1. (a) Proceeds from the account for deferred payment loans to borrowers may be used only for eligible costs that are incurred in the rehabilitation of the property as set forth in this section. In addition, eligible costs must be necessary and consistent with the lowest reasonable cost in the area. In addition to eligible costs set forth in statute, eligible costs include, but are not limited to, the following:

   1. (1) costs of rehabilitation of the property;
   2. (2) costs of room additions when other rehabilitation work is being performed;
   3. (3) costs of improvements necessary to ensure accessibility of the property to physically handicapped borrowers or dependents occupying the property, when other rehabilitation work is being performed;
   4. (4) costs of improvements required to correct unsafe, unhealthy, or unsanitary conditions, including general property improvements when such improvements are necessary or integral to the rehabilitation work;

   5. (5) costs incurred in originating the loan including the following:

      1. (A) title insurance;
      2. (B) credit reports;
      3. (C) appraisal reports;
      4. (D) first year insurance premiums;
      5. (E) recording fees; and
      6. (F) property tax and title monitoring service fees.
   6. (6) costs of building permits and other related government fees; and
   7. (7) costs of architectural, engineering, and other consultant services which are directly related to the rehabilitation of the property, which may include the costs of an environmental assessment if such an assessment is required as a condition of the loan by the department.

2. (b) Payments may be made to local entities for administrative expenses, which shall be in the form of grants from the department pursuant to section 8059. Administrative grant funds shall only be used for eligible costs that are incurred in the administration of a local program and in accordance with the proposed budget submitted with the application pursuant to section 8054. Administrative grants shall be a maximum of $2,500.00 or 20 percent of each deferred payment loan amount, whichever is less. Eligible categories of cost include:

   1. (1) personal services, including the following:

      1. (A) staff salaries, wages and benefits; and
      2. (B) contract services which are directly related to the administration of the local program.

   2. (2) operating expenses and office equipment, including the following:

      1. (A) office supplies, printing and copying, and telephone charges;
      2. (B) travel;
      3. (C) office rent and utilities related to the local program;
      4. (D) rented office equipment; and
      5. (E) insurance and fidelity bonds.
   3. (3) construction fund disbursement fees; and
   4. (4) escrow fees.

3. (c) All local entities shall be eligible to receive grants for administrative costs of operating a local program. Administrative grants will be paid on a loan-by-loan basis in the following manner:

   1. (1) Local entities that are not leveraging deferred payment loan funds with other funding sources shall receive their actual loan processing cost or 20 percent of each deferred payment loan amount, up to $2,500.00.
   2. (2) Local entities that are leveraging deferred payment loan funds with other funding sources which do not provide administrative funding shall receive their actual loan processing cost or 20 percent of each deferred payment loan amount, up to $2,500.00.
   3. (3) Local entities that are leveraging deferred payment loan funds with other funding sources which do provide administrative funding shall receive the difference between the amount received through the other financing source for their actual loan processing cost and the deferred payment loan or 20 percent of each deferred payment loan amount, up to $2,500.00.
   4. (4) Local entities that are leveraging deferred payment loan funds with Entitlement Community Development Block Grant funds shall receive no administrative funding from the program for those loans in which deferred payment funds are leveraged with Entitlement Community Development Block Grant funds.
4. (d) Local entities requesting administrative grant funding shall demonstrate to the department's satisfaction the administrative funding received from other financing sources is insufficient to implement and assure compliance with the program. Such demonstration shall include a certification from the local entity regarding the need for administrative funds.
5. (e) Local entities shall not substitute fund commitments from the account for other available local funds. This restriction applies to the local entity's overall rehabilitation activities, rather than on a loan-by-loan basis.

Note: Authority cited: Section 50668.5(g), Health and Safety Code. Reference: Sections 50661, 50662, 50664 and 50668.5(b), Health and Safety Code.

History

1. New section filed 11-30-89 as an emergency; operative 11-30-89 (Register 89, No. 49). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed by operation of law on 3-30-90.

2. New section refiled 3-26-90 as an emergency; operative 3-30-90 (Register 90, No. 16). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed by operation of law on 7-30-90.

3. New section filed 7-26-90 as an emergency; operative 7-26-90 (Register 90, No. 38). A Certificate of Compliance must be transmitted to OAL by 11-23-90 or emergency language will be repealed by operation of law on the following day.

4. Amendment of subsection (a) filed 8-27-90 as an emergency; operative 8-27-90 (Register 90, No. 42). A Certificate of Compliance must be transmitted to OAL by 12-26-90 or emergency language will be repealed by operation of law on the following day.

5. New section refiled 11-16-90 as an emergency; operative 11-16-90 (Register 90, No. 51). A Certificate of Compliance must be transmitted to OAL by 3-18-91 or emergency language will be repealed by operation of law on the following day.

6. Readoption of 8-27-90 order filed 12-21-90 as an emergency; operative 12-21-90 (Register 91, No. 7). A Certificate of Compliance must be transmitted to OAL by 4-22-91 or emergency language will be repealed by operation of law on the following day.

7. Certificate of Compliance as to 11-30-89 order, readopted and operative on 3-30-90, 7-26-90 and 11-16-90, including amendment of subsections (a), (b), (c), and (d) transmitted to OAL 11-30-90 and filed 12-31-90 (Register 91, No. 7).