SECTIONS 50705-50708 - California Statutes

HEALTH AND SAFETY CODE

SECTION 50705-50708

50705. (a) The Affordable Housing Revolving Development and
Acquisition Program is hereby established for the purpose of funding
the acquisition of property to develop or preserve affordable
housing. The program will be comprised of a Loan Fund and a
Practitioner Fund.
(b) The department shall adopt guidelines for the operation of the
program. The guidelines 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. The department shall adopt
regulations for the program prior to issuing any request for
qualifications funded with loan repayments or any other sources.

50706. (a) (1) The department shall issue a request for
qualification to select a private sector entity to manage the Loan
Fund for a period of five years, and the agreement may be extended in
additional five-year increments. The selected fund manager shall be
responsible for reviewing and approving loan applications,
originating and servicing loans, and establishing terms and
conditions for loan applications. The fund manager shall meet all of
the following criteria:
(A) Be a nonprofit lender with experience making similar loans in
this state.
(B) Have originated and serviced loans in the aggregate amount of
not less than thirty million dollars ($30,000,000) that were used to
develop or acquire affordable housing, including at least ten million
dollars ($10,000,000) or more in acquisition loans.
(C) Have at least twenty-five million dollars ($25,000,000) of its
own capital invested in loans to affordable housing developers whose
characteristics are similar to the criteria the fund manager will be
implementing under the new gap acquisition fund.
(D) Be the originator of loans in the aggregate amount of
twenty-five million dollars ($25,000,000) or more using bank or other
investor capital.
(2) Applicants for fund manager shall submit a detailed business
plan describing how the entity intends to meet the requirements of
the Loan Fund. The business plan shall include a description of
appropriate financial and internal controls and underwriting
standards and procedures. The plan shall also demonstrate how the
lender will close loans quickly.
(b) Applicants may apply to the fund manager for loans to purchase
real property for the development or preservation of housing
affordable to low-income households. Loans made under this section
shall be for a maximum term of five years.
(c) Applicants shall demonstrate all of the following:
(1) The support of the local government in which the real property
is located for the proposed development project. Support may be
demonstrated through a letter from the governing board or the manager
of the housing or community development department.
(2) Availability of additional funds equal to three times the loan
amount.
(3) Sufficient organizational stability and capacity to carry out
the proposed development project for which the property is being
purchased. Capacity may be demonstrated by substantial successful
experience performing similar activities, or through other means
acceptable to the department.
(4) Completion of not less than five housing development projects,
with each project having not less than 40 percent of the units sold
at an affordable housing cost, as defined in Section 50052.5, or
rented at an affordable rent, as defined by Section 50053.
(d) The guidelines and regulations, at a minimum, shall do all of
the following:
(1) Establish the minimum criteria required of the fund manager
and applicants.
(2) Establish a point system for prioritizing requests in the
event that requests exceed the funds available for the program in any
given year.
(3) Give priority to applicants that propose development projects
with the greatest level of affordability.
(4) Provide that any equity not originally contributed by the
borrower shall return to the state for the purposes of this program
if the property is sold or transferred for purposes other than
affordable housing.
(5) Establish a reasonable fund manager administrative fee.
(e) Funds not lent by the fund manager within 48 months after
availability to the fund manager shall be disencumbered and
transferred to the Self-Help Housing Fund established under Section
50697.1, to be expended for the purposes of the CalHome Program
established under Chapter 6 (commencing with Section 50650).

50707. (a) The department shall issue a request for qualification
to select one or more nonprofit entities that qualify under Section
501(c)(3) of the Internal Revenue Code to borrow moneys from the
Practitioner Fund to purchase real property for the development or
preservation of housing affordable to low- and moderate-income
households. The selection of one or more nonprofit entities that
qualify shall be made by the department, based on the review and
recommendation of the department's Loan and Grant Committee. The loan
from the Practitioner Fund will be for a maximum of five years.
(b) The entity or entities selected pursuant to subdivision (a)
shall demonstrate all of the following:
(1) Operation as a nonprofit entity that qualifies under Section
501(c)(3) of the Internal Revenue Code with housing development
experience in this state and a minimum of 25 employees.
(2) Availability of additional funds of at least three times the
loan amount.
(3) Completion of not less than 2,500 total housing units, with
each housing development project having a majority of its units
affordable to low- and moderate-income families, as defined in
Section 50052.5 or 50053. For purposes of this requirement, the
applicant shall be the developer of record with primary day-to-day
management and financial responsibility for the development.
(4) Sufficient organizational stability and capacity to use the
Practitioner Fund to achieve scale economies in the development and
preservation of affordable housing. Capacity may be demonstrated by
substantial successful experience in affordable housing development
and management, including successful partnerships with local
government entities.
(5) Assets worth at least two hundred million dollars
($200,000,000), to demonstrate evidence of sufficient net worth for
assurance of repayment of the loan.
(c) The guidelines and regulations, at a minimum, shall do all of
the following:
(1) Establish the minimum criteria required of the practitioner
and a point system for rating and ranking responses.
(2) Provide that any equity not originally contributed by the
borrower shall be returned to the state for the purposes of this
program, if property acquired with state funds is sold or transferred
for purposes other than affordable housing.
(3) Give priority to those respondents who demonstrate an
immediate need of funds from the committee and who can demonstrate
the greatest levels of efficiency and economies of scale.
(4) Establish a reasonable practitioner administrative fee.
(d) Funds not used by a practitioner within 36 months after their
availability to the practitioner shall be disencumbered and
transferred to the Loan Fund.
(e) The guidelines and regulations shall require that before
expending any state funds, the borrower shall obtain binding
commitments for at least three dollars ($3) of nonstate acquisition
capital to leverage every dollar of loan funds. To be considered
nonstate acquisition capital, those funds shall be committed for a
term at least equal to the term of the loan made under this section,
and shall be available to be used for the purposes of this section.
Equity from the anticipated sale of either federal or state
low-income housing tax credits shall not be considered nonstate
acquisition capital. If the selected entity is unable to meet these
capital leveraging requirements within 180 days after selection, the
loan shall be repaid, with accumulated interest, to the department,
deposited in the fund, and made available to the next highest rated
qualified project sponsor. If, within 270 days after selection, there
is no remaining qualified applicant available in the case of the
Practitioner Fund, any unexpended funds shall be made available for
the purposes of Section 50706.
(f) The department shall establish a schedule for the timely
expenditure of funds by the applicant. The department may require
repayment in the event that a selected entity fails to use the funds
consistently with the schedule and the other terms of the program.

50708. The department shall collect all of the following from each
borrower and include a summary of this information in its last annual
report submitted to the Legislature on or before December 31, 2013,
pursuant to Section 50408:
(a) A general description of activities undertaken pursuant to
this chapter.
(b) For each property acquired, the acquisition price; the amount
and terms of the nonstate funds leveraged, and a statement as to
whether the state acquisition funds were essential to the leveraging
of these other acquisition funds; a description of the expiration
date of the project's rent or sales restrictions; the number of
assisted units created or preserved; the amount of state funds
required for each assisted unit created or preserved; and the level
of affordability maintained.
(c) If any borrower sells any property acquired with assistance
through these state funds, a description of the name and location of
the purchaser, the purchase price, and the total transaction costs.
(d) A comparison of the cost of creating or preserving units under
Section 50706 with that of Section 50707.
(e) An overall assessment of the effectiveness of these funds as
tools in creating and preserving affordable housing.