Health and Safety Code section 50560


(a)

Subject to the requirements of this chapter, the department may approve an extension of a department loan, the reinstatement of a qualifying unpaid matured loan, the subordination of a department loan to new debt, the payoff of a department loan in whole or part before the end of its term, the extraction of equity from a development for purposes set forth in subdivision (c) of Section 50406.4, or an investment of tax credit equity under one or more of the following rental housing finance programs: the original Rental Housing Construction Program established by Chapter 9 (commencing with Section 50735), the Special User Housing Rehabilitation Program established by Section 50670, the Deferred-Payment Rehabilitation Loan Program established by Chapter 6.5 (commencing with Section 50660), the rental component of the California Natural Disaster Assistance Program established by Chapter 6.5 (commencing with Section 50671), the State Earthquake Rehabilitation Assistance Program established by Chapter 6.5 (commencing with Section 50671), the rental component of the California Housing Rehabilitation Program established by Section 50668.5, the component of the Rental Housing Construction Program funded with bond proceeds governed by Section 50771.1, the Family Housing Demonstration Program established by Chapter 15 (commencing with Section 50880), the Families Moving to Work Program established by Chapter 15 (commencing with Section 50880), the Multifamily Housing Program established by Chapter 6.7 (commencing with Section 50675), and any and all other multifamily housing loans funded or monitored by the department.

(b)

Once the department has approved a loan extension, reinstatement of a qualifying unpaid matured loan, subordination, payoff of a department loan in whole or part before the end of its term, extraction of equity from a development for purposes set forth in subdivision (c) of Section 50406.4, or tax credit investment pursuant to this chapter, the statutes enumerated in subdivision (a), and the regulations or guidelines promulgated pursuant to these statutes, shall no longer apply to developments restructured pursuant to this chapter. These developments shall instead be governed by this chapter and guidelines adopted pursuant to subdivision (h).

(c)

All projects restructured pursuant to this chapter shall comply with the affirmative marketing and language accessibility requirements set forth in Section 50736 of this code and Section 65863 of the Government Code.

(d)

The department may approve an extension of a loan, the reinstatement of a qualifying unpaid matured loan, the subordination of a department loan to new debt, the payoff of a department loan in whole or part before the end of its term, the extraction of equity from a development for purposes set forth in subdivision (c) of Section 50406.4, or an investment of tax credit equity if it determines that the project has, or will have after rehabilitation or repairs, a potential remaining useful life equal to or greater than the term of the department’s regulatory agreement. Eligible uses of loan and equity sources under this subdivision include, but are not limited to, the purchase of a limited partner interest of a tax credit investor in the project, payment of any unpaid deferred developer fee for the project, payment for necessary repairs and rehabilitation of the project, and the establishment or replenishment of department-approved project reserves.

(e)

The department may subordinate its loan to refinance existing senior debt for eligible activities pursuant to subdivision (d) and to reimburse borrower advances for predevelopment costs, unreimbursed capital improvements, and unreimbursed operating deficits, only if it determines that the department’s security is not negatively impacted and the requirements of Section 50406.4 are satisfied, and provided that the reimbursements shall be subject to the guidelines adopted pursuant to subdivision (h) of Section 50560. The department shall not withhold consent unreasonably.

(f)

If the extension of a department loan, the reinstatement of a qualifying unpaid matured loan, the subordination of a department loan to new debt, or an investment of tax credit equity will result in a rent increase for tenants of a development exceeding the annual adjustment to the tenants’ rents under the department’s regulatory agreement, except as reasonably necessary, in the sole discretion of the department, for the feasibility of the project, the department may only subordinate a loan to senior debt if necessary for the feasibility of a project and to fund reasonable rehabilitation or improvements including soft costs. The application to refinance shall include a third-party analysis that supports the need for refinancing. The department shall not approve the extraction of equity from a development for purposes set forth in paragraph (1) of subdivision (c) of Section 50406.4, if it will result in a rent increase for tenants of a development exceeding the annual adjustment to the tenants’ rents under the department’s regulatory agreement.

(g)

The department may approve additional senior debt only as necessary for eligible activities pursuant to subdivision (d), and only as necessary to finance rehabilitation or repairs, including soft costs, that are reasonable in size, scope, and cost, as determined by the department. In approving additional senior debt, the department may consider information from third-party capital needs assessment reports.

(h)

It is the intent of the Legislature in enacting this chapter to provide to the department the flexibility necessary to maintain the quality of the affordable rental housing units for which the state has already made a significant public investment. The department may implement this chapter through guidelines that shall not be subject to Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. These guidelines shall be developed through the following process:

(1)

The department shall provide a notice of proposed action as described in Section 11346.5 of the Government Code to the public at least 21 days before the close of the public comment period.

(2)

The department shall schedule at least one public hearing as described in Section 11346.8 of the Government Code before the close of the public comment period.

(3)

The department shall maintain a rulemaking file as described in Section 11347.3 of the Government Code.

(4)

The final version of the guidelines shall be accompanied by a final statement of reason as described in subdivision (a) of Section 11346.9 of the Government Code.

(5)

The rules and guidelines shall be effective immediately upon adoption by the department.

Source: Section 50560, https://leginfo.­legislature.­ca.­gov/faces/codes_displaySection.­xhtml?lawCode=HSC§ionNum=50560.­ (updated Jun. 30, 2025; accessed Jul. 21, 2025).

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Verified:
Jul. 21, 2025

§ 50560's source at ca​.gov