2005 California Health and Safety Code Sections 50675-50675.14 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
both of the following:
   (1) To set and maintain affordable rent levels for assisted units.
   (2) To the payment of prevailing wage rates with respect to
construction assisted through the program.  In implementing this
paragraph, it is the intent of the Legislature that this requirement
apply to construction work that is dependent on the commitment of
program funds in order for construction to proceed.  Notwithstanding
any other provision of law, the department's enforcement
responsibilities shall be limited to the imposition of this
requirement through the lending documents.  The department shall
require, as a condition of loan closing, a signed certificate that
prevailing wages have been, or will be, paid in conformance with the
requirements of Chapter 1 (commencing with Section 1720) of Part 7 of
the Labor Code and that labor records shall be made available to any
enforcement agency upon request.  The requirements of this paragraph
shall not apply to projects for which program funds are used
exclusively to achieve lower rents and to pay associated
administrative costs.
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.
50675.12.  (a) The department shall include in the annual report
required by Section 50408 information that describes all of the
following:
   (1) The number of projects assisted through the program.
   (2) The types of units assisted through the program.
   (3) The location and geographical distribution of the projects and
units assisted.
   (4) The average cost per project, and cost per unit.
   (5) The number of projects and units that have been assisted that
serve special needs populations and information related to the types
of special needs populations served.
   (b) After each Notice of Funding Availability issued for the
distribution of funds pursuant to the program, the department shall
evaluate the ability of projects that serve families or special needs
populations to competitively access the program.  Based on its
analysis, if the department determines that those projects are not
able to apply for or to successfully compete for funding, the
department shall make the adjustments it deems appropriate to ensure
that these populations are adequately served in subsequent Notices of
Funding Availability.  These adjustments may include, but are not
limited to, making adjustments to threshold requirements, evaluative
criteria, or the timing of the issuance of Notices of Funding
Availability to ensure that reasonable funding remains available for
more complex projects that include the supportive services necessary
to serve families and special needs populations.
50675.13.  (a) If the Housing and Emergency Shelter Trust Fund Act
of 2002 is approved by the voters, with respect to funds appropriated
pursuant to paragraph (1) of subdivision (a) of Section 53533, the
department shall award reasonable priority points for projects to
prioritize any of the following:
   (1) Infill development.
   (2) Adaptive reuse in existing developed areas served with public
infrastructure.
   (3) Projects in proximity to public transit, public schools, parks
and recreational facilities, or job centers.
   (b) The department may utilize other factors in rural areas to
promote infill development.
50675.14.  (a) This section shall apply only to supportive housing
projects funded pursuant to paragraph (3) of subdivision (a) of
Section 53533.
   (b) For purposes of this section, "supportive housing" means
housing with no limit on length of stay, that is occupied by the
target population as defined in subdivision (d) of Section 53260, and
that is linked to onsite or offsite services that assist the
supportive housing resident in retaining the housing, improving his
or her health status, and maximizing his or her ability to live and,
when possible, work in the community.
   (c) The criteria, established by the department, for selecting
supportive housing projects shall give priority to the following:
   (1) Supportive housing projects that house persons with
disabilities who would otherwise be at high risk of homelessness,
where the application for funding demonstrates collaboration with
programs that meet the needs of the supportive housing residents'
disabilities.
   (2) Supportive housing projects that include a focus on measurable
outcomes and a plan for evaluation, which evaluation shall be
submitted by the borrowers, annually, to the department.
   (d) The department may provide higher per-unit loan limits as
reasonably necessary to provide and maintain rents that are
affordable to the target population as defined in subdivision (d) of
Section 53260.
   (e) In an evaluation or ranking of a borrower's development and
ownership experience, the department shall consider experience
acquired in the prior 10 years.
   (f) (1) A borrower shall, beginning the second year after
supportive housing project occupancy, include the following data in
his or her annual report to the department.  However, a borrower who
submits an annual evaluation pursuant to subdivision (c) may,
instead, include this information in the evaluation:
   (A) The length of occupancy by each supportive housing resident
for the period covered by the report.
   (B) Changes in each supportive housing resident's employment
status during the previous year.
   (C) Changes in each supportive housing resident's source and
amount of income during the previous year.
   (2) The department shall include aggregate data with respect to
the supportive housing projects described in this section in the
report that it submits to the Legislature pursuant to Section
50675.12.
   (g) The department shall consider, commencing in the second year
of the funding, the feasibility and appropriateness of modifying its
regulations to increase the use of funds by small projects.  In doing
this, the department shall consider its operational needs and prior
history of funding supportive housing facilities.