California Code of Regulations › Title 25 - Housing and Community Development › Division 1 - Housing and Community Development › Chapter 7 - Department of Housing and Community Development Programs › Subchapter 16 - Family Housing Demonstration Program Regulations-Proposition 84 › Article 2 - Program Requirements › Section 8123 - Limits on Distributions

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Sponsors other than governmental entities
					 shall be allowed to distribute earnings from the assisted portion of the rental
					 housing development in an annual amount no greater than 8 percent of its actual
					 investment in the assisted portion. A sponsor shall not be subject to any
					 limitation on the amount of distribution it receives from the nonassisted
					 portion of the rental housing development. For purposes of this section, the
					 assisted portion includes assisted units; the prorated share of common space,
					 determined pursuant to section 8114(e)(2); and the child care center, if
					 program funds are used to develop all or any portion of the child care center.
					 The nonassisted portion includes units which are not assisted units; the
					 prorated share of common space attributable to those units, determined pursuant
					 to section 8114(e)(2); any commercial space; and the child care center, if no
					 program funds are used to develop the child care center.
(b) Except as noted in subdivision (c),
					 actual investment, for the purposes of this section, includes cash and the
					 market value of property contributed to the assisted portion of the project by
					 the sponsor. For projects receiving state or federal low-income housing tax
					 credits, the amount of actual investment recognized by the department for the
					 purpose of calculating allowable distributions shall not exceed fifteen percent
					 of the total project development costs of the assisted portion of the project.
					 Actual investment does not include any payments of project funds to the
					 sponsor. In syndicated projects, actual investment shall be net syndication
					 proceeds as defined in section 8124.
(c) For a project involving only
					 rehabilitation and no acquisition or refinancing, actual investment is
					 determined as follows: the market value of the rental housing development prior
					 to rehabilitation, as determined in an appraisal, less outstanding debt prior
					 to rehabilitation, plus any cash contributions to the project made by the
					 sponsor, multiplied by the ratio of the assisted portion to the entire rental
					 housing development.
(d) A sponsor
					 may not accumulate distributions from year to year. A sponsor may deposit all
					 or a portion of the amount permitted for distributions into a project account
					 for distribution in subsequent years. Such future distributions shall not
					 reduce the otherwise permitted distribution in those subsequent
					 years.
(e) In its initial operating
					 budget, the sponsor shall demonstrate to the department the amount of the
					 sponsor's actual investment on which the allowable distribution will be
					 calculated. The actual investment amount shall be increased in subsequent
					 budgets upon a showing of additional actual investment advanced by the
					 sponsor.
(f) Distributions shall be
					 permitted only after the sponsor submits a complete annual report and operating
					 budget and the department determines that the report and budget demonstrate
					 compliance with all program requirements for the applicable year. Circumstances
					 under which no distributions shall be made include:
(1) when written notice of default has been
					 issued by any entity with an equitable or beneficial interest in the rental
					 housing development;
(2) when the
					 department determines that the sponsor has failed to comply with the
					 department's written notice of any reasonable requirement for proper
					 maintenance or operation of the rental housing development;
(3) if all currently due and payable debt
					 service and operating expenses have not been paid; and
(4) if the replacement reserve account,
					 operating reserve account, or any other reserve accounts are not fully funded
					 pursuant to section 8139 and the Regulatory Agreement.