Virginia Administrative Code › Title 13 - HOUSING › Agency 10 - VIRGINIA HOUSING DEVELOPMENT AUTHORITY › Chapter 20 - RULES AND REGULATIONS FOR MULTI-FAMILY HOUSING DEVELOPMENTS › Section 13VAC10-20-130 - Modification of regulatory controls and mortgage loan

Current through Register Vol. 40, No. 24, July 15, 2024
If the executive director determines that (i) the mortgagor
				  of any development is not receiving a sufficient financial return from the
				  operation thereof as a result of a reduction in the amount of federal tax
				  benefits available to the development (generally, at least 10 years, in the
				  case of new construction, or five years, in the case of substantial
				  rehabilitation, after the date of initial occupancy), (ii) the reserves of such
				  development are and, after any action taken pursuant to this section, will
				  continue to be adequate to assure its proper operation and maintenance and
				  (iii) the rental and other income is and, after any action taken pursuant to
				  this section, will continue to be sufficient to pay the debt service on the
				  mortgage loan and the operating expenses of the development (including required
				  payments to reserve accounts), then he may agree to one or more of the
				  following modifications to the regulatory controls of the authority:
1. Rents may be thereafter established and
				changed by the mortgagor without the prior approval of the authority, subject
				to (i) such restrictions as he shall deem necessary to assure that the rents
				shall be affordable to persons and families to be served by the development,
				(ii) compliance by the mortgagor with the provisions in
				13VAC10-20-20, and (iii) such
				limitations on rent increases to existing residents as he shall deem necessary
				to prevent undue financial hardship to such residents;
2. Subject to prior approval by the board,
				any limitation on annual dividend distributions may be increased or eliminated,
				as determined by him to be necessary to provide an adequate financial return to
				the mortgagor without adversely affecting the financial strength or proper
				operation and maintenance of the development; and
3. The mortgagor may be given the right to
				prepay the mortgage loan on the date 20 years after the date of substantial
				completion of the development as determined by the executive director (or such
				later date as shall be necessary to assure compliance with federal laws and
				regulations governing the tax exemption of the notes or bonds issued to finance
				the mortgage loan), provided that the mortgagor shall be required to pay a
				prepayment fee in an amount described in
				13VAC10-20-120, and provided
				further that such right to prepay shall be granted only if the prepayment
				pursuant thereto would not, in the determination of the executive director,
				result in a reduction in the amount or term of any federal subsidy or
				assistance for the development. The executive director may require that the
				mortgagor grant to the authority (i) a right of first refusal upon a proposed
				sale of the development which would result in an exercise by the mortgagor of
				its right, as described above, to prepay the mortgage loan and (ii) an option
				to purchase the development upon an election by the mortgagor otherwise to
				exercise its right, as described above, to prepay the mortgage loan, which
				right of first refusal and option to purchase shall be effective for such
				period of time and shall be subject to such terms and conditions as the
				executive director shall require.
The foregoing modifications shall be made only to the extent
				  permissible under and consistent with applicable federal laws and regulations
				  and any agreements governing federal subsidy, assistance or mortgage
				  insurance.
Upon a determination by the executive director as described
				  in (i), (ii) and (iii) above in this section, the authority may also approve an
				  increase in the principal amount of its mortgage loan or a restructuring of
				  such mortgage loan (such as a modification of the mortgage loan by conversion
				  thereof into an obligation guaranteed by a federal agency or instrumentality),
				  subject to such terms and conditions as the authority may require, including
				  (but not limited to) one or more of the following:
1. Compliance with the conditions and
				limitations in the Act and the authority's rules and regulations and with any
				applicable federal law and regulations and any agreements governing federal
				subsidy, assistance or mortgage insurance;
2. The ability of the authority to sell bonds
				to finance any mortgage loan increase in amounts, at rates and under terms and
				conditions satisfactory to the authority (applicable only if any such mortgage
				loan increase is to be financed by the authority from proceeds of its
				bonds);
3. A determination by the
				authority that the rents shall remain affordable to persons and families of low
				and moderate income to be served by the development and that the mortgage loan
				increase or restructuring and any increase in debt service will have no
				material adverse effect on the financial security of its mortgage loan or
				proper operation and maintenance of the development;
4. If the development receives federal
				subsidy or assistance or is subject to federal mortgage insurance, assurances
				satisfactory to the authority that such mortgage loan increase or restructuring
				and any increase in debt service are permissible under applicable federal law
				and regulations and will not adversely affect the term or amount of any federal
				subsidy or assistance or the coverage of any mortgage insurance and that any
				federal subsidy or assistance may be applied to pay any increase in debt
				service;
5. Such terms and
				conditions as the authority shall require in order to protect the security of
				its mortgage loan; to reimburse the authority for costs and expenses that may
				result from such mortgage loan increase or restructuring; to comply with
				covenants and agreements with, and otherwise to protect the interests of, the
				holders of its bonds issued to finance the mortgage loan or any increase
				thereof; and to carry out its public purpose.
Upon a determination as described in (i), (ii) and (iii)
				  above in this section, the executive director may also approve a release of
				  moneys held in the reserve funds of the development in such amount as he shall
				  determine to be in excess of the amount required to assure the proper operation
				  and maintenance of the development.
The executive director may require that all or a portion of
				  the proceeds from any increase or restructuring of the mortgage loan or from
				  any release of reserve funds be applied, in such manner and amount and on such
				  terms and conditions as he shall deem necessary or appropriate, for
				  improvements to the development or for providing additional housing for persons
				  and families of low and moderate income.
The authorizations in this section for modifications of
				  regulatory controls, mortgage loan increases and restructuring, and releases of
				  reserve funds shall be cumulative and shall not be exclusive of each other.
				  Accordingly, the authority, in its discretion, may elect to exercise for any
				  development one or more or all of such authorizations.