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CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

94

Introduced by Assembly Member Quirk-Silva

(Coauthor: Assembly Member Haney)

February 18, 2025

An act to amend Section 50607 of the Health and Safety Code, relating to housing.

Vote: majority   Appropriation: no   Fiscal committee: yes   Local program: no

LEGISLATIVE COUNSEL’S DIGEST

Existing law authorizes the Department of Housing and Community Development, upon appropriation, to make loans or grants, or both loans and grants, to rehabilitate, capitalize operating subsidy reserves for, and extend the long-term affordability of department-funded housing projects that have an affordability restriction that has expired, that have an affordability restriction with a remaining term of less than 10 years, or are otherwise at risk of conversion to market-rate housing.

This bill would also authorize the department to make those loans and grants to rehabilitate, capitalize operating subsidy reserves for, and extend the long-term affordability of housing projects that qualify as a challenged development, as defined. The bill would require the department to grant priority for these loans and grants to housing projects that are department funded and have an affordability restriction that has expired or have a remaining term of less than 10 years, or are otherwise at risk for conversion. conversion, as defined. The bill would authorize the department to establish separate selection and underwriting standards for these projects and projects that are challenged developments. The bill would require, prior to allocating program funds, the department to evaluate the above-described developments to help inform program guidelines and allocation decisions. The bill would require the department to allocate a certain percentage at least 10% of funds of every round to challenged developments that are not department funded based on relative need and the availability of resources. department-funded, as specified.

The people of the State of California do enact as follows:

SECTION 1.

Section 50607 of the Health and Safety Code is amended to read:

50607.

(a) (1) Upon appropriation by the Legislature for purposes of this chapter, the department may make loans or grants, or both loans and grants, to rehabilitate, capitalize operating subsidy or replacement reserves for, and extend the long-term affordability of housing projects that meet either of the following criteria:

(A) The housing project is department funded and has an affordability restriction that has expired or has a remaining term of less than 10 years, or is otherwise at risk for of conversion.

(B) The housing project is a challenged development, as defined in subdivision (f).

(2) The department shall grant priority to developments that meet the requirements described in subparagraph (A) of paragraph (1).

(3) The department shall allow developments financed pursuant to this chapter to layer program funds with other federal, state, and local resources.

(4) Prior to allocating program funds, the department shall evaluate and analyze the preservation and rehabilitation needs of department-funded developments that meet the requirements described in subparagraphs (A) and (B) of paragraph (1) to help inform program guidelines and allocation decisions.

(5) The department shall allocate a certain percentage of funds to challenged developments that are not department-funded based on relative need and the availability of resources. at least 10 percent of funds of every round to challenged developments that are not department funded. The department may allocate a higher percentage of funds to challenged developments that are not department funded depending on overall application demand for and the availability of Portfolio Reinvestment Program resources under this chapter. The department may allocate a portion of the 10 percent to department-funded projects if the number of applications for funding from nondepartment-funded developments is not sufficient.

(b) Notwithstanding any other law, if the department makes a loan or grant pursuant to this chapter to a project that has an existing loan issued by the department for a multifamily housing project, the department may additionally approve an extension of the existing loan, the reinstatement of a qualifying unpaid matured loan, the subordination of a loan made by the department to new indebtedness, or an investment of tax credit equity for purposes of funding necessary rehabilitation and extending the affordability of the project without complying with the requirements of Chapter 3.9 (commencing with Section 50560). The department may also forgive some or all of the accrued interest on the existing department loan if necessary to facilitate the department’s new rehabilitation loan.

(c) The department may establish loan processing or transaction fees for loans or grants authorized by this chapter, as necessary, in an amount not to exceed the amount necessary to generate sufficient revenue to cover the cost of processing loan transactions under this chapter. However, the department may waive fees to the extent necessary for project feasibility.

(d) The department may charge a monitoring fee in lieu of the required 0.42 percent per annum loan payments required by subdivision (a) of Section 50608. The department may capitalize fees authorized by this subdivision, at its discretion, as necessary to ensure the financial feasibility and long-term affordability of the project. All moneys set aside by the department to capitalize a monitoring fee pursuant to this subdivision shall be deposited in the Housing Rehabilitation Loan Fund and, notwithstanding Section 13340 of the Government Code, are continuously appropriated to the department for the purposes of the default reserve set forth in Section 50609.

(e) The department may adopt guidelines to implement this chapter. Any guidelines adopted pursuant to this section are hereby exempted from the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).

(f) For purposes of this chapter, “challenged chapter:

(1) “Challenged development” means a development that meets all of the following criteria:

(A) The development is at least 15 years old.

(B) The development either:

(i) Serves households of low, very low income income, or extremely low income, such that the average maximum household income as restricted, pursuant to an existing regulatory agreement with a federal, state, county, local, or other governmental agency, is not more than 45 percent of the area median gross income, as determined under Section 42 of the Internal Revenue Code, relating to low-income housing credit, adjusted by household size. agency.

(ii) Is financed under Section 514 or 521 of the National Housing Act of 1949 (42 U.S.C. Sec. 1485).

(C) The development has insufficient access to private or other public resources to complete substantial rehabilitation, as determined by the department.