(a)

1. (1) The Director’s San Diego County Farmworker Housing Discretionary Account is hereby established in the Office of Migrant Services in the department. The director may make loans or grants from this account for innovative farmworker housing projects providing housing for migrant or nonmigrant farmworkers in San Diego County. There shall be no maximum limitation set on the term of tenancy if the project is operated for farmworkers.

2. (2) All grants or loans from the account shall be made to local public entities or private community-based nonprofit agencies which agree to both of the following:

   1. (A) To own and operate the farmworker housing project for at least 10 years from the date funds are first advanced to the sponsor under the grant or loan.
   2. (B) To provide and operate the project in compliance with statutes or regulations applicable to rent in state-owned migrant farm labor centers assisted by the Office of Migrant Services and in compliance with the habitability, licensing, and inspection requirements of the Employee Housing Act (Part 1 (commencing with Section 17000) of Division 13).
3. (3) If the department finds that the sponsor of a project to which funds have been granted under this section has violated either or both of the terms of paragraph (2), the grant shall be deemed a loan and the sponsor shall be liable to the account for repayment of the amount granted, plus interest, in accordance with paragraph (4) or (5).

4. (4) If the department finds that the sponsor of a project to which funds have been loaned under this section, or a sponsor of a project to which funds have been granted under this section and to whom or to which paragraph (3) is applicable, has violated either or both of the terms of paragraph (2), the sponsor shall be liable to the account for repayment of the amount granted or loaned, plus interest, in accordance with the following:

   1. (A) If the department finds that the violation of either or both of the terms of paragraph (2) has occurred before the date on which six years will have elapsed from the date funds were first advanced to the sponsor under the grant or loan, the sponsor shall be liable to the account for repayment of the full amount of the grant or the full amount of the outstanding balance of the loan, plus interest thereon at the rate of 9 percent per year.
   2. (B) If the department finds that the violation of either or both of the terms of paragraph (2) has occurred on or after the date on which six years will have elapsed, but before the date on which seven years will have elapsed, from the date funds were first advanced to the sponsor under the grant or loan, the sponsor shall be liable to the account for repayment of 80 percent of the amount of the grant or 80 percent of the outstanding balance of the loan, plus interest thereon at the rate of 9 percent per year.
   3. (C) If the department finds that the violation of either or both of the terms of paragraph (2) has occurred on or after the date on which seven years will have elapsed, but before the date on which eight years will have elapsed, from the date funds were first advanced to the sponsor under the grant or loan, the sponsor shall be liable to the account for repayment of 60 percent of the amount of the grant or 60 percent of the outstanding balance of the loan, plus interest thereon at the rate of 9 percent per year.
   4. (D) If the department finds that the violation of either or both of the terms of paragraph (2) has occurred on or after the date on which eight years will have elapsed, but before the date on which nine years will have elapsed, from the date funds were first advanced to the sponsor under the grant or loan, the sponsor shall be liable to the account for repayment of 40 percent of the amount of the grant or 40 percent of the outstanding balance of the loan, plus interest thereon at the rate of 9 percent per year.
   5. (E) If the department finds that the violation of either or both of the terms of paragraph (2) has occurred on or after the date on which nine years will have elapsed, but before the date on which 10 years will have elapsed, from the date funds were first advanced to the sponsor under the grant or loan, the sponsor shall be liable to the account for repayment of 20 percent of the amount of the grant or 20 percent of the outstanding balance of the loan, plus interest thereon at the rate of 9 percent per year.
5. (5) Notwithstanding paragraph (4), when the sponsor of a project to which funds have been granted or loaned under this section has agreed to own and operate the farmworker housing project for 11 or more years from the date funds are first advanced to the sponsor under the grant or loan, and the department finds that a violation of either or both of the terms of paragraph (2) has occurred at any time after the funds have been advanced to the sponsor, the sponsor shall be liable to the account for repayment of a principal amount, and interest thereon, to be determined in the discretion of the director. The principal amount repaid pursuant to this paragraph shall not exceed the amount actually loaned or granted to the sponsor, and the interest shall not exceed the rate of 9 percent per year.
6. (6) On or before October 1 of each year, the sponsor of a project to which funds are granted or loaned under this section shall submit to the department a written report that includes sufficient information on occupancy, income, and maintenance levels to enable the department to assess whether the sponsor is complying with the terms and conditions of the program and this chapter.
7. (7) In selecting sponsors, the director may make awards for projects serving the needs of single farmworkers, but preference shall be given to those projects primarily serving families. Funds may be used under this section for farmworker housing on either a permanent foundation or nonpermanent foundation, including manufactured housing or mobilehomes.