2023 California Code › Health and Safety Code - HSC › DIVISION 31 - HOUSING AND HOME FINANCE › PART 2 - DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT › CHAPTER 6.5 - Deferred-Payment Rehabilitation Loans › Section 50670.

50670. (a)  The department shall establish a Special User Housing Rehabilitation Program under which it may make deferred-payment loans to sponsors for the rehabilitation or the acquisition and rehabilitation of rental housing developments to be occupied by eligible households of very low and low income. The department may make such loans in an amount necessary to acquire and rehabilitate a rental housing development and to provide affordable rents, when considered in conjunction with other financing on or assistance to such development, for eligible households of very low and low income for the term of the regulatory agreement pursuant to subdivision (d). In no event, may the amount of the loan exceed 90 percent of the combined amount of the fair market value of the rental housing development and the cost of rehabilitation work to be undertaken. However, with respect to a nonprofit sponsor or local public entity, the department may loan up to 100 percent of such combined amount.
(b)  In making a loan pursuant to this section, the department may disburse funds in a manner and in accordance with a schedule which ensures the economic feasibility of the rental housing development and the completion of the rehabilitation work and which protects the interests of the state.
(c)  Prior to making a loan commitment pursuant to this section, the department shall do all of the following:
(1)  Inspect the rental housing development to be assisted pursuant to this section to determine the economic feasibility of rehabilitating such development.
(2)  Approve a plan submitted by the sponsor which includes a plan for occupancy of the development, a description of the nature and costs of rehabilitation to be undertaken, and projections as to rental levels in such development.
(d)  Prior to disbursement of any funds pursuant to this section, the department shall enter into a regulatory agreement with the sponsor which provides for the limitation on profits in the operation of the rental housing development. When the sponsor is not a nonprofit sponsor or a local public entity, the regulatory agreement with the sponsor shall limit the distribution of the sponsor’s earnings to an annual amount no greater than 8 percent of the sponsor’s actual investment (excluding unaccrued liabilities of the sponsor) in the rental housing development. The regulatory agreement shall also set standards for tenant selection to ensure occupancy by eligible households of very low and low income for the term of such agreement, govern the terms of occupancy agreements, and contain other provisions necessary to carry out the purposes of this section. Upon recordation of the agreement in the office of the county recorder in the county in which the real property subject to such agreement is located, the agreement shall be binding upon the sponsor and successors in interest for the original term of the loan, as determined by the department, but for a period of not more than 30 years.
(e)  The department shall fix and alter, from time to time, a schedule of rents on each development as may be necessary to provide residents of the rental housing development with affordable rents, to the extent consistent with the financial integrity of such development. No sponsor shall increase the rent on any unit without the prior permission of the department which shall be given only if the sponsor affirmatively demonstrates that such increase is required to defray necessary operating costs or to avoid jeopardizing the fiscal integrity of the housing development. However, in the event that the department does not act upon a request for a rent increase within 60 days from documented receipt of the request, such increase shall be deemed approved.
(f)  The department may annually inspect rental housing developments assisted pursuant to this section to ensure compliance with the terms of the regulatory agreement and may require such audits, financial statements, and other documents as are necessary to ensure compliance with the terms of the regulatory agreement and to ensure occupancy by eligible households of very low and low income.
(g)  With respect to rental housing developments rehabilitated pursuant to this section:
(1)  The department shall make payments and shall provide advisory assistance to persons and families permanently displaced as a result of such rehabilitation in accordance with the requirements of subdivisions (b) and (e) of Section 7265.3 of the Government Code.
(2)  The department shall provide affordable temporary housing to eligible households of very low and low income who reside in a rental housing development prior to rehabilitation or acquisition and rehabilitation of such housing development, who are required to move during the period of rehabilitation, and who occupy a unit in such development upon completion of rehabilitation. Such temporary housing shall be provided until units in the rental housing development are available for occupancy by such households.
(3)  For the purposes of subdivision (f) of Section 7265.3 of the Government Code, moneys appropriated for purposes of this chapter on and after the effective date of the amendments to this section enacted by the Statutes of the 1983 Regular Session of the Legislature, and by Chapter 1043 of the Statutes of 1979, whether or not reappropriated for transfer to the Housing Rehabilitation Loan Fund, shall constitute available state funds.
(4)  Eligible households of very low and low income displaced as a result of rehabilitation pursuant to this section shall be accorded first priority in occupying units in the rental housing development, from which they were displaced, subsequent to rehabilitation.
(Amended by Stats. 1983, Ch. 682, Sec. 2. Effective September 11, 1983.)