Bill Text: CA SB1032 | 2023-2024 | Regular Session | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Housing finance: portfolio restructuring: loan forgiveness.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Engrossed) 2024-08-15 - August 15 hearing: Held in committee and under submission. [SB1032 Detail]
Download: California-2023-SB1032-Introduced.html
Bill Title: Housing finance: portfolio restructuring: loan forgiveness.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Engrossed) 2024-08-15 - August 15 hearing: Held in committee and under submission. [SB1032 Detail]
Download: California-2023-SB1032-Introduced.html
CALIFORNIA LEGISLATURE—
2023–2024 REGULAR SESSION
Senate Bill
No. 1032
| Introduced by Senator Padilla |
February 06, 2024 |
An act to amend Section 50560 of, and add Section 50566 to, the Health and Safety Code, relating to housing.
LEGISLATIVE COUNSEL'S DIGEST
SB 1032, as introduced, Padilla.
Housing finance: portfolio restructuring: loan forgiveness.
Existing law establishes various rental housing finance programs administered by the Department of Housing and Community Development. Existing law authorizes the department to monitor and fund various multifamily housing loans. With respect to these programs and loans, existing law authorizes the department to approve an extension of a department loan, the reinstatement of a qualifying unpaid matured loan, the subordination of a department loan to new debt, or an investment of tax credit equity pursuant to specified rental housing finance programs and multifamily housing loans administered, monitored, or funded by the department, subject to specified requirements.
This bill would additionally authorize the department to forgive the above-described loans, including the full amounts of the principal, interests, fees, and any other outstanding
balances of specified department loans, if the borrower shows that the loan is impeding their ability to maintain and operate the project, as specified. The bill would require that projects receiving loan forgiveness meet specified requirements, including that the projects ensure that 50% of the units are dedicated to lower income households, as specified. The bill would authorize borrowers to appeal a loan forgiveness decision to the Secretary of Business, Consumer Services, and Housing for reconsideration.
This bill would make findings and declarations related to a gift of public funds.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NOBill Text
The people of the State of California do enact as follows:
SECTION 1.
Section 50560 of the Health and Safety Code is amended to read:50560.
(a) Subject to the requirements of this chapter, the department may approve an extension of a department loan, the reinstatement of a qualifying unpaid matured loan, the subordination of a department loan to new debt, the forgiveness of a department loan, or an investment of tax credit equity under one or more of the following rental housing finance programs: the original Rental Housing Construction Program established by Chapter 9 (commencing with Section 50735), the Special User Housing Rehabilitation Program established by Section 50670, the Deferred Payment Rehabilitation Loan Program established by Chapter 6.5 (commencing with Section 50660), the rental component of the California Natural Disaster Assistance Program established by Chapter 6.5 (commencing with Section 50671), the State Earthquake Rehabilitation Assistance Program established by Chapter 6.5 (commencing with Section 50671), the rental component of the California Housing Rehabilitation Program established by Section 50668.5, the component of the Rental Housing Construction Program funded with bond proceeds governed by Section 50771.1, the Family Housing Demonstration Program established by Chapter 15 (commencing with Section 50880), the Families Moving to Work Program established by Chapter 15 (commencing with Section 50880), the Multifamily Housing Program established by Chapter 6.7 (commencing with Section 50675), and any and all other multifamily housing loans funded or monitored by the department.(b) Once the department has approved a loan extension, reinstatement of a qualifying unpaid matured loan, subordination, or tax credit investment pursuant to this chapter, the statutes enumerated
in subdivision (a), and the regulations promulgated pursuant to these statutes, shall no longer apply to developments restructured pursuant to this chapter. These developments shall instead be governed by this chapter and guidelines adopted pursuant to subdivision (h).
(c) All projects restructured pursuant to this chapter shall comply with the affirmative marketing and language accessibility requirements set forth in Section 50736 of this code and Section 65863 of the Government Code.
(d) The department may approve an extension of a loan, the reinstatement of a qualifying unpaid matured loan, the subordination of a department loan to new debt, or an investment of tax credit equity if it determines that the project has, or will have after rehabilitation or repairs, a potential remaining useful life equal to or greater than the term of the restructured loan.
(e) The department may subordinate its loan to refinance existing senior debt only as necessary for project feasibility and to reimburse borrower advances for predevelopment costs, recent capital improvements, and recent operating deficits.
(f) If the extension of a department loan, the reinstatement of a qualifying unpaid matured loan, the subordination of a department loan to new debt, or an investment of tax credit equity will result in a rent increase for tenants of a development, the department may only subordinate a loan to senior debt if necessary to increase the feasibility of a project and to fund reasonable rehabilitation or improvements including soft costs. The application to refinance shall include a third-party analysis that supports the need for refinancing.
(g) The department may approve additional
senior debt only as necessary to finance rehabilitation or repairs, including soft costs, that are modest in size, scope, and cost, as determined by the department.
(h) It is the intent of the Legislature in enacting this chapter to provide to the department the flexibility necessary to maintain the quality of the affordable rental housing units for which the state has already made a significant public investment. The department may implement this chapter through guidelines that shall not be subject to Chapter 2.5 (commencing with Section 11340) of Part 1 of Title 2 of the Government Code. These guidelines shall be developed through the following process:
(1) The department shall provide a notice of proposed action as described in Section 11346.5 of the Government Code to the public at least 21 days before the close of the public comment period.
(2) The department shall schedule at least one public hearing as described in Section 11346.8 of the Government Code before the close of the public comment period.
(3) The department shall maintain a rulemaking file as described in Section 11347.3 of the Government Code.
(4) The final version of the guidelines shall be accompanied by a final statement of reason as described in subdivision (a) of Section 11346.9 of the Government Code.
(5) The rules and guidelines shall be effective immediately upon adoption by the department.
SEC. 2.
Section 50566 is added to the Health and Safety Code, to read:50566.
(a) Upon a showing by the borrower that a loan made pursuant to the programs listed in subdivision (a) of Section 50560 is impeding the borrower’s ability to maintain and operate the project for affordable housing or senior housing, the department shall forgive the full amounts of the principal, interests, fees, and any other outstanding balances of the loan.(b) Projects that receive loan forgiveness pursuant to this section shall meet all of the following requirements:
(1) The project shall ensure that 50 percent of the units within the development project, excluding managers’ units, shall be dedicated to lower income households available at either of the following:
(A) An affordable housing cost, as defined by Section 50052.5.
(B) An affordable rent set in an amount consistent with the rent limits established by the California Tax Credit Allocation Committee.
(2) The units shall be subject to a recorded deed restriction for a period of 55 years for rental units and 45 years for owner-occupied units.
(c) Borrowers may appeal a decision of the department made pursuant to this section to the Secretary of Business, Consumer Services, and Housing for reconsideration.
