Bill Text: CA AB523 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Department of Housing and Community Development: loans.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Passed) 2014-09-19 - Chaptered by Secretary of State - Chapter 445, Statutes of 2014. [AB523 Detail]

Download: California-2013-AB523-Amended.html

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BILL NUMBER: AB 523	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 12, 2014
	AMENDED IN SENATE  JUNE 23, 2014
	AMENDED IN SENATE  SEPTEMBER 3, 2013
	AMENDED IN SENATE  JUNE 24, 2013
	AMENDED IN ASSEMBLY  MAY 24, 2013

INTRODUCED BY   Assembly Members Ammiano and Brown
   (Principal coauthor: Senator Leno)

                        FEBRUARY 20, 2013

   An act to add Section 50406.7 to the Health and Safety Code,
relating to housing.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 523, as amended, Ammiano. Department of Housing and Community
Development: loans.
   Existing law authorizes the Department of Housing and Community
Development to make advance payments to eligible borrowers and
grantees under certain loan or grant programs for housing, if the
department makes specified determinations.
   This bill would additionally authorize the department to reduce
the interest rate on any loan issued by the department to a rental
housing development to as low as 0.42% per annum, or a rate
determined by the department that is sufficient to cover the costs of
project monitoring, as specified, if the development meets specified
requirements. The bill would also authorize the department to change
the current interest rate for any loan for which it receives a loan
extension request associated with an award of federal or state
low-income housing tax credits made on or after January 1, 2014, to
the most recently published applicable federal rate, and require the
additional tax credit equity generated by the change to be used for
rehabilitation of the project. The bill would also authorize the
department to forgive an amount of accrued interest if the total
amount of debt and accrued interest at the end of the loan term would
be greater after making this change than it would have been under
the original interest rate. The bill would also require the
department to charge a fee sufficient to cover administrative costs
associated with a loan modification requested by a borrower.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 50406.7 is added to the Health and Safety Code,
to read:
   50406.7.  (a) Notwithstanding any other law, the department is
authorized to reduce the interest rate on any loan issued by the
department to a rental housing development to as low as forty-two
hundredths of 1 percent per annum, or a rate determined by the
department that is sufficient to cover the costs of project
monitoring described in subdivision (c) of Section 50675.6, whichever
is greater, if the development meets all of the following
requirements:
   (1) The development has no other debt with regularly scheduled or
amortizing debt service payments. The department reserves the right
to impose a default interest rate of 3 percent should amortizing debt
be placed on the project.
   (2) The development will utilize low-income housing tax credits.
   (3) The sponsor determines that the loan issued by the department
is not eligible to be treated as debt for federal or state low-income
housing tax credit purposes without a reduction in the interest rate
of the loan. The determination must be acceptable to the department.
The department may contract with a third-party tax professional for
verification, the cost of which shall be borne by the sponsor.
   (4) The development has no debt in a senior lien position to the
department's debt.
   (5) The development has 35 percent or more of the total units in
the project serving households with income not exceeding 30 percent
of the area median income.
   (6) The new department loan shall not be used to 
supplement   supplant  or replace an existing
department loan.
   (b) The department is authorized to change the current interest
rate for any loan for which it receives a loan extension request
associated with an award of federal or state low-income housing tax
credits made on or after January 1, 2014, to the applicable federal
rate most recently published by the United States Internal Revenue
Service. The additional tax credit equity generated by the change in
interest rate shall be used for rehabilitation of the development. If
the total amount of debt and accrued interest at the end of the loan
term would be greater after making this change than it would have
been under the original interest rate, the department may forgive an
amount of accrued interest equal to the lesser of either the amount
necessary to make the expected principal and accrued interest the
same as it would have been using the original interest rate, or the
total amount of interest accrued at the time of the sponsor's
request.
   (c) The department shall charge a fee in an amount sufficient to
cover administrative costs associated with a loan modification
requested by a borrower pursuant to this section.