Header:
CALIFORNIA CODE ANNOTATED
HEALTH AND SAFETY CODE
Division 31. Housing and Home Finance
Part 2. Department of Housing and Community Development
Chapter 6.5. Deferred-Payment Rehabilitation Loans
Date:
08/31/2009
Document:
§ 50671.5. Financial assistance for rehabilitation of rental housing developments
For the purpose of providing disaster relief to owners of rental housing and the tenants residing in rental housing that was damaged or destroyed as a result of a natural disaster as defined by Section 8680.3 of the Government Code, resulting in a state of emergency proclaimed by the Governor pursuant to Section 8625 of the Government Code, financial assistance may be provided to disaster victims as prescribed in this chapter under the following special conditions, which shall prevail over conflicting provisions of this chapter and administrative regulations:
(a)
(1) Funds may be used to make loans for (A) repair or (B) refinancing in conjunction with repair, of rental housing developments that were damaged or destroyed as a result of the natural disaster. For purposes of this section, "repair" includes reconstruction.
(2) The loans shall only be made in a city, county, or city and county proclaimed by the Governor to be in a state of disaster to assist rental housing developments that are damaged or destroyed by a natural disaster and only to the extent that other federal and state resources, private insurance proceeds, or private institutional lending sources, are not available or do not provide the assistance or coverage needed to rehabilitate or reconstruct that housing.
(3) The loans may be provided (A) to persons who do not qualify for loan assistance from an agency of the United States for repair of the damage caused by a natural disaster, or, (B) to the extent that federally provided or assisted financing may be insufficient to accomplish the necessary repair or would require rent increases above the rent charged for the units prior to the disaster.
(4) As to damaged rental housing, the loan funds shall be used to correct serious, life-threatening violations of the state or local building code or housing standards which are required to be corrected prior to occupancy, and to bring the property into compliance with seismic safety standards. If reconstruction is precluded on the original project site due to documented soil, geological, or other conditions which cannot be mitigated at a reasonable cost or the cost of the repair or reconstruction would exceed 110 percent of the value after reconstruction, the department may approve reconstruction on a comparable site in the immediate neighborhood. However, loan funds shall not be used for acquisition of real property.
(b)
(1) Rental housing developments, for this purpose, shall include, but not be limited to, multifamily rental dwellings, apartments, residential hotels, rental mobilehomes, mobilehome parks, group homes for senior citizens or the disabled, buildings of mixed residential rental and commercial use, and buildings of mixed owner-occupant and rental use, that are made available for permanent residency of tenants. Rental housing developments shall contain five or more units. For buildings of mixed residential rental and commercial use, funds may be used for the repair of commercial as well as residential space.
(2) To be eligible for funds under this section, the owner of any rental housing development set forth above, shall have been the owner of record at the time of the natural disaster.
(c) In addition to the other requirements of this chapter, the department may require terms and conditions as it determines necessary to meet the needs of the disaster area and its victims, to ensure the fiscal integrity of the rental housing development, and to protect the interests of the state. The department shall require that priority in occupancy in any unit assisted pursuant to this section shall be given first to occupants of rental units assisted pursuant to this section who were displaced by the natural disaster or the resulting repair of the assisted rental units. Second priority shall be given to other persons who were displaced from housing as a result of the natural disaster.
(d) In allocating funds, the department shall consider the availability of other resources to assist rental housing and the occupants of that rental housing and shall give priority to those applicants in jurisdictions with the greatest housing need resulting from the disaster and the fewest resources to address those needs. In allocating funds, the department shall also consider the availability of program funds and may give first priority to a loan request for repair only, and second priority to a loan request for refinancing and repair.
(e)
(1) The department may waive the maximum loan amounts and per-unit loan amounts established by regulation as it determines necessary to serve the disaster victims. Loans made pursuant to this section for repair shall have a term of up to 20 years. Upon the request of the borrower, the department may permit repayment of the principal amount of any loan provided under this section, or of any interest on that loan, before the end of the loan term. This section shall not be construed to authorize any deferrals on the payment of principal or interest, unless the department determines that temporary deferral is necessary for fiscal integrity or to prevent foreclosure. The deferral period may be extended for an additional 12 months if the extension is authorized by the director.
(2) The department may set interest rates as specified in subdivision (m) of Section 50662.7.
(f) A loan shall not exceed the combined costs of refinancing existing indebtedness and repair. However, the total secured debt in a superior position to the department's loan, plus the department's loan, shall not exceed 100 percent of the after-repair value of the property, except that the department may waive this limitation in individual cases when necessary to ensure correction of serious, life-threatening violations of the state or local building code or housing standards which are required to be corrected prior to occupancy, seismic safety standards, and general property improvements relating to these standards, pursuant to subdivision (a).
(g) Prior to full loan approval, the department may make loans not exceeding five thousand dollars ($5,000) per loan to pay for the costs of predevelopment activity which must be undertaken prior to making eligible repairs if, in the opinion of the department, the borrower is unable to pay for these costs in advance of full loan approval. These loans shall bear interest at the rate of 6 percent simple interest per annum and shall be evidenced by a promissory note secured by a deed of trust. At the time of full loan approval, the predevelopment loan shall be canceled, and the principal amount of the loan and all accrued interest shall be included in the amount of the full loan and shall be subject to the same interest rate and terms and conditions as the full loan. For purposes of computing the maximum loan amount, the amount of the predevelopment loan shall be included.
(h) Tenants of rental housing developments repaired with assistance provided under this section who are displaced as a result of either the natural disaster or the repair work, or both the natural disaster and the subsequent repair work, shall be entitled to relocation benefits pursuant to, and subject to, the requirements of Section 7265.3 of the Government Code. Sponsors of assisted rental housing developments shall be responsible for providing the benefits and assistance. The costs of the benefits and the assistance provided to tenants shall be eligible for funding by a loan provided pursuant to this section. Benefits and assistance provided hereunder shall not duplicate benefits or assistance for temporary housing received by tenants from any other public source or from insurance proceeds.
(i) The department may make loans directly to owners of rental housing, or contract for the administration of loans under this section with entities that it determines to have the necessary experience to successfully administer the loan program, including, but not limited to, local public agencies and private organizations. The department may authorize, under that contract, the payment of expenses incurred by the entities in administering the loan program and may prescribe the conditions pursuant to which the entities shall administer the loans.
(j) To the extent that any housing unit or other structure that was damaged or destroyed is reconstructed pursuant to this section with substantially the same number of units, it shall be deemed to be "existing housing" for purposes of subdivision (d) of Section 37001.5.
(k) The department may set aside or use funds that are made available for the purposes of this section for the purpose of curing or averting a housing sponsor's default on the terms of any loan or other obligation where that default would jeopardize the financial integrity of a rental housing development or the department's security in the rental housing development assisted pursuant to this section. The payment or advance of funds by the department pursuant to this subdivision shall be exclusively within the department's discretion, and no person shall be deemed to have any entitlement to the payment or advance of those funds. The amount of any funds expended by the department pursuant to this subdivision shall be added to the loan amount secured by the deed of trust and shall be payable to the department upon demand.
(l) Any rule, policy, or standard of general application employed by the Department of Housing and Community Development in implementing the provisions of this section shall not be subject to the requirements of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code.
(m) The department shall adopt regulations establishing terms and conditions upon which repair loans may be made. These regulations shall be made available to the public by the department.
(n) Fund allocations made pursuant to this section shall not be subject to review or approval by the Local Assistance Loan and Grant Committee of the Department of Housing and Community Development operating pursuant to Subchapter 1 (commencing with Section 6900) of Chapter 6.5 of Title 25 of the California Code of Regulations.
(o)
(1) In order to be eligible for one or more loans pursuant to this section, the borrower shall agree to all of the following:
(A) All buildings shall be connected to the foundation systems except those of unreinforced masonry wall construction as necessary to meet the seismic requirements of the 1973 Edition of the Uniform Building Code of the International Conference of Building Officials in a manner approved by the department, which may include seismic strengthening of foundation cripple walls, and affixing or bolting sill plates to the foundation.
(B) For all buildings of unreinforced masonry wall construction, all repairs and seismic retrofits shall comply with earthquake hazard mitigation programs established pursuant to Chapter 12.2 (commencing with Section 8875) of Division 1 of Title 2 of the Government Code.
(C) All water heaters shall be braced, anchored, or strapped to resist falling or horizontal displacement due to earthquake motion.
(2) The loans shall include an amount sufficient to meet the requirements of paragraph (1).
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