50561
. (a) The department may approve an extension of an existing
rental housing development loan, the reinstatement of a qualifying
unpaid matured loan, the subordination of a department loan to new
debt, or an investment of tax credit equity as long as the rental
housing development is being operated in a manner consistent with the
regulatory agreement and the development requires an extension in
order to continue to operate in a manner consistent with this
chapter. Each extension shall be for a period of not less than 10
years and each extension shall not exceed 55 years, or 58 years if
needed to match the term of tax credit restrictions. The interest
rate shall be 3 percent simple interest. All loan payments shall be
deferred for the full term of the loan, except for residual receipts
payments. These residual receipts payments shall be structured to
avoid reducing the amount of payments on local public agency loans
resulting solely from changes in the payment terms on the department'
s loan, and not resulting from fees or other payments to the
borrower, and shall otherwise be consistent with the provisions of
the department's Uniform Multifamily Regulations or successor
regulations. The department may charge a monitoring fee to cover the
aggregate monitoring costs it incurs in years that the loan is
extended and charge a transaction fee to cover its costs for
processing restructuring transactions. The department may waive or
defer some or all fees, if it determines that a particular
development or class of developments does not have the ability to
make these payments. In determining the fees and payments to be
charged, the department shall seek to share monitoring activities
with other regulatory agencies and to minimize the impact on tenants
with the lowest incomes and on the capacity of the developments to
support private debt or secure tax credit investments.
(b) To the minimum extent necessary to support new debt to pay for
rehabilitation, rents for assisted units in these developments may
be adjusted. This rehabilitation shall be determined by the
department to be demonstrably necessary, based on third-party
assessment and on the department's own inspection. Assisted units in
developments with a specific, department-approved plan to undertake
the necessary rehabilitation, at a level that equals or exceeds the
minimum per-unit rehabilitation cost standards under the low-income
housing tax credit program, may be adjusted as follows:
(1) For developments originally financed under the bond-funded
component of the Rental Housing Construction Program pursuant to
Section 50771.1, and the Family Housing Demonstration Program, rents
may be increased up to a maximum of 30 percent of 60 percent of area
median income, for units designated in the development's original
regulatory agreement as lower income units, and up to a maximum of 30
percent of 35 percent of area median income, for units designated in
the development's original regulatory agreement as very low income
units.
(2) For developments originally financed under other programs,
rents for at least 35 percent of the assisted units, or as specified
in the original regulatory agreement governing the development,
whichever is greater, shall be restricted to the midlevel target used
by the Multifamily Housing Program. Rents for the balance of the
assisted units may be increased up to a maximum of 30 percent of 60
percent of area median income. For purposes of this paragraph,
"midlevel target used by the Multifamily Housing Program" shall mean
either of the following:
(A) For counties with an area median income of 110 percent or less
of state median income, it shall mean 30 percent of 30 percent of
state median income, expressed as a percentage of area median income.
(B) For counties with an area median income that exceeds 110
percent of the state median income, it shall mean 30 percent of 35
percent of state median income, expressed as a percentage of area
median income.
(c) Rent increases for tenants living in assisted units at the
time of restructuring pursuant to this chapter shall be limited as
follows:
(1) For existing tenants with incomes not exceeding 35 percent of
area median income, increases shall be limited to 5 percent per year,
until the rents reach the levels set under subdivision (b).
(2) For existing tenants with incomes exceeding 35 percent of area
median income, increases shall be limited to 10 percent per year,
until they reach the levels specified in paragraphs (1) and (2) of
subdivision (b) of Section 50561.
(3) It is the intent of the Legislature that rent increases for
existing tenants authorized by this subdivision shall not be greater
than necessary to ensure the financial feasibility of the project.
The projected maximum rent for tenants in assisted units, as
determined by subdivision (b), shall not exceed 50 percent of the
household's actual income. This requirement shall be applied using
maximum rent levels and household incomes determined at the time of
restructuring or at the time of the department's approval of the
restructuring.
(4) If the refinance of a loan results in a rent increase, the
project sponsor shall provide tenants with the following
notifications:
(A) Notice six months prior to the scheduled rent increase with an
estimate of the amount of the increase.
(B) Notice 90 days prior to the actual increase with the exact
amount of the new rent.
(d) If existing tenants move, the rent for these units may be
increased immediately up to the level specified in paragraphs (1) and
(2) of subdivision (b). The income limit for new tenants shall
correspond with the rent limit set pursuant to paragraphs (1) and (2)
of subdivision (b).
(e) Once rents achieve the levels set forth in paragraphs (1) and
(2) of subdivision (b), income levels and rent limits shall be
calculated consistent with the calculation methodology used under the
Low Income Housing Tax Credit program and the Multifamily Housing
Program, and rent increases shall be based on increases in the area
median income.
(f) Eligible households displaced as a result of rehabilitation
pursuant to this section shall be accorded first priority in
occupying comparable units in the development from which they were
displaced, subsequent to rehabilitation. Tenants of rental housing
developments repaired with assistance provided under this chapter who
are temporarily or permanently displaced as a result of
rehabilitation or other repair work, shall be entitled to relocation
benefits pursuant to, and subject to, the requirements of Section
7260 of the Government Code. Sponsors of assisted rental housing
developments shall be responsible for providing the benefits and
assistance. The costs of the benefits and the assistance provided to
tenants shall be eligible for funding by a loan provided pursuant to
this section.
(g) The guidelines adopted by the department pursuant to
subdivision (h) of Section 50560 shall be patterned after the
regulations governing the Multifamily Housing Program, including the
Uniform Multifamily Regulations, except that the department may adopt
different standards for the following factors:
(1) Commercial vacancy loss assumptions must reflect project
operating history.
(2) Debt service coverage ratios.
(3) Payment terms and principal amount of senior debt, considering
financial market conditions, including costs and department risk, as
determined by the department.
(4) Developer fee limitations shall be consistent with California
Tax Credit Allocation Committee regulations for inclusion in the
basis for projects receiving 9 percent tax credits, for projects
receiving the special rent increases contemplated by this chapter,
and, consistent with the requirements of other funding sources, for
projects not receiving special rent increases.
(5) Replacement reserve deposit amounts must be based on projected
costs over 20 years, adjusted for inflation, and as shown in an
independent replacement reserve analysis.
(h) It is the intent of the Legislature in enacting this section
that the department shall manage its reserves for the original Rental
Housing Construction Program in a manner that will allow for the
continuation of benefits to current low-income tenants for the
longest period of time possible up to the term of the original
regulatory agreement or the depletion of the annuity funds, whichever
occurs first. Accordingly, rents for those households in units
subsidized by the annuity fund established pursuant to Section 50748
may be increased to 30 percent of household income. A household
affected by the rent increase permitted by this subdivision shall be
given at least 90 days advanced notice of the increase.
(i) (1) The department shall, within available resources, post on
its Internet Web site information regarding household incomes and
rents for developments approved for restructuring.
(2) The information shall be provided within six months of a
restructuring and, thereafter, no less than every three years.
(3) The information shall include the following or similar
information:
(A) The monthly rent of each household at the time of
restructuring.
(B) The current monthly rent of each household.
(C) The annual income of each household as a percentage of area
median income at the time of restructuring.
(D) The current income of each household as a percentage of area
median income.