Cal. Code Regs. tit. 25 § 7406

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

Section 7406 - Loan Limits

The following limitations shall apply to all Fund commitments or deferred payment loans made by local entities:

(a) The Loan Committee shall authorize no more than 10 percent of the appropriation to the Fund for rehabilitation activities of code enforcement agencies pursuant to Section 7404(a)(4). Not less than 20 percent of the appropriations to the Fund on or after January 1, 1980 shall be expended in rural areas.

(b) Loans for direct rehabilitation and repairs by code enforcement agencies.

(1) The maximum amount of funds loaned to a local entity shall be $10,000 per unit.

(2) Funds received pursuant to this subsection shall be applied to the total permitted by subsection (a) of this section.

(3) The maximum loan from the Fund plus other indebtedness against the property shall not exceed 90 percent of the anticipated after-rehabilitation value of the property.

(c) Loans to low and moderate income owner-occupants of a unit to be assisted.

(1) The maximum deferred payment loan per unit shall be $10,000 or $20,000 when there are room additions, subject to the limitation of subdivisions (2) and (3), and may be subordinate to prior loans and liens.

(2) The maximum deferred payment loan plus other indebtedness against the property shall not exceed 90 percent of the anticipated after-rehabilitation value of the property. The existence of senior citizen tax deferral liens shall not be included in the calculation of indebtedness.

(3) Loans shall be limited to the amount necessary to cover the cost of meeting rehabilitation standards which cannot be financed by any combination of funds otherwise available without exceeding the borrower's ability to afford shelter expenses. Such funds may be derived from sources such as Marks-Foran, CHFA, CDBG, HUD 312, FmHA, or funds from private lenders. A loan to an elderly owner-occupant of low income may be permitted without requiring the other financing specified in subsection 7404(f)(3). With Department permission, this requirement may also be waived where its enforcement would require loans from other sources in such small amounts that the local entity determines that the administration and processing of such other loans is impractical or unreasonable.

(4) The borrower shall receive only one deferred payment loan.

(5) Exceptions to subparagraphs (c)(1), (c)(2), and (c)(4) may be recommended by a vote of the Loan Committee if it finds the presence of extraordinary circumstances, such as where the existing loan limit is not sufficient to cover costs attributed to retrofitting a unit for the handicapped, or where there are urgent health and safety needs, such as a polluted water supply or severe foundation problems. In either case, the local entity must document that no other funds are available for this purpose.

(d) Loans to owners of rental units.

(1) The maximum deferred payment loan to an owner of rental units shall be $10,000 per unit, or $20,000 when there are room additions, $5,000 per residential hotel room, and $200,000 per housing development, subject to the limitations of subdivisions (2) and (3). Maximum loan amounts shall be based on the number of units after rehabilitation. The deferred payment loan may be subordinate to prior loans and liens.

(2) The maximum deferred payment loan plus other indebtedness against the property shall not exceed 90 percent of the anticipated after-rehabilitation value of the property.

(3) Loans qualifying under Section 7404(g)(5) shall be limited to the amount of the cost of meeting rehabilitation standards which exceed the amount which can be financed by any combination of funds otherwise available without exceeding monthly debt service, as determined by increased rents, which either would exceed the affordable rents for one or more low-income households residing in the rental property or having been displaced from the rental property at the commencement of rehabilitation work funded by the local entity or by CHFA; or make it economically infeasible to accept subsidies, such as Section 8, available to provide affordable rents to low-income households. With Department permission, this requirement may be waived where its enforcement would require loans from other sources in such small amounts that the local entity determines that the administration and processing of such other loans is impractical or unreasonable.

(4) The borrower shall receive only one deferred payment loan for each housing development assisted.

(5) Exceptions to subparagraphs (d)(1), (d)(2), and (d)(4) may be recommended by a vote of the Loan Committee if it finds the presence of extraordinary circumstances, such as where the existing loan limit is not sufficient to cover costs attributed to retrofitting a unit for the handicapped, or where there are urgent health and safety needs, such as a polluted water supply or severe foundation problems. In either case, the local entity must document that no other funds are available for this purpose.

Cal. Code Regs. Tit. 25, § 7406

1. Amendment filed 10-2-81; effective thirtieth day thereafter (Register 81, No. 40).
2. Amendment of subsection (d) filed 11-2-82; effective thirtieth day thereafter (Register 82, No. 45).
3. Editorial correction of subsection (d)(3) filed 1-6-83 (Register 83, No. 2).
4. Amendment filed 6-3-85; effective thirtieth day thereafter (Register 85, No. 23).

Note: Authority cited: Section 50662, Health and Safety Code. Reference: Sections 50660-50668, Health and Safety Code.