The fund shall be administered by the director and any persons within the department designated by the director, in accordance with all of the following requirements:

(a)  The department shall not commit more than 20 percent of the total moneys appropriated to the fund to any single borrower at any point in time.

(b)  The department shall require adequate security for all loans made from the fund. For the purposes of this subdivision, “adequate security” includes, but need not be limited to, a security interest in any property purchased with fund moneys, a promissory note, or an assignment of a land option, except that in the case of Indian trust land a mortgage on a leasehold interest in the property shall be acceptable.

(c)  No predevelopment loan may be made pursuant to this chapter unless the department may reasonably anticipate that a commitment can be obtained by an eligible sponsor for construction financing or long-term financing that will permit occupancy primarily by persons of low income, as specified in subdivision (b) of Section 50531. The department may make land purchase loans to eligible sponsors to enable those sponsors to exercise options or to purchase land on which no option can be obtained even though the sponsor is not able at the time the loan is made to proceed with the development of assisted housing on the purchased site. If the eligible sponsor is unable to proceed with the development of assisted housing on the purchased site within three years of its acquisition, the sponsor, upon demand of the department, shall convey the site to the department. The department shall dispose of the site in accordance with subdivision (o) of Section 50406, and the net proceeds shall be paid into the fund.

(d)  The department may establish alternate project selection processes, threshold requirements, and priorities for funds appropriated for special purposes. These alternate processes, requirements, and priorities shall be tied to the specific needs and objectives for which the funds have been appropriated.

(e)  The department shall, from time to time, direct the Treasurer to invest moneys of the fund which are not required for its current needs in eligible securities which the department designates from among those specified in § 16430 of the Government Code. The department may direct the Treasurer to deposit moneys from the fund in interest-bearing accounts in state or national banks or other financial institutions having principal offices in this state. The department may alternatively require the transfer of moneys in the fund to the Surplus Money Investment Fund for investment pursuant to Article 4 (commencing with Section 16470) of Chapter 3 of Part 2 of Division 4 of Title 2 of the Government Code. All interest, dividends, and pecuniary gains from those investments or deposits shall accrue to the fund.

(f)  In complying with Section 50408, the department shall also report annually to the Legislature and the Governor on the administration of the fund. The report shall include, but need not be limited to, all of the following information:

(1)  The number of units assisted.

(2)  The average income of households assisted and the distribution of annual incomes among assisted households.

(3)  The rents in assisted units.

(4)  The number and amount of loans made to each eligible sponsor in the preceding year.

(5)  Data on the number of delinquencies and defaults.

(6)  Recommendations, as needed, to improve the operation of the fund.

(7)  The number of loans made at interest rates lower than 7 percent per annum, and the income of households assisted by those loans.

(8)  The public transportation services conveniently available to assisted households.

(9)  The number of manufactured housing units assisted under Section 50531 and this section.

(10)  The location, size, and cost of land, and option rights purchased with land purchase loans.

(g)  (1)  Except as provided in paragraph (2), the balance of any loan made from the fund or its predecessor fund which remains unpaid on September 22, 1983, except any portion which is delinquent, and all loans made from the fund on or after that date, shall bear interest at a rate of 3 percent per annum.

(2)  The department may reduce or eliminate interest on the loans, if, in the exercise of sound discretion, the department determines that action is necessary for the provision of decent housing to very low income households, as described in Section 50105. However, if the department eliminates interest on a loan, it shall charge a loan origination fee not to exceed 2 percent of the loan amount.

(h)  To the extent feasible, the department shall ensure a reasonable geographic distribution of the funds. Other things being equal, the department shall give priority to assisting development that meets either of the following requirements:

(1)  It will be located in public transit corridors.

(2)  It will be used for the preservation and acquisition of existing government-assisted rental housing at risk of conversion to market-rate use. Within this category, the department shall give priority to those applications that include matching financing from local redevelopment agencies or federal programs.

(i)  The department may make predevelopment loans or land purchase loans for the development of mobilehome parks and manufactured housing subdivisions.

(Amended by Stats. 2001, Ch. 395, Sec. 8. Effective October 1, 2001.)