Cal. Code Regs. tit. 25 § 7308

Current through Register 2024 Notice Reg. No. 50, December 13, 2024

Section 7308 - Interest Rate and Loan Repayments

(a) Loans shall bear simple interest of 3% per annum on the unpaid principal balance. Interest shall accrue from the date that funds are disbursed by the Department to or on behalf of the Sponsor.

(b) For the first 30 years of the loan term, payments in the amount of 0.42% of the outstanding principal loan balance shall be payable to the Department commencing on the last day of the Initial Operating Year and continuing on each anniversary date thereafter. The balance of accrued interest shall be payable out of Operating Income remaining after payment of approved Operating Expenses, debt service on other loans, reserve deposits, and Sponsor Distributions. Commencing on the 30th anniversary of the last day of the Initial Operating Year, interest shall be payable in an amount equal to the lesser of:

(1) the full amount of interest accruing on the outstanding principal loan amount; or

(2) the amount determined by the Department to be necessary to cover the costs of continued monitoring of the Project for compliance with the requirements of the Program. HUD Section 811 and 202 projects will be subject to the requirements of this subsection.

(c) Except for the required payment of 0.42% of the outstanding principal loan balance, the Department shall permit the deferral of accrued interest for such periods and subject to such conditions as will enable the Sponsor to maintain Affordable Rents, maintain the Fiscal Integrity of the Project and pay allowable Distributions pursuant to Section 8314 of this title.

(d) All Program loan payments (including the 0.42% loan payment) shall be applied in the following order:

(1) to any expenses incurred by the Department to protect the property or the Department's security interest in the property, or incurred due to the Sponsor's failure to perform any of the Sponsor's covenants and agreements contained in the deed of trust or other loan documents;

(2) to the payment of accrued interest; and

(3) to the reduction of principal.

(e) The total outstanding principal and interest, including deferred interest, shall be due and payable in full to the Department at the end of the loan term including any extension granted by the Department. The Department shall, at the end of the loan term, forgive that portion of the Program loan, including principal and deferred interest, applied to the costs of developing childcare facilities provided that such facilities have been operated for childcare purposes for a period of not less than 10 years.

Cal. Code Regs. Tit. 25, § 7308

1. New section filed 1-8-2002; operative 1-8-2002 pursuant to Government Code section 11343.4 (Register 2002, No. 2).
2. Amendment of subsection (c) filed 9-29-2003; operative 9-29-2003 pursuant to Government Code section 11343.4 (Register 2003, No. 40).

Note: Authority cited: Sections 50406(n), 50675.1(c) and 50675.11, Health and Safety Code. Reference: Sections 50675.1 and 50675.6(c), Health and Safety Code.