1. (a) The ratio of total indebtedness secured by the project property, including the department's loan, to the total after-rehabilitation value of the project property shall not exceed 90 percent, except when the sponsor is a nonprofit sponsor, in which case the ratio shall not exceed 100 percent. In the event there is a transfer of the project between a for-profit sponsor and a nonprofit sponsor, the loan-to-value ratio applicable to the acquiring party shall apply to the project upon transfer.

2. (b) The after-rehabilitation value shall be based on an appraisal, undertaken at the sponsor's expense, that

   1. (1) is prepared by an individual who:

      1. (A) has the knowledge and experience necessary to appraise income property competently;
      2. (B) is aware of, understand, and correctly employs those recognized methods and techniques that are necessary to produce a credible appraisal;
      3. (C) in reporting the results of the appraisal, communicates each analysis, opinion, and conclusion in a manner that is not misleading as to the true value and condition of the property;
      4. (D) if developing a business appraisal, is aware of, understands, and correctly employs those recognized methods and techniques that are necessary to produce a credible appraisal;
      5. (E) in reporting the results of a business appraisal, communicates each analysis, opinion, and conclusion in a manner that is not misleading as to the true value and condition of the property.

   2. (2) utilizes all of the following methods to determine value:

      1. (A) sales of comparable developments;
      2. (B) capitalization of income;
      3. (C) replacement cost; and
   3. (3) includes the pre-rehabilitation value, if requested by the department.
3. (c) The department shall not accept any appraisal that does not conform to the provisions of subdivision (b).
4. (d) The department shall accept the valuation from the replacement cost method as the after-rehabilitation value of the project property when the department determines that such method accurately reflects sufficient value in the project to meet the loan-to-value limits pursuant to this section.

Note: Authority cited: Section 50668.5, Health and Safety Code. Reference: Sections 50662, 50668.5 and 50670, 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 (b) 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 subsection (b) transmitted to OAL 5-22-90 and filed 5-29-90 (Register 90, No. 29).