1. (a) Loans shall bear simple interest of three percent per annum on the unpaid principal balance. Interest shall accrue from the date that funds are disbursed by the department to an escrow holder on behalf of the sponsor.
2. (b) Accrued interest shall be payable annually to the department commencing no later than the sixtieth (60th) day after the last day of the initial operating year and continuing no later than that date annually thereafter until the loan is paid in full.

3. (c) Upon request by the sponsor, the department may permit periodic payments of principal, provided that the resulting additional debt service will not jeopardize the fiscal integrity of the project or the sponsor's ability to maintain rents in accordance with program requirements. The department may approve a repayment plan at loan closing or any time thereafter, subject to the following:

   1. (1) The repayment plan shall be based on actual or projected net cash flow which shall be calculated by subtracting from total operating income the sum of the amounts necessary for project fiscal integrity plus the amount for the allowable distribution to sponsor pursuant to section 7684.
   2. (2) The repayment plan may include provision for an incentive payment to the sponsor not to exceed the proposed repayment to be applied to the principal. Such payment to the sponsor shall be in addition to the sponsor's permitted distribution pursuant to section 7684.
   3. (3) The additional debt service and any payments to sponsor under this subdivision shall not be included in determining compliance with the project's debt service coverage ratio requirements of Health and Safety Code section 50668.5(d).
4. (d) Upon request by the sponsor, the department may approve, either at loan closing or any time thereafter, the deferral of accrued interest for such periods and subject to such conditions as may enable the sponsor to maintain affordable rents and maintain the fiscal integrity of the project.
5. (e) The total amount of the outstanding principal and interest, including deferred interest, shall be due and payable in full to the department at the end of the loan term including any extension granted by the department, or upon the department's termination of the loan.

Note: Authority cited: Section 50668.5, Health and Safety Code. Reference: Sections 50662, 50668.5 and 50669, Health and Safety Code.

History

1. New section filed 6-12-89 as an emergency pursuant to Health and Safety Code section 50668.5(g); operative 6-12-89 (Register 89, No. 24). A Certificate of Compliance must be transmitted to OAL within 120 days or the regulation will be repealed on 10-10-89. For history of former subchapter 8 (sections 7700-7714.5, not consecutive), see Register 85, No. 33.

2. New section refiled 10-6-89 as an emergency pursuant to Health and Safety Code section 50668.5(g) and Government Code section 11346.1(h); operative 10-10-89 (Register 89, No. 42). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed on 2-7-90.

3. New section refiled 2-5-90 as an emergency pursuant to Health and Safety Code section 50668.5(g) and Government Code section 11346.1(h); operative 2-7-90 (Register 90, No. 6). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed on 6-7-90.

4. Amendment of subsections (a)-(c) filed 3-5-90 as an emergency pursuant to Health and Safety Code section 50668.5(g); operative 3-5-90 (Register 90, No. 12). A Certificate of Compliance must be transmitted to OAL within 120 days or emergency language will be repealed on 7-3-90.

5. Certificate of Compliance as to 2-5-90 and 3-5-90 orders including amendment of subsections (a), (b), and (c) transmitted to OAL 5-22-90 and filed 5-29-90 (Register 90, No. 29).