BILL NUMBER: AB 523	AMENDED
	BILL TEXT

	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,  as
specified,  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  authorize 
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  (0.42%)  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  provides evidence acceptable to the
department that demonstrates   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 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  may   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.