35A-8-504.5. Low-income ADU loan guarantee pilot program.
| (1) |
As used in this section:
Terms Used In Utah Code 35A-8-504.5- Board: means the Housing Board created by this part. See Utah Code 35A-8-501
- Director: means the director of the division. See Utah Code 35A-8-101
- Executive director: means the executive director of the department appointed under Section 35A-1-201. See Utah Code 35A-1-102
- Fixed Rate: Having a "fixed" rate means that the APR doesn't change based on fluctuations of some external rate (such as the "Prime Rate"). In other words, a fixed rate is a rate that is not a variable rate. A fixed APR can change over time, in several circumstances:
- You are late making a payment or commit some other default, triggering an increase to a penalty rate
- The bank changes the terms of your account and you do not reject the change.
- The rate expires (if the rate was fixed for only a certain period of time).
- Process: means a writ or summons issued in the course of a judicial proceeding. See Utah Code 68-3-12.5
- Property: includes both real and personal property. See Utah Code 68-3-12.5
- Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
- Writing: includes :Utah Code 68-3-12.5
| (a) |
“Accessory dwelling unit” means the same as that term is defined in Section 10-9a-103. |
| (b) |
“Borrower” means a residential property owner who receives a low-income ADU loan from a lender. |
| (c) |
“Lender” means a trust company, savings bank, savings and loan association, bank, credit union, or any other entity that provides low-income ADU loans directly to borrowers. |
| (d) |
“Low-income ADU loan” means a loan made by a lender to a borrower for the purpose of financing the construction of an accessory dwelling unit that is:
| (i) |
located on the borrower’s residential property; and |
| (ii) |
rented to a low-income individual. |
|
| (e) |
“Low-income individual” means an individual whose household income is less than 80% of the area median income. |
| (f) |
“Pilot program” means the two-year pilot program created in this section. |
|
| (2) |
The executive director shall establish a two-year pilot program to provide loan guarantees on behalf of borrowers for the purpose of insuring the repayment of low-income ADU loans. |
| (3) |
The executive director may not provide a loan guarantee for a low-income ADU loan under the pilot program unless:
| (a) |
the lender:
| (i) |
agrees in writing to participate in the pilot program; |
| (ii) |
makes available to prospective borrowers the option of receiving a low-income ADU loan that:
| (A) |
has a term of 15 years; and |
| (B) |
charges interest at a fixed rate; |
|
| (iii) |
monitors the activities of the borrower on a yearly basis during the term of the loan to ensure the borrower’s compliance with:
| (A) |
Subsection (3)(c); and |
| (B) |
any other term or condition of the loan; and |
|
| (iv) |
promptly notifies the executive director in writing if the borrower fails to comply with:
| (A) |
Subsection (3)(c); or |
| (B) |
any other term or condition of the loan; |
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| (b) |
the loan terms of the low-income ADU loan:
| (i) |
are consistent with the loan terms described in Subsection (3)(a)(ii); or |
| (ii) |
if different from the loan terms described in Subsection (3)(a)(ii), are mutually agreed upon by the lender and the borrower; and |
|
| (c) |
the borrower:
| (i) |
agrees in writing to participate in the pilot program; |
| (ii) |
constructs an accessory dwelling unit on the borrower’s residential property within one year after the day on which the borrower receives the loan; |
| (iii) |
occupies the primary residence to which the accessory dwelling unit is associated:
| (A) |
after the accessory dwelling unit is completed; and |
| (B) |
for the remainder of the term of the loan; and |
|
| (iv) |
rents the accessory dwelling unit to a low-income individual:
| (A) |
after the accessory dwelling unit is completed; and |
| (B) |
for the remainder of the term of the loan. |
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| (4) |
At the direction of the board, the executive director shall make rules in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, to establish:
| (a) |
the minimum criteria for lenders and borrowers to participate in the pilot program; |
| (b) |
the terms and conditions for loan guarantees provided under the pilot program, consistent with Subsection (3); and |
| (c) |
procedures for the pilot program’s loan guarantee process. |
|
| (5) |
The executive director shall submit a report on the pilot program to the Business and Labor Interim Committee on or before November 30, 2023. |
Enacted by Chapter 102, 2021 General Session
