50745-50750

HEALTH AND SAFETY CODE
SECTION 50745-50750




50745.  (a) Upon application by the agency or a local finance
entity, the department may contract with the agency or local finance
entity to pay all or a portion of the development costs incurred by a
sponsor in connection with the construction of a rental housing
development which is financed, or otherwise assisted pursuant to
subdivision (b), by the agency, local finance entity, or a federal
agency.
   (b) In lieu of providing financing of a rental housing development
at below-market interest, a local finance entity to be eligible for
assistance under this article, may utilize other types of subsidies
including, but not limited to, federal funds, as authorized by law,
which reduce by an equivalent amount the rental levels of a rental
housing development.
   (c) Pursuant to such a contract the agency or local finance entity
shall, in accordance with criteria established by the department,
(1) ensure the feasibility of the proposed rental housing development
to be financed and assisted pursuant to this chapter, (2) supervise
the design and construction of the rental housing development to be
financed by it and assisted pursuant to this chapter, and (3)
supervise the management of such rental housing development while the
financing thereof remains outstanding and unpaid or for a period of
30 years, whichever is greater. The department shall adopt criteria
to ensure that a local finance entity has the capability of
performing such functions prior to entering a contract pursuant to
this section.


50745.1.  (a) Notwithstanding any other provision or requirement of
this chapter, and any regulations adopted thereunder, the department
may contract with the agency, a local finance entity, or a sponsor to
pay all or any portion of the development costs incurred in
connection with the construction of a rental housing development
consistent with the requirements of this section.
   (b) Pursuant to this section, funds may be utilized only to assist
the development of rental housing developments in Anaheim where the
department determines that such assistance is necessary to alleviate
hardship resulting from the destruction of rental units in Anaheim
caused by a fire which resulted in a state of emergency proclaimed on
April 23, 1982, by the Governor, as provided by Section 8625 of the
Government Code.
   (c) Any rental housing development assisted pursuant to this
section shall not be governed by the percentage requirements
contained in Section 50736, nor shall units assisted pursuant to this
section be used in determining compliance with the percentage
requirements contained in Section 50736.
   (d) As a condition of assistance provided pursuant to this
section, the department may establish such rent levels as the
department may determine are necessary to alleviate hardship in the
disaster area consistent with the economic feasibility of the
assisted rental housing development. Contracts and agreements
governing the provision of financial assistance pursuant to this
section shall not be subject to the requirements of Sections 50746
and 50749. The department may require such terms and conditions as it
determines are necessary to meet the needs of the disaster area and
its victims, to ensure fiscal integrity of the rental housing
development and to protect the interests of the state. The terms and
conditions required by the department, including the restrictions on
rent levels for assisted units, shall remain binding on sponsors of
developments assisted pursuant to this section, and heirs,
successors, and assigns, for a period of at least 20 years or such a
longer term as the department may require. The department shall
require that priority in occupancy of any units in a development
assisted pursuant to this section shall be given first to households
of low income, as defined in Section 50093, who have been displaced
from their dwelling units as a result of this disaster, and,
secondly, to any other victim of this disaster. After no additional
victims of this disaster qualify for, or remain in, any assisted
units, these units shall be available to, on a priority basis, or
occupied by households of low income.
   (e) The department may allocate funds to an annuity fund
established pursuant to Section 50748, or utilize existing annuity
funds, to ensure that the rent levels established by the department
are maintained consistent with the fiscal integrity of the rental
housing development.
   (f) The department may require funds utilized pursuant to this
section to be returned to the Rental Housing Construction Fund from
the present allocation of funds to the agency. Any repayment of funds
originating from the Rental Housing Construction Fund and utilized
pursuant to this section shall be utilized by the department pursuant
to this chapter.
   (g) Any rule, policy or standard of general application employed
by the department in implementing the provisions of this section,
shall not be subject to the requirements 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.




50746.  Each contract pursuant to Section 50745 shall be recorded or
referenced in a recorded document in the office of the county
recorder of the county in which the rental housing development is
located, and shall be indexed by the recorder in the grantor index to
the name of the sponsor and in the grantee index to the name of the
State of California. The contract shall contain at least the
following provisions:
   (a) The amount and terms of payments to be provided under this
article, including specific items to be covered by such payments.
   (b) A description of the way in which the payments will be used to
provide affordable rents to eligible households occupying assisted
units within the rental housing development.
   (c) Projected rent levels for all units, and the number of units
to be occupied by eligible households.
   (d) Requirements for payment of prevailing wage rates on
construction.
   (e) A requirement for a periodic report to be made at least
annually by the agency or local finance entity which shall include,
at a minimum, information on the fiscal condition of the rental
housing development, the maintenance of such development, and the
number of units occupied by eligible households.
   (f) A provision for department approval prior to the execution of
the terms of the regulatory agreement to be entered into between the
sponsor and the agency or local finance entity pursuant to Section
50749.
   (g) A provision that failure to operate the rental housing
development in accordance with the regulatory agreement shall be
deemed a violation of the regulatory agreement or deed of trust, as
the case may be. In the alternative or in addition, the contract may
contain a lien on the rental housing development for the purpose of
securing performance of the agreement. Such lien shall include a
legal description of the assisted real property which is subject to
the lien and shall specify the duration of the lien upon the assisted
real property.
   (h) Standards which govern selection of tenants by housing
sponsors to ensure occupancy by eligible households consistent with
the requirements of Sections 50736 and 50739 and the terms of
occupancy agreements to be used in rental housing developments.
   (i) Provisions sufficient to ensure that dwelling units in the
rental housing development available to and occupied by eligible
households in accordance with Section 50736 and in accordance with
the written agreement required by Section 50739 remain available to
such households for a period of not less than 30 years or the
duration of the long-term financing, whichever is greater.
   (j) Provisions which specify the timing and manner in which
payments are made by the department so as to ensure the economic
feasibility of the rental housing development and to protect the
interests of the state.
   (k) A provision making the covenants and conditions of the
contract binding upon successors in interest of the sponsor.
   ( l) When the sponsor is not a nonprofit housing sponsor or a
local public entity, a provision limiting distribution of the sponsor'
s earnings to an annual amount no greater than 6 percent of the
sponsor's actual investment (excluding unaccrued liabilities of the
sponsor) in the rental housing development. The department may allow
an earnings distribution of no greater than 10 percent on a
nonelderly rental housing development if the department finds it
necessary to do so to fulfill the requirements of Section 50736. With
respect to such nonelderly rental housing developments, the
department may adopt regulations consistent with this section
governing the conditions under which an earnings distribution over 6
percent but not to exceed 10 percent may be allowed.
   (m) A provision which specifies the conditions under which the
department and agency may enforce the regulatory agreement with
respect to a rental housing development financed by the agency.
   (n) Provisions necessary for the administration, disbursement, and
protection of annuity fund payments including provisions specifying
the conditions under which the department may recover or reallocate
all or any part of such payments for the benefit of eligible
households in existing or additional assisted units.
   (o) Provisions (1) governing the recovery and reallocation by the
department of rent revenues derived by the sponsor from the assisted
units and which are not necessary to defray costs of operation
attributable to such units and (2) specifying the return on the
sponsor's investment pursuant to subdivision (b). Such rent revenue
shall be handled by the department in the same manner as annuity
payments recovered pursuant to subdivision (n).
   (p) Authorization for the agency or local finance entity to fix
and alter rents pursuant to the provisions of subdivision (c) of
Section 50749.
   (q) Any other provisions necessary to carry out the purposes and
to exercise the powers granted by this chapter.




50747.  The development cost payments provided by the department
pursuant to this article shall not exceed 100 percent of the
development costs of a rental housing development, and shall not
exceed the amount required, when considered with any subsidy or
assistance provided by the agency, local finance entity or housing
sponsor, including below-market interest financing, to ensure the
economic feasibility of restricting occupancy of the rental housing
development in accordance with Sections 50736 and 50739. The
department may defray all or a portion of development costs as they
are incurred, or in accordance with a schedule developed pursuant to
subdivision (j) of Section 50746.



50748.  (a) The department may establish and administer an annuity
fund, with respect to rental housing developments assisted under this
article or Article 3 (commencing with Section 50755) or Article 4
(commencing with Section 50765) for the purpose of reducing rent
levels to ensure occupancy by eligible households pursuant to
Sections 50736 and 50739. The annuity funds shall be structured so
that the principal and interest accumulated thereon is not depleted
prior to the expiration of the agreements or contracts required by
Section 50749.
   (b) Payments made by the department pursuant to this section shall
not constitute a subsidy under subdivision (b) of Section 50745, and
shall not constitute an advance payment within the meaning of state
law restricting advance payments under state contracts.
   (c) The department shall require annual reports on the use of
annuity funds and such audits as may be required to ensure the proper
use of moneys from the annuity fund. The department shall review all
complaints received concerning such trust funds and shall have all
powers necessary to assure the lawful application of such funds.
   (d) When the amount of moneys made payable from an annuity fund
pursuant to this section exceeds the amount necessary to ensure that
eligible households in a rental housing development assisted under
this chapter are paying affordable rents, or if payments from the
annuity fund become unnecessary for such purpose, the department may
by contract (1) require that such unneeded moneys be paid into the
Rental Housing Construction Incentive Fund or (2) authorize use of
such moneys to reduce rents to an affordable level for additional
eligible households in the rental development.
   (e) Not less than 20 percent of the moneys appropriated for the
purposes of this chapter shall be utilized pursuant to this section.
However, moneys transferred to the Rental Housing Construction Fund
pursuant to subdivision (d) shall be used for any purpose authorized
by this chapter.



50748.1.  (a) The department shall from time to time direct the
Treasurer to invest moneys set aside or otherwise deposited in the
annuity fund established by Section 50748 as an account in the Rental
Housing Construction Fund, which are not required for its current
needs, in the eligible securities specified in Section 16430 of the
Government Code that are designated by the department. The department
may direct the Treasurer to deposit moneys in interest-bearing
accounts in state or national banks or other financial institutions
having principal offices in this state, or in other investments which
are consistent with state policy and achieve returns adequate to
fulfill the requirements of this chapter. The department may
alternatively require the transfer of moneys in the annuity fund to
the Surplus Money Investment Fund for investment pursuant to Article
4 (commencing with Section 16470) of Chapter 3 of Part 2 of Division
4 of Title 2 of the Government Code.
   All interest or other increment resulting from the investment or
deposit shall be deposited in the annuity fund account,
notwithstanding Section 16305.7 of the Government Code. Moneys in the
fund are not subject to transfer to any other fund pursuant to Part
2 (commencing with Section 16300) of Division 4 of Title 2 of the
Government Code, except the Surplus Money Investment Fund.
   (b) Upon request of the department, the Controller shall transfer
from the annuity fund account in the Rental Housing Construction
Fund, an aggregate amount not exceeding five million dollars
($5,000,000) to the Predevelopment Loan Fund. The department shall
determine the respective amount to be deposited in these funds.
   Transfers made pursuant to this subdivision shall be treated as
advances and shall be repaid, with interest specified in this
subdivision, within three years of the effective date of transfer of
the moneys, except that the department may defer repayment if (1) the
balance of moneys in the annuity fund account is sufficient to meet
current or anticipated financial obligations and (2) the financial
integrity of any component or fund of the Rental Housing Construction
Program is not at risk. Moneys advanced pursuant to this subdivision
shall be repaid with interest at the rate of 7 percent.



50749.  Any rental housing development assisted pursuant to this
article shall be governed by a regulatory agreement between the
sponsor and the agency or local finance entity. Such regulatory
agreements shall be recorded or referenced in a recorded document in
the office of the county recorder for the county in which the rental
housing development is located. The regulatory agreements shall
contain at least all of the following:
   (a) Restrictions on occupancy of dwelling units within the rental
housing development, as necessary to meet the requirements of
Sections 50736 and 50739.
   (b) A requirement that prevailing wage rates be paid with respect
to construction of the rental housing development, and that all
contractors and subcontractors use affirmative action in hiring.
   (c) The authorization for the agency or local finance entity to
fix and alter, from time to time, a schedule of rents such as may be
necessary to provide residents of the rental housing development with
affordable rents, to the extent consistent with the maintenance of
the financial integrity of the rental housing development.
   With respect to rental housing developments financed by the
agency, no housing sponsor may increase rents except in accordance
with the provisions of Section 51200. With respect to units under the
supervision of a local finance entity, no housing sponsor shall
increase the rent without the prior permission of such entity which
shall be given only if the sponsor affirmatively demonstrates that
such increase is required to defray necessary operating costs or to
avoid jeopardizing the fiscal integrity of the rental housing
development. Prior to the time any rent increase is effective, the
housing sponsor shall notify every affected tenant, in writing, of
informal meetings with the housing sponsor to review the proposed
rent increase. Each tenant, upon request, shall be provided the
information submitted to the local housing finance entity pursuant to
this subdivision.
   Notwithstanding Section 51200 with respect to rental housing
developments assisted under this article, if the agency or local
finance entity does not act upon a request for a rent increase within
60 days from documented receipt of the request, such increase shall
be deemed approved.
   Thirty days' notice of any rent increase shall be given in
writing.
   (d) Provisions implementing standards governing selection of
tenants by sponsors to ensure initial and continued occupancy by
eligible households consistent with the requirements of Sections
50736 and 50739.
   (e) Provisions implementing the terms of occupancy agreements.
   (f) Provisions necessary for the administration and protection of
annuity trust funds established pursuant to Section 50748 and for
recovery and reallocation of annuity fund payments and rent revenues
pursuant to subdivisions (n) and (o) of Section 50746.
   (g) Any other provisions necessary to carry out the purposes and
to exercise the powers granted by this chapter.
   The regulatory agreement shall remain in effect so long as any
financing for the rental housing development provided by the agency
or local finance entity remains outstanding, but in any event not
less than 30 years. The regulatory agreement shall be enforceable as
specified in subdivision (m) of Section 50746 by the department, the
agency or local finance entity or by any intended beneficiary of
housing assisted under this chapter as against the sponsor or any
successor in interest of the sponsor.


50750.  Upon consent of the legislative body of the city or county
in which a rental housing development is or will be located, the
department may contract with a local finance entity located in a
rural area to ensure that the terms of the agreement between such
entity and a sponsor entered into pursuant to Section 50749 are
carried out.