Section 8314 - Use of Operating Cash Flow(a) Operating income remaining after payment of approved current and prior year operating expenses, reserve deposits and mandatory debt service shall be applied in the following priority order: (1) First, towards payment of any: (A) Approved deferred Developer Fee, pursuant to Section 8312;(B) Asset management, partnership management and similar fees, including fees paid to investors, in an amount not to exceed the sum of: 1. An amount for the current year, equal to $30,000 for 2016 and increased at the rate of 3.5% for each subsequent year, plus2. Unpaid asset management, partnership management, and similar fees accrued for a period not to exceed three project fiscal years following the year during which they are earned, up to the difference between the limit for the year and the amount paid for that year; and(C) Supportive Services Costs that these regulations would allow to be paid as operating costs, but that other funding sources do not.(2) Second, 50 percent to the Sponsor as Distributions and 50 percent to the Department as payments on the Program loan. (A) If the terms of other public agencies' financing also require payments from remaining cash flow, the Department may agree to share what would otherwise be its 50 percent share of available cash flow with the public agencies in amounts proportional to the agencies' respective assistance amounts (total local government assistance, as defined in Section 8315, and total Department loans and grants).(B) To be consistent with the terms of other public agency loans or leases, the Department may agree to set the percentage payable to the Sponsor at an amount less than 50 percent.(C) For projects with income from project-based Section 8 or similar project-based rental assistance that is not underwritten by other Project lenders, the Department may reduce the Sponsor's share to an amount equivalent to the amount they would receive if one of the other lender's loan amount was based on an income stream that included the income from the rental assistance.(b) A Sponsor may not accumulate Distributions from year to year. A Sponsor may deposit all or a portion of permitted Distributions into a Project account for distribution in subsequent years. These future Distributions shall not reduce the otherwise permitted Distribution in those subsequent years.(c) The limits on payments for Developer Fee pursuant to subsection (a)(1)(A) and for asset management, partnership management, and similar fees pursuant to subsection (a)(1)(B) shall not apply to payments of those fees made from Distributions.(d) Payment of Distributions, deferred Developer Fee, asset management fees, partnership management fees and similar fees shall be permitted only after the Sponsor submits a complete annual report and operating budget, and the Department determines that the report and budget demonstrate compliance with all Program requirements for the applicable year. Circumstances under which no Distributions, deferred Developer Fee, asset management fees, or partnership management fees, and similar fees shall be paid include:(1) when written notice of default has been issued by any entity with an equitable or beneficial interest in the Project;(2) when the Department determines that the Sponsor has failed to comply with the Department's written notice of any reasonable requirement for proper maintenance or operation of the Rental Housing Development or use of Project income;(3) if all currently required debt service, including mandatory payments on the Program loan, and Operating Expenses have not been paid;(4) if the replacement reserve account, operating reserve account, or any other reserve accounts are not fully funded pursuant to Sections 8308 and 8309 and the Regulatory Agreement.(e) For 2017, the following limits shall apply to total Supportive Services Costs paid as Operating Expenses. These limits shall be increased each year after 2017 at the rate of 2.5 percent per year:(1) $4,080 per unit per year for supportive housing restricted to individuals or families experiencing chronic homelessness, as defined consistent with Health and Safety Code Section 50675.14;(2) $3,060 per unit per year (A) for supportive housing that is not restricted to individuals or families experiencing chronic homelessness as defined pursuant to Health and Safety Code Section 50675.14; and(B) for units restricted to occupancy by Special Needs Populations under any Department programs ("Special Needs Population" has the same meaning as defined in Section 7301(s));(3) $1,051 per unit per year for other units where the Sponsor, their affiliate, or a service provider under contract to provide Supportive Services at the Project has both: (A) qualified staff devoted exclusively to oversight and quality control of resident services in affordable housing, including the Project; and(B) a system to track and report on tenant outcomes, such as changes in employment status and income;(4) $250 per unit per year for other units, where the Sponsor, their affiliate, or a service provider under contract does not satisfy the requirements set forth in subsection (e)(3).(f) The following limits shall apply to Supportive Services Costs paid as Operating Expenses: (1) The cost of staff supervision shall not exceed 10% of the cost of on-site staff salaries.(2) Administrative overhead expenses, including accounting and human relations, shall not exceed 15% of the total Supportive Services Costs paid as Operating Expenses.(g) Sponsors paying Supportive Services Costs as Operating Expenses shall maintain onsite and available for Department inspection records of group activities (including calendars and sign-in sheets) and individualized services and referrals. The Department may also require annual reporting on these and related matters.(h) For supportive housing, as defined pursuant to Health and Safety Code Section 50675.14, and upon approval by the Department, Sponsors may establish a reserve to cover unexpected shortfalls in revenues to pay for resident services coordination and case management costs. This reserve may be funded through project cash flow available after funding Operating Expenses and other required reserves, or through development sources. The maximum balance shall not exceed three times the per-unit, per-year limits specified in subsection (e).Cal. Code Regs. Tit. 25, § 8314
1. New section filed 9-29-2003; operative 9-29-2003 pursuant to Government Code section 11343.4 (Register 2003, No. 40).
2. Amendment of section and NOTE filed 11-8-2017; operative 11-15-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 45). Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code. Reference: Sections 50517.5(a)(1), 50517.5(c)(2), 50517.5(e)(2), 50675.8(a)(5) and 50896.1(a), Health and Safety Code.
1. New section filed 9-29-2003; operative 9-29-2003 pursuant to Government Code section 11343.4(Register 2003, No. 40).
2. Amendment of section and Note filed 11-8-2017; operative 11/15/2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 45).