencies as determined by the director of the department, the department may waive the requirements of this chapter as deemed necessary to avoid an unnecessary administrative burden. 50675.10. (a) The department may designate an amount not to exceed 4 percent of funds appropriated for use pursuant to this chapter for the purposes of curing or averting a default on the terms of any loan or other obligation by the recipient of financial assistance, or bidding at any foreclosure sale where the default or foreclosure sale would jeopardize the department's security in the rental housing development assisted pursuant to this chapter. The funds so designated shall be known as the "default reserve." (b) The department may use default reserve funds made available pursuant to this section to repair or maintain any rental housing development assisted pursuant to this chapter that was acquired to protect the department's security interest. (c) The payment or advance of funds by the department pursuant to this section shall be exclusively within the department's discretion, and no person shall be deemed to have any entitlement to the payment or advance of those funds. The amount of any funds expended by the department for the purposes of curing or averting a default shall be added to the loan amount secured by the rental housing development and shall be payable to the department upon demand. 50675.11. If an appropriation is made by the Legislature for the purposes of this chapter in an amount of twenty million dollars ($20,000,000) or less, the department may administer the funds with guidelines that shall not be subject to the requirements of Chapter 3.5 (commencing with Section 11340) of Part 1 of Title 2 of the Government Code. If an appropriation exceeds twenty million dollars ($20,000,000), the department may administer the funds with guidelines for 15 months, during which time the guidelines shall not be subject to the requirements of Chapter 3.5 (commencing with Section 11340) of Part 1 of Title 2 of the Government Code. SEC. 3. Section 50880 of the Health and Safety Code is amended to read: 50880. (a) The Legislature finds and declares all of the following: (1) That there are more than 600,000 families in California who face the enormous challenge of moving rapidly from welfare to work in order to meet federal and state deadlines. (2) That a significant number of these families face substantial obstacles in meeting these deadlines inasmuch as a vast percentage of these families pay 50 to 80 percent of their welfare checks for housing, live in counties with unemployment rates that are as high as 30 percent, cannot locate infant or child care because of no availability or long waiting lists, and lack personal or public transportation. (3) That approximately 1,500,000 children receiving Aid to Families with Dependent Children (AFDC) will require child care when their mothers begin private or public employment and that only four out of every 100 slots in licensed child care centers are open to infants. (4) That most of the 600,000 parents who will be required to work lack training, and a high percentage lack a high school diploma, job experience, and job retention skills in order to earn the income necessary to sustain themselves and their children without welfare assistance. Studies demonstrate that a welfare mother in Los Angeles with one toddler will need to find a job earning thirteen dollars and seven cents ($13.07) per hour in order to provide housing, and the basic necessities and health care. A mother of two needs seventeen dollars and ten cents ($17.10) per hour. (5) That in response to this complex problem facing so many endangered families, assistance to families moving to work shall be provided under the "Families Moving to Work Program" which shall be operated as a component of the Multifamily Housing Program established by Chapter 6.7 (commencing with Section 50675), through which the Department of Housing and Community Development shall test innovative strategies of providing affordable housing combined with child care and a job training program. The housing shall be located on a main transportation system. (b) The Legislature intends that the funds included in Item 2240-106-0001 of the Budget Act of 1999 be used as an integral part of a county's welfare plan as a means of assisting families qualifying for CalWORKs benefits and experiencing the greatest difficulty moving from welfare to work. The Legislature further intends for this to be a transitional program that will provide focused, enriched resources to CalWORKs households during the period of moving from welfare to work, and that upon the completion of the program, the household's assistance will be terminated and then a new CalWORKs household will be provided assistance in the Families Moving to Work Program. The Legislature intends that the department may establish goals and timelines for moving from welfare to work, and that broad criteria for this transition shall be applied to households on an individual basis. (c) The Legislature finds and declares that the legislative findings and declarations set forth in Sections 1 to 5, inclusive, of both Chapters 1042 and 1043 of the Statutes of 1979, remain valid and are applicable to the program enacted by this chapter. The Legislature finds and declares that there is an urgent need to establish a program to design new living environments, part of which will include social and economic programs, so that working parents, jobseeking parents, and homeless parents can build productive lives for themselves and their children. SEC. 4. Section 50881 of the Health and Safety Code is amended to read: 50881. This chapter shall be known and may be cited as the Families Moving to Work Program. The Families Moving to Work Program shall be operated as a component of the Multifamily Housing Program of the department (Chapter 6.7 (commencing with Section 50675)). SEC. 5. Section 50881.5 of the Health and Safety Code is amended to read: 50881.5. The definitions in this section apply to all activities conducted pursuant to this chapter. Except as otherwise provided in this chapter, or unless the context requires otherwise, the definitions in Chapter 2 (commencing with Section 50050) of Part 1 and Chapter 6.7 (commencing with Section 50675) also apply to this chapter. (a) "Community housing development" means a development of 20 or more rental or cooperative units on one or more sites, that includes the social and economic features described in this chapter. (b) "Congregate housing" or "congregate housing development," means a new or rehabilitated large multibedroom structure in which more than two families share common living areas and child care, cleaning, cooking, and other household responsibilities. (c) "Sponsor" means any nonprofit corporation, cooperative, or local public agency, or any combination thereof, including limited partnerships in which the managing general partner is an eligible nonprofit corporation. SEC. 6. Section 50882 of the Health and Safety Code is amended to read: 50882. (a) The Families Moving to Work Account is hereby established in the Rental Housing Construction Fund. The account shall be organized into subaccounts as provided in this chapter. All of the following moneys shall be paid into the account: (1) Any moneys appropriated and made available by the Legislature for the purposes of the account. (2) Any moneys that the department receives in repayment or return of loans made from the account, including any interest on those loans. (3) Any other moneys that may be made available to the department for the purposes of this chapter from any other source or sources. (b) Notwithstanding Section 13340 of the Government Code, all money in the account is hereby continuously appropriated to the department and shall be utilized for the purposes of Article 1 (commencing with Section 50880) to Article 4 (commencing with Section 50893), inclusive, including administrative expenses of the department for the implementation and operation of the programs created by this chapter. All interest or other increment resulting from investment or deposit of moneys in the account shall be deposited in the account, notwithstanding Section 16305.7 of the Government Code. Moneys in the account are not subject to transfer to any other fund, except as set forth in this chapter, pursuant to any provision of Part 2 (commencing with Section 16300) of Division 4 of Title 2 of the Government Code, except the Surplus Money Investment Fund. (c) At the time funding availability is announced by the department, the department may apportion funds available for loans between community housing developments and congregate housing developments. The plan for apportioning funds may include a priority for funding loans for new construction, acquisition and rehabilitation, or rehabilitation. (d) Notwithstanding any other provision of law, on or after July 1, 1996, the unencumbered account balance and reserves shall be transferred out of the Family Housing Demonstration Account, but shall be retained within the Rental Housing Construction Fund. (e) Notwithstanding any other provision of law, the funds transferred to the Rental Housing Construction Fund pursuant to Item 2240-106-0001 of the Budget Act of 1999 shall be transferred into the Housing Rehabilitation Loan Fund to be used only for the purposes of this chapter. Repayments shall be made to the Housing Rehabilitation Loan Fund and may be used for any eligible purpose of that fund. SEC. 7. Section 50887 of the Health and Safety Code is repealed. SEC. 8. Section 50888.3 of the Health and Safety Code is amended to read: 50888.3. (a) Housing assisted pursuant to this chapter shall be subject to the following provisions: (1) For the period during which the development benefits from assistance provided pursuant to this chapter, and not less than 10 years, households moving into assisted units must be comprised of CalWORKs recipients and their families. (A) Following this period, occupancy shall be limited in accordance with the provisions of the Multifamily Housing Program established by Chapter 6.7 (commencing with Section 50675). (2) Child care must be available to all households living in assisted units. The child care must be available onsite or in close proximity to the housing. (3) Case management services must be available to all households living in assisted units commencing upon initial occupancy and continuing for at least three months following termination of the program assistance provided to these households. (4) The assistance provided to individual households shall be for the purpose of assisting them in moving from welfare to work, or to retain employment as determined necessary by the county welfare department and consistent with the services provided by the county's CalWORKs program. (5) The regulatory agreement entered into between the department and the sponsor shall contain provisions (A) for requiring termination of program assistance consistent with the requirements of the local welfare reform plan and CalWORKs; (B) for expeditiously transferring assistance to a new CalWORKs recipient household, once assistance has been terminated for a household that no longer qualifies for the assistance; (C) for grievance hearings and other resident protections which ensure reasonable security of occupancy; (D) to ensure that if an eligible household's income exceeds the standard pursuant to which it was accepted for tenancy, that fact alone shall neither constitute cause for the eviction nor be a violation of the sponsor's loan agreement; (E) for requiring sponsors to collect and report to the department such information as the department deems necessary for program evaluation purposes; and (F) any other provisions necessary to carry out the purposes and requirements of this chapter. (6) In evaluating projects for funding and to permit assessment of the efficacy of various housing models, the weighted underwriting and evaluative criteria shall give consideration to ensuring that a variety of project types receive funding. (7) (A) Community housing developments shall include all of the following features and criteria: (i) A jobs and economic development component. (ii) A child care center and play area adequate in size to serve the residents of the development, and may also serve the children of nonresidents of the development. (iii) A community room, which may also be the child care center. (iv) Adequate laundry facilities. (v) Other features as appropriate. (B) The jobs and economic development component of a community housing development shall consist of a program of job placement and training for residents which shall be implemented commencing upon initial occupancy of the development. The program shall be based on a consideration of existing potential employment at nearby facilities through publicly assisted or other job training or entry level employments programs, as well as employment in the management and operation of the development, including the child care center. The economic and development component shall be subject to the department' s approval and shall be memorialized as a rider to the regulatory agreement. (8) The housing must be on a main transportation system. (9) Sponsors shall provide evidence that the proposed development is consistent with the Welfare Reform Plan required pursuant to Section 10531 of the Welfare and Institutions Code, as adopted by the county board of supervisors. (10) If the CalWORKs program ceases to exist or is modified to the extent that it becomes financially infeasible for developments assisted pursuant to this chapter to comply with the requirements of this chapter, as determined by the department, the department may modify these requirements to the extent necessary to preserve the financial feasibility of the developments. SEC. 9. Section 50888.5 of the Health and Safety Code is repealed. SEC. 10. Section 50888.7 of the Health and Safety Code is repealed. SEC. 11. Section 50889.5 of the Health and Safety Code is repealed. SEC. 12. Section 50893.5 of the Health and Safety Code is repealed. SEC. 13. Section 50893.7 of the Health and Safety Code is repealed. SEC. 14. Section 50893.9 of the Health and Safety Code is repealed. SEC. 15. Notwithstanding any other provision of law, the funds transferred to the Housing Rehabilitation Loan Fund pursuant to Item 2240-107-0001 of Section 2.00 of the Budget Act of 1999 shall be utilized for the purposes set forth in, and shall be administered through, the Multifamily Housing Program established by Chapter 6.7 (commencing with Section 50675) of Part 2 of Division 31 of the Health and Safety Code, as added by this act, subject to the following special conditions: (a) The funds shall be used for multifamily housing rehabilitation or acquisition, or rehabilitation and acquisition. (b) First priority for the funds shall be the conservation of affordable housing for existing tenants. (c) The department may use up to four hundred thousand dollars ($400,000) of the transferred funds for program administration.