Illinois Administrative Code › Title 47 - HOUSING AND COMMUNITY DEVELOPMENT › Part 310 - MULTIFAMILY RENTAL HOUSING MORTGAGE LOAN PROGRAM › Subpart D - MORTGAGE LOAN › Section 310.403 - Equity and Distributions

Current through Register Vol. 48, No. 28, July 12, 2024
a)
				Right to Distributions. As provided in the Act, an Owner shall have the right,
				commencing on the Initial Closing Date, to make annual Distributions in an
				amount not to exceed 6% of its Equity in a Development, except as otherwise
				provided pursuant to Sections
				310.801
				through
				310.805,
				except that, if a Distribution cannot be made as provided in subsections (b)
				and (c) of this Section, an Owner may cumulate the right to make a
				Distribution. An Owner's right to a Distribution shall begin to cumulate on the
				Initial Closing Date. In any partial fiscal year in which an Owner is entitled
				to make a Distribution, the amount of a Distribution shall be calculated pro
				rata based on the number of days since the closing of the Mortgage
				Loan.
b) Source of Distributions.
				An Owner may make Current and Cumulative Distributions out of Surplus Cash
				and/or Residual Receipts. If Surplus Cash or Residual Receipts are unavailable
				in a given fiscal year, an Owner shall make no Current Distribution, but the
				right to make a Distribution shall cumulate. If Surplus Cash and/or Residual
				Receipts are insufficient in a given fiscal year to make a Distribution in an
				amount equal to 6%, or as otherwise permitted in Sections
				310.801
				through 310.805, of an Owner's Equity in a Development, an Owner may distribute
				all available Surplus Cash and/or Residual Receipts and cumulate the right to
				make the rest of the Distribution in future years when and if Surplus Cash
				and/or Residual Receipts are available.
c) Timing of Distributions. No Distribution
				shall be made until after the Final Closing Date. Even if Surplus Cash and/or
				Residual Receipts are available, the initial and all subsequent Distributions,
				including Cumulative Distributions, may be made only after the Authority has
				approved the Development's annual financial report (see Section
				310.306
				); the Development has an approved Development budget for the next fiscal year;
				the Owner has complied with all outstanding notices of requirements for proper
				maintenance and operation of the Development; the Owner has cured any defaults
				or breaches of applicable Rules, contracts and agreements; and the Authority
				has issued its written authorization of the Distribution.
d) Amount of Equity. As required by the Act,
				the Authority shall establish an Owner's Equity in a Development on or after
				the Final Closing Date. In no event shall the amount of the Equity be
				calculated to include any grants or other funds not originating with the Owner.
				Once established by the Authority, the amount of an Owner's Equity shall remain
				constant so long as the Mortgage Note and Mortgage are outstanding on the
				Development, unless adjusted by resolution of the Members based on the criteria
				set forth in subsection (e).
e)
				Increase in Amount of Equity
1) If an Owner
				agrees either to preserve the existing income and rental restrictions of a
				Development for a period not less than five years (starting from the later of
				the date on which the owner acquires the right to prepay its Mortgage Loan or
				the date on which the increase in Equity is granted) or create an equivalent
				number of additional units of housing with similar income and rental
				restrictions, the Authority, by resolution of its Members, may increase Owner's
				Equity to an amount not to exceed the difference between the unpaid balance of
				the Mortgage Loan and the Development's appraised value at the time of the
				request by the Owner for an Equity increase. The appraisal shall be based on
				the Development's highest and best use and be conducted by an appraiser
				acceptable to the Authority. For purposes of the increase in Owner's Equity,
				the Development's appraised value may be updated by the Owner no more
				frequently than every five years after an increase is granted under this
				subsection (e) and the amount of Owner's Equity may be adjusted to reflect the
				updated appraisal. The cost of the appraisal shall not be a Development
				expense.
2) It shall be a condition
				of the Authority increasing Owner's Equity that:
A) the Authority give its prior written
				consent to any increase in the rental charges for the Development;
				and
B) the Authority determine, in
				its sole discretion, that:
i) the Reserve Fund
				for Replacements for the Development is sufficient to pay the costs set forth
				in Section
				310.405
				for the five years (starting from the later of the date on which the owner
				acquires the right to prepay its Mortgage Loan or the date on which the
				increase in Equity is granted), as determined by a physical needs assessment
				performed by a company acceptable to the Authority; the cost of such physical
				needs assessment shall not be a Development expense; and
ii) the amount needed to complete any
				deferred maintenance on the Development is less than one year's funding
				requirement for the Reserve Fund for Replacements.
3) The Authority shall require the
				Owner to execute an agreement evidencing the increase in Equity and containing
				the Owner's agreement either to preserve the existing income and rental
				restrictions of the Development as affordable for low and moderate income for a
				period not less than five years (starting from the later of the date on which
				the owner acquires the right to prepay its Mortgage Loan or the date on which
				the increase in Equity is granted) or create an equivalent number of additional
				units of housing with similar income and rental restrictions.
4) Any increase in Owner's Equity approved
				pursuant to this Section shall conform to any relevant federal statutes, rules
				or regulations.