37915-37925

HEALTH AND SAFETY CODE
SECTION 37915-37925




37915.  A local agency may determine the location and character of
any residential rehabilitation to be financed under the provisions of
this part and may lend financial assistance to any participating
party for the purpose of financing residential rehabilitation in
areas designated as residential rehabilitation areas by the local
agency, or for the purpose of financing residential rehabilitation
outside such areas, as provided in Section 37922.1 or 37924.5.



37915.5.  In developing criteria for selection of residential
rehabilitation areas pursuant to subdivision (a) of Section 37922,
the local agency shall analyze the need for senior citizen housing
within its jurisdiction and shall, at a public hearing, consider
criteria which give priority to rehabilitation of senior citizen
housing.



37916.  The local agency may issue bonds and bond anticipation notes
of the local agency for the purpose of financing residential
rehabilitation authorized by this part and for the purpose of funding
or refunding such bonds or notes.


37917.  The local agency may fix fees, charges, and interest rates
for financing residential rehabilitation and may from time to time
revise such fees, charges, and interest rates to reflect changes in
interest rates on the local agency's bonds, losses due to defaults,
changes in loan servicing charges, or other expenses related to
administration of the residential rehabilitation financing program.
Any change in interest rate shall conform to the provisions of
Section 1916.5 of the Civil Code, except that paragraph (3) of
subdivision (a) of Section 1916.5 shall not apply and that the
"prescribed standard" specified in Section 1916.5 shall be
periodically determined by the governing body of the local agency
after hearing preceded by public notice to affected parties, and
shall reflect changes in interest rates on the local agency's bonds,
losses due to defaults, and bona fide changes in loan servicing
charges related to the administration of a program under the
provisions of this part.
   The local agency may purchase loans made to participating parties
by qualified mortgage lenders without premium, if the loan was
approved for such purpose prior to consummation of the loan and is of
the character and on the terms previously established by the local
agency for the residential rehabilitation program. The local agency
may fix fees for servicing of such loans by qualified mortgage
lenders, or may itself undertake collection, or may contract to pay
any person, partnership, association, corporation, or public agency
for such collection and disbursal. In determining fees and charges
for financing and servicing of loans by qualified mortgage lenders,
the local agency shall endeavor to obtain participation of not less
than two qualified mortgage lenders, and shall apply the same fees
and charges to all participating qualified mortgage lenders.
   The local agency may hold deeds of trust or mortgages, including,
but not limited to, mortgages insured under Title II of the National
Housing Act (12 U.S.C., 1707 et seq.), as security for financing
residential rehabilitation and may pledge or assign the same as
security for repayment of bonds issued pursuant to this part. The
local agency may establish the terms and conditions for the financing
of residential rehabilitation undertaken pursuant to this part, and
may require that any note evidencing a loan made to a participating
party be insured or guaranteed, in whole or in part, by an
instrumentality of the United States or of the State of California or
by a person licensed to insure mortgages in this state.
Notwithstanding any other provision of law, any person licensed to
insure mortgages or to write residential mortgage guarantee insurance
in the state shall be authorized to insure or guarantee, in whole or
in part, any loan made for residential rehabilitation, excluding
residential infill construction, pursuant to and in accordance with
the provisions of this part, and such insurance shall not exceed 95
percent of the after-rehabilitation value of the property subject to
such loan. Such insurance may include insurance of construction
advances for purposes of residential rehabilitation and need not
require completion of said residential rehabilitation for payment of
claims thereunder.
   Such notes, deeds of trust, or mortgages may be assigned to, and
held on behalf of the local agency by, any bank or trust company
appointed to act as trustee or fiscal agent by the local agency in
any indenture or resolution providing for issuance of bonds pursuant
to this part.
   Notwithstanding Section 711 of the Civil Code, the full amount
owed on any loan for residential rehabilitation made pursuant to this
part shall be due and payable upon sale or other transfer of
ownership of the property subject to such rehabilitation, except that
assignment of the loan to the buyer or transferee may be permitted
where required by the federal or state insurer or in cases of
hardship, which shall be defined, and procedures established for the
determination of their existence, in the guidelines established
pursuant to subdivision (c) of Section 37922.



37918.  The local agency may employ engineering, architectural,
accounting, collection, or other services, including services in
connection with the servicing of loans made to participating parties,
as may be necessary in the judgment of the local agency for the
successful financing of such residential rehabilitation. The local
agency may pay the reasonable costs of consulting engineers,
architects, accountants, and construction experts, if, in the
judgment of the local agency, such services are necessary to the
successful financing of any residential rehabilitation and if the
local agency is not able to provide such services. The local agency
may employ and fix the compensation of financing consultants, bond
counsel, and other advisers as may be necessary in its judgment to
provide for the issuance and sale of any bonds or bond anticipation
notes of the local agency.



37919.  In addition to all other powers specifically granted by this
part, the local agency may do all things necessary or convenient to
carry out the purposes of this part.



37920.  Revenues and the proceeds of mortgage insurance or guarantee
claims, if any, shall be the sole source of funds pledged by the
local agency for repayment of its bonds. Bonds issued under the
provisions of this part shall not be deemed to constitute a debt or
liability of the local agency or a pledge of the faith and credit of
the local agency but shall be payable solely from revenues and the
proceeds of mortgage insurance or guarantee claims, if any. The
issuance of bonds shall not directly, indirectly, or contingently
obligate the legislative body to levy or pledge any form of taxation
or to make any appropriation for their payment.




37921.  All residential rehabilitation shall be constructed or
completed subject to the rules and regulations of the local agency. A
local agency may acquire by deed, purchase, lease, contract, gift,
devise, or otherwise any real or personal property, structures,
rights, rights-of-way, franchises, easements, and other interests in
lands necessary or convenient for the financing of residential
rehabilitation, upon such terms and conditions as it deems advisable,
and may lease, sell, or dispose of the same in such manner as may be
necessary or desirable to carry out the objectives and purposes of
this part.


37922.  Prior to the issuance of any bonds or bond anticipation
notes of the local agency for residential rehabilitation, the local
agency shall by ordinance or resolution adopt a comprehensive
residential rehabilitation financing program which shall include, but
is not limited to, the following items:
   (a) Criteria for selection of residential rehabilitation areas by
the local agency which shall include findings by the local agency
that:
   (1) There are a substantial number of deteriorating structures in
the area which do not conform to community standards for decent,
safe, sanitary housing.
   (2) Financial assistance from the local agency for residential
rehabilitation is necessary to arrest the deterioration of the area.
   (3) Financing of residential rehabilitation in the area is
economically feasible.
   However, these findings are not required when the residential
rehabilitation area is a redevelopment project area to which the
provisions of the Community Redevelopment Law (Part 1 (commencing
with Section 33000)) apply.
   (b) Procedures for selection of residential rehabilitation areas
by the local agency which shall include:
   (1) Provisions for citizen participation in selection of
residential rehabilitation areas.
   (2) Provisions for a public hearing by the governing body of the
local agency prior to selection of any particular residential
rehabilitation area by the local agency.
   (c) A commitment that, subject to budgeting and fiscal limitations
of the local agency, rehabilitation standards will be enforced in 95
percent of the residences in each residential rehabilitation area.
   (d) Guidelines for financing rehabilitation of existing
residences, which shall be subject to the following limitations:
   (1) Unless insured or guaranteed in whole or in part by an
instrumentality of the United States or the State of California or by
a person licensed to insure loans in this state, outstanding loans
on the property to be rehabilitated, including the amount of the
loans for rehabilitation, shall not exceed 80 percent of the
anticipated after-rehabilitation value of the property to be
rehabilitated, except that the local agency may authorize loans,
which are neither insured nor guaranteed, of up to 95 percent of the
anticipated after-rehabilitation value of the property if such loans
are made for the purpose of rehabilitating the property for
residential purposes, there is demonstrated need for such higher
limit, and there is a high probability that the value of the property
will not be impaired during the term of the loan. Outstanding loans
on property to be rehabilitated may be authorized up to 97 percent of
the anticipated after-rehabilitation value of the property, if the
person to whom the loan is made is of low income, as defined in
Section 50093. A nonprofit corporation incorporated pursuant to Part
1 (commencing with Section 9000) of Division 2 of Title 1 of the
Corporations Code or a cooperative housing corporation, as defined in
subdivision (a) of Section 17265 of the Revenue and Taxation Code,
may be authorized a loan not exceeding either 98 or 100 percent of
the estimated after-rehabilitation value or of its total development
cost, according to the standards for nonprofit housing sponsors set
forth in Section 50958, if the dwelling units within the residence
rehabilitated with financing under this part are committed for the
period during which the loan is outstanding for occupancy by persons
or families who are eligible for financial assistance specifically
provided by a governmental agency for the benefit of occupants of the
residence.
   (2) The maximum repayment period for such residential
rehabilitation loans shall be 40 years or four-fifths of the economic
life of the structure, whichever is less.
   (3) Except as authorized in this paragraph, the maximum amount
loaned for rehabilitation, exclusive of costs of acquisition, or
exclusive of refinancing, for each dwelling unit and for each
commercial unit which is, or is part of, a "residence" within the
meaning of that term as defined in this part, shall be forty-five
thousand dollars ($45,000). Financing provided pursuant to this part
by the redevelopment agency of a city and county may exceed such
limitation with respect to loans for rehabilitation of one-to-four
unit dwellings, provided the total amount financed, including any
amount loaned for acquisition or refinancing, shall not exceed eighty
thousand dollars ($80,000) per dwelling unit or 90 percent of the
after-rehabilitation value specified in paragraph (1), whichever is
less, regardless of whether the loan is or is not insured or
guaranteed.
   (4) No more than 20 percent of any loan for such residential
rehabilitation shall be used for residential rehabilitation which is
not required under the local agency's rehabilitation standards except
that in the case of owner-occupied one- to four-dwelling-unit
properties, up to 40 percent of the loan for such residential
rehabilitation may be used for residential rehabilitation not
required under the local agency's rehabilitation standards.
   (5)  Except with respect to move-on residences, loans shall not be
made for the purpose of refinancing the outstanding indebtedness of
a participating party with respect to property which is subject to
residential rehabilitation or for financing the acquisition of
property which has been, or is to be, subject to residential
rehabilitation, unless the cost, including in such costs any amounts
previously expended for residential rehabilitation of that property
by a participating party, within a residential rehabilitation area or
a redevelopment project area established at the time of such
expenditure, of meeting the rehabilitation standards is at least 20
percent of the principal amount of the loan.
   (e) Guidelines for financing residential infill construction
within any residential rehabilitation area which is approved for such
a program by the legislative body. The guidelines for residential
infill construction shall be subject to the following limitations:
   (1) Unless insured or guaranteed in whole or in part by an
instrumentality of the United States or the State of California or by
a person licensed to insure loans in this state, outstanding loans
on the property, including the amount of the loans for residential
infill construction, shall not exceed 80 percent of the anticipated
value of the property, following completion of the construction,
except that the local agency may authorize loans, which are neither
insured nor guaranteed, of up to 90 percent of the anticipated value
of the property following completion of the construction, if such
loans are made for the purpose of constructing residences containing
two or more dwelling units. A nonprofit corporation incorporated
pursuant to Part 1 (commencing with Section 9000) of Division 2 of
Title 1 of the Corporations Code or a cooperative housing
corporation, as defined in subdivision (a) of Section 17265 of the
Revenue and Taxation Code, may be authorized a loan not exceeding 100
percent of the estimated value of the property following completion
of construction, if the dwelling units constructed with financing
under this part are committed for the period during which the loan is
outstanding for occupancy by persons or families who are eligible
for financial assistance specifically provided by a governmental
agency for the benefit of occupants of the residence.
   (2) The maximum repayment period for loans for residential infill
construction shall be 40 years or four-fifths of the economic life of
the structure, whichever is less.
   (f) Guidelines for financing the purchase of residences previously
rehabilitated or constructed with financing under this part, if
authorized by the legislative body, which shall be subject to the
following limitations:
   (1) Purchasers of single-family dwellings eligible to receive such
financing shall be persons or families of low or moderate income.
   (2) All rental dwelling units in the residence financed shall be
committed for the period during which the loan is outstanding for
occupancy by persons and families of low or moderate income, as
defined by Section 50093. Upon recordation of the deed, other
instrument of conveyance, lease, or instrument of financing in the
office of the county recorder of the county in which the real
property is located, the rental dwelling units reserved for occupancy
by persons of low income shall remain for such occupancy for not
less than 30, nor more than 55, years. Such recorded agreement shall
be binding upon successors in interest.
   (3) Unless insured or guaranteed in whole or in part by an
instrumentality of the United States or the State of California or by
a person licensed to insure loans in this state, outstanding loans
on the property to be acquired shall not exceed 80 percent of the
value of the property, except that the local agency may authorize
loans, which are neither insured nor guaranteed, of up to 90 percent
of the value of the property if such loans are made for the purpose
of financing residences containing two or more dwelling units. A
nonprofit corporation incorporated pursuant to, or otherwise made
subject to the provisions of, Part 2 (commencing with Section 5110)
of Division 2 of Title 1 of the Corporations Code or a cooperative
housing corporation, as defined in subdivision (a) of Section 17265
of the Revenue and Taxation Code, may be authorized a loan not
exceeding 100 percent of the value of the property, if the dwelling
units within the residence are committed for the period during which
the loan is outstanding for occupancy by persons or families who are
eligible for financial assistance specifically provided by a
governmental agency for the benefit of occupants of the residence.
   (4) The maximum repayment period for acquisition loans shall be 40
years or four-fifths of the economic life of the property, whichever
is less.
   (g) No more than 35 percent of the aggregate principal amount of
all loans made in a residential rehabilitation area may be for
residential infill construction or acquisition financing.
   (h) A requirement that a plan for public improvements necessary to
successful rehabilitation of the residential rehabilitation area be
developed, with citizen participation, for each residential
rehabilitation area and that the plan for public improvements be
adopted by the local agency prior to the financing of residential
rehabilitation in any residential rehabilitation area, together with
a commitment that, subject to budgetary and fiscal limitations, such
plan will be carried out by the local agency.



37922.1.  (a) A comprehensive residential rehabilitation financing
program may authorize residential rehabilitation outside residential
rehabilitation areas of residences which meet the following
qualifications:
   (1) The residence is located in an area determined by the
legislative body to be a stable and viable residential neighborhood.
   (2) Rehabilitation of the residence is determined by the
legislative body to be econonically feasible.
   (3) Dwelling units rehabilitated within the residence with
financing under this part are committed for the period during which
the loan is outstanding for occupancy by persons or families who are
eligible for financial assistance specifically provided by a
governmental agency for the benefit of occupants of the residence.
   (b) Guidelines for financing residential rehabilitation of
residences specified in subdivision (a) shall be included in the
comprehensive residential rehabilitation financing program if
financing of such rehabilitation is authorized pursuant to this
section. Such guidelines shall be subject to the limitations
prescribed by subdivision (d) of Section 37922. The maximum repayment
period for residential rehabilitation loans for residences described
in subdivision (a) shall be 40 years or four-fifths of the economic
life of the property, whichever is less.
   (c) With respect to rehabilitation of residences specified in
subdivision (a), the comprehensive residential rehabilitation
financing program shall provide for notice to affected owners and
tenants of the proposed rehabilitation and for an opportunity for
participation by them in the designation of dwelling units to be
rehabilitated and in the planning of the proposed rehabilitation.



37922.2.  If anticipated rent increases or other increases in
housing costs will result in dislocation of residential
rehabilitation area residents or will result in residents paying a
disproportionately large percentage of their incomes for housing, the
local agency shall take every possible action to prevent
displacement of all residents as a result of the operation of the
residential rehabilitation program in residential rehabilitation
areas. Such actions shall include relocation payments to persons and
families of low or moderate income, as defined by Section 50093, who
are tenants displaced because of the temporary or permanent
displacement for rehabilitation work or residential infill
construction assisted under this part, or rent increases resulting
from rehabilitation, pursuant to the Uniform Relocation and Real
Property Acquisition Policies Act of 1970 (42 U.S.C., Sec. 4601) or
Chapter 16 (commencing with Section 7260) of Division 7 of Title 1 of
the Government Code. Such actions shall also include, but need not
be limited to, utilization of all federal, state, or local funding
programs which are available for housing subsidies. In allocating
funds which may become available through federal revenue sharing and
through the federal Housing and Community Development Act of 1974
(P.L. 93-383; 88 Stat. 633), the local agency shall give
consideration to measures which will assist in preventing
displacement of such residents, the consideration of such measures to
be evidenced in writing.
   For purposes of this section, displacement includes relocation
occurring because of the inability of a person or family of low or
moderate income to pay increased rentals resulting from
rehabilitation, or involuntary temporary or permanent displacement of
such a person or family.
   The relocation payments required under this section shall be
mandatory only if federal or state funds are available. However,
nothing shall preclude the public entity from using local funds or
funds from the sale of bonds.



37922.5.  (a) A local agency, in order to prevent precipitous
increases in rent which the loans would engender as to residential
rental property, may require, as a condition of making a loan
pursuant to this part, that the borrower contract during the term of
the loan not to raise the rental amount over an amount which the
agency by regulation establishes will yield a fair rate of return for
similar investments and will allow for increases that are reasonably
necessary to provide and continue proper maintenance of the
property. This subdivision shall apply only to structures which will
contain 12 or more dwelling units after rehabilitation and to
structures for which loans exceeding five thousand dollars ($5,000)
per dwelling unit have been extended pursuant to this part.
   (b) A local agency may require that an owner of a residential
property provide notice to tenants at the time of application for a
loan pursuant to this part, so that, in the event of protest by
tenants, the amount of rehabilitation work may, at the discretion of
the local agency, be limited in order to prevent precipitous rent
increases which may cause displacement.



37923.  (a) The local agency shall require that any residence that
is rehabilitated, constructed, or acquired with financing obtained
under this part shall be open, upon sale or rental of any portion
thereof, to all regardless of any basis listed in subdivision (a) or
(d) of Section 12955 of the Government Code, as those bases are
defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1)
of subdivision (p) of Section 12955, and Section 12955.2 of the
Government Code. The local agency shall also require that contractors
and subcontractors engaged in residential rehabilitation financed
under this part provide equal opportunity for employment, without
discrimination as to any basis listed in subdivision (a) of Section
12940 of the Government Code, as those bases are defined in Sections
12926 and 12926.1 of the Government Code, and except as otherwise
provided in Section 12940 of the Government Code. All contracts and
subcontracts for residential rehabilitation financed under this part
shall be let without discrimination as to any basis listed in
subdivision (a) of Section 12940 of the Government Code, as those
bases are defined in Sections 12926 and 12926.1 of the Government
Code, and except as otherwise provided in Section 12940 of the
Government Code. It shall be the policy of the local agency financing
residential rehabilitation under this part to encourage
participation by minority contractors, and the local agency shall
adopt rules and regulations to implement this section.
   (b) Notwithstanding subdivision (a), with respect to familial
status, subdivision (a) shall not be construed to apply to housing
for older persons, as defined in Section 12955.9 of the Government
Code. With respect to familial status, nothing in subdivision (a)
shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11,
and 799.5 of the Civil Code, relating to housing for senior
citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil
Code and subdivisions (n), (o), and (p) of Section 12955 of the
Government Code shall apply to subdivision (a).



37924.  The authority of this part may be used to issue bonds for
the purpose of financing residential rehabilitation in areas which
were designated for concentrated code enforcement and have received
federal funds under the Federally Assisted Code Enforcement Program
(Sections 115, 117, and 312 of the Housing Act of 1949, 42 U.S.C.
1466, 1468, and 1452b), and nothing in this part shall prevent using
funds generated by bonds issued pursuant to the provisions of this
part to finance residential rehabilitation in such areas.



37924.5.  The local agency may include, in the comprehensive
residential rehabilitation financing program adopted by ordinance or
resolution pursuant to Section 37922, criteria for selection or order
of selection of dwelling structures to be inspected in a systematic
enforcement program to be carried out citywide or countywide in
addition to the concentrated enforcement of rehabilitation standards
in one or more residential rehabilitation areas, during the period in
which such concentrated enforcement is carried out. Guidelines for
financing residential rehabilitation of residences subjected to
systematic enforcement shall be subject to the financing limitations
prescribed by subdivision (d) of Section 37922. The comprehensive
residential rehabilitation financing program shall, in such case,
provide notice and opportunities to be involved in planning and
operation of the program to persons potentially affected by the
systematic enforcement program.



37925.  Any action challenging the legality of a comprehensive
residential rehabilitation financing program, the selection of a
residential rehabilitation area, the selection of residences for
residential rehabilitation pursuant to Section 37922.1, or the
adoption of a plan for public improvements for a residential
rehabilitation area, shall be commenced within 60 days of the
adoption of such program, selection of such area or residences, or
adoption of such plan for public improvements.