Cal. Code Regs. tit. 25 § 8114

Current through Register 2024 Notice Reg. No. 50, December 13, 2024

Section 8114 - Eligible Uses of Funds

(a) Funds shall be used only for approved eligible costs that are incurred with respect to the planning and executing of the project as set forth in this section. In addition, the costs must be necessary and must be consistent with the lowest reasonable cost consistent with the project's scope and area.

(b) Eligible categories of costs for projects involving the new construction of a rental housing development include the following:

(1) land acquisition;

(2) acquisition of projects under construction satisfying the requirements of section 8112(c)(1) through (c)(3);

(3) land lease payments;

(4) construction work, including demolition costs satisfying the requirements of section 8112(d);

(5) offsite improvements, such as sewers, utilities and streets, related to the rental housing development;

(6) onsite improvements related to the rental housing development;

(7) architectural, appraisal, engineering, legal, accounting and other consulting costs and fees, which are directly related to the planning and execution of the project and which are incurred through third-party contracts;

(8) administrative expenses pursuant to section 8119;

(9) rent-up costs;

(10) insurance, construction financing fees and interest, taxes, and any other expenses necessary to hold the property while the rental housing development is under construction.

(11) building permits and state and local fees;

(12) initial operating and replacement reserve balances required pursuant to section 8139;

(13) escrow, title insurance, recording and other costs related to the financing of the project;

(14) costs required to assure the completion of construction, such as contractor bond premiums; and

(15) environmental hazard reports, surveys, and investigations.

(c) Eligible categories of costs for projects involving the rehabilitation of a rental housing development include the following:

(1) acquisition of project property, including existing improvements, and costs related to such acquisition;

(2) refinancing of that amount of debt existing at the time of application which is necessary to achieve rents for lower- and very low-income households in accordance with program requirements, and costs related thereto;

(3) reconstruction costs, when the estimated costs including demolition, construction and related activities are less than the estimated cost of rehabilitation of the rental housing development, and where demolition is consistent with the requirements of section 8112(d);

(4) conversion costs when the estimated total rehabilitation cost is less than the new construction cost of comparable units in the area;

(5) cost of rehabilitation necessary to correct code violations;

(6) general costs required to correct unsafe, unhealthy and unsanitary conditions, including general property improvements when the sponsor can demonstrate that such improvements are integral to the project;

(7) work related to protecting physical security;

(8) work related to reducing long-term maintenance costs;

(9) onsite and offsite improvements;

(10) work related to meeting specialized design criteria described in section 8126;

(11) seismic rehabilitation improvements, and work directly related thereto pursuant to section 8129;

(12) architectural, appraisal, engineering, legal, accounting and other consulting costs and fees, which are directly related to the planning and execution of the project and which are incurred through third-party contracts;

(13) administrative expenses pursuant to section 8119;

(14) rent-up costs;

(15) insurance, construction financing fees and interest, and taxes, and any other expenses necessary to hold the property while the rental housing development is under construction;

(16) building permits and state and local fees;

(17) work lawfully required by a governmental entity which is reasonably required to correct unsafe, unhealthy or unsanitary conditions;

(18) relocation benefits and assistance to lower-income residential tenants displaced as a result of acquisition and rehabilitation, or rehabilitation only. All other temporary and permanent relocation benefits specified in section 8125 are not eligible uses of program funds;

(19) escrow, title insurance, recording and other related costs; and

(20) environmental hazard reports, surveys, and investigations.

(d) Except where lawfully required to secure local government approvals essential to completion of the project, costs associated with the following items are ineligible for funding with program loan proceeds, and cannot be paid for from syndication proceeds or loans supported by rents from assisted units:

(1) building and roof shapes, ornamentation, and exterior finish schemes whose costs are in excess of the typical costs of these features in modestly designed rental housing;

(2) fireplaces, tennis courts, and similar amenities not typically found in modestly designed rental housing;

(3) shake and tile roofs, custom-made windows, ceramic tile floors and counters, hardwood floors, and similar features using materials not typically found in modestly designed rental housing, except where such materials have lower replacement costs over the life of the rental housing development due to lower operating, maintenance and replacement costs.

(e) No program funds shall be used for costs associated exclusively with nonassisted units or commercial space. If only a portion of the rental housing development consists of assisted units, the program loan amount shall not exceed the sum of the following:

(1) the costs of all items specified in subdivisions (b) or (c), as applicable, and (d) associated exclusively with the assisted units;

(2) a share of the costs of common areas used primarily by residential tenants; this share shall be in direct proportion to the ratio between the gross floor area of the assisted units and the gross floor area of all residential units; and

(3) a share of the cost of other items, such as roofs, that cannot specifically be allocated to assisted units, nonassisted units, or commercial space; this share shall be in direct proportion to the ratio between the following:

(A) the gross floor area of the assisted units, plus a share of the gross floor area of common areas used primarily by residential tenants in direct proportion to the ratio between the gross floor area of the assisted units and the gross floor area of all units; and

(B) the total gross floor area of the structure or structures.

(f) Notwithstanding subdivision (e)(1), not more than 50 percent of the cost of the child care center may be funded with program funds, except that the cost of all items specified in subdivision (b) or (c), as applicable, and (d) associated with the development of the child care center are eligible for program funding as specified in section 8127(c).

Cal. Code Regs. Tit. 25, § 8114

1. New section filed 12-14-90 as an emergency; operative 12-14-90 (Register 91, No. 11). A Certificate of Compliance must be transmitted to OAL by 4-15-91 or emergency language will be repealed by operation of law on the following day.
2. Repealed by operation of law on 4-16-91.
3. New section filed 7-19-91 as an emergency; operative 7-19-91 (Register 92, No. 16). A Certificate of Compliance must be transmitted to OAL 11-6-91 or emergency language will be repealed by operation of law on the following day.
4. New section refiled 11-15-91 as an emergency; operative 11-15-91 (Register 92, No. 16). A Certificate of Compliance must be transmitted to OAL 3-16-92 or emergency language will be repealed by operation of law on the following day.
5. Certificate of Compliance as to 11-15-91 order transmitted to OAL 12-12-91 and filed 1-13-92 (Register 92, No. 16).

Note: Authority cited: Sections 50406(n), 50884 and 50895, Health and Safety Code. Reference: Section 50881.5(f), 50888.3(e), 50893.3(a) and (b) and 53133, Health and Safety Code.