(a) There is hereby created the Interim Repositioning Program, the purpose of which is to leverage private capital to increase the funding available to preserve at-risk housing.
(b) The department shall administer this program and establish the terms upon which loans may be made consistent with this section.
(c) The department shall select a single sponsor through a competitive process. The sponsor shall meet all of the following criteria:
(1) Be a not-for-profit corporation based in California.
(2) Demonstrate sufficient organizational stability and capacity to carry out the activity for which it is requesting funds, including the capacity to acquire, renovate, or rehabilitate, asset manage and property manage a portfolio of assisted housing developments, and, if applicable, to underwrite, close, and service loans. Capacity may be demonstrated by substantial successful experience performing similar activities, or through other means acceptable to the department.
(3) Demonstrate a feasible strategy to meet the leveraging requirements of subdivision (g) within 60 days after being chosen as the sponsor.
(4) Demonstrate past experience in the cost-effective use of public resources.
(5) Submit a detailed business plan as to how the sponsor intends to meet the requirements of this section. The business plan shall include a description of appropriate financial controls, acquisition procedures, underwriting procedures, and internal controls.
(d) The department shall give bonus points in the rating and ranking process to an applicant who can demonstrate letters of intent from private entities to provide capital to meet the leverage requirement of this section.
(e) The department shall make a loan for a term of not more than five years to the project sponsor for the purposes of subdivision (i).
(f) Principal and accumulated interest is due and payable upon completion of the term of the loan. The loan shall bear simple interest at a rate of 3 percent per annum on the unpaid principal balance.
(g) Before expending any state funds, the sponsor shall raise at least three dollars ($3) of private capital as equity to match every dollar of Interim Repositioning Program loan proceeds. To be considered private capital, outside funds shall be committed for a term at least equal to the term of the loan made pursuant to this section and available to be used for the purposes of this section. If the sponsor is unable to meet these matching requirements within 60 days of selection as the sponsor, 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 identified pursuant to subdivision (c). If, within 180 days, there is no remaining qualified project sponsor available, any unexpended funds shall be made available for the purposes of Section 50603.
(h) Funds lent to the project sponsor pursuant to this section and the required private matching funds shall be used to finance up to 20 percent of the cost of acquiring an assisted housing development.
(i) The sponsor shall use Interim Repositioning Program loan proceeds and the required private matching funds for the following purposes:
(1) To acquire an assisted housing development in California for which rent restrictions have expired or are eligible to expire within five years of the date that the department chooses the sponsor. First priority shall be given to projects for which rent restrictions have expired or are eligible to expire within two years.
(2) To make loans not to exceed a term of three years to any entity described in subdivision (d) of Section 65863.11 of the Government Code for the acquisition of an assisted housing development for which rent restrictions have expired or are eligible to expire within five years of the date the agency chooses the project sponsor. First priority for loans shall be given to projects for which rent restrictions have expired or are eligible to expire within two years. The rate of interest on loans made pursuant to this paragraph shall be equal to the lowest feasible rate sufficient to cover the cost of capital to the sponsor.
(j) The sponsor, in the event he or she directly acquires an assisted housing development, or the borrower, if he or she has received a loan from the project sponsor pursuant to this section, shall agree to obligate himself or herself and any successors in interest to maintain the affordability of the assisted housing development for households of very low, low, or moderate income for a term of not less than 30 years. To the extent economically feasible, the development shall be continuously occupied in the approximate percentages that those households who have occupied that development as of the date of acquisition by the purchaser or the approximate percentages specified in existing federal, state, or locally imposed use restrictions, whichever is higher. This obligation shall be recorded at the close of escrow in the office of the county recorder of the county in which the development is located. In addition, the regulatory agreement shall contain provisions requiring the renewal of rental subsidies, if they are available and provided at a level sufficient to maintain the project’s fiscal viability. Nothing in this paragraph shall be construed to require the future income restriction of units unrestricted under the new regulatory agreement required by this subdivision.
(k) The department, in its loan agreement with the sponsor, shall establish a schedule for the timely expenditure of funds by the sponsor.
( l) The department shall select a sponsor for the purposes of this section within six months of the date funding becomes available.
(m) The department may, upon consultation with interested parties, including potential applicants and housing advocates, administer this program through a notice of funding availability that shall not be subject to Chapter 3.5 (commencing with Section 11340) of Part 1 of Title 2 of the Government Code.
(Added by Stats. 2002, Ch. 721, Sec. 1. Effective January 1, 2003.)