Cal. Code Regs. tit. 25 § 7414

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

Section 7414 - Authorized Expenses

Funds from the Fund may be used only with respect to the following authorized expenses.

(a) Loans to local entities for direct code enforcement repair or rehabilitation pursuant to Section 7404(a)(4) may be used only for actual rehabilitation and repair costs. They may not be used for governmental administrative costs, overhead costs, costs of collection or foreclosures, or other items.

(b) Loans from the Fund made by local entities to borrowers may include the following costs:

(1) Costs of rehabilitating, or the reconstruction of, eligible properties in conformance with rehabilitation standards, except as excluded under subsection (c);

(2) Room additions or enlargements pursuant to Section 7402;

(3) Costs for improvements related to making the housing development accessible to and usable by the handicapped;

(4) In unusual cases, and if approved by the Department after consideration of need and cost by the local entity, the cost of design services for the preparation of plans, drawings, and specifications for the rehabilitation of the property;

(5) The cost of building permits and related fees required for the rehabilitation, if not included in the construction contract;

(6) Costs of title reports, credit reports, appraisal reports and fees for recording documents related to the loan; and

(7) The cost of repair and installation of alternative energy conservation systems and weatherization when done in conjunction with other rehabilitation work.

(c) Loans made by local entities pursuant to this subchapter may not include the following unauthorized expenses:

(1) Real property acquisition;

(2) New construction, except for room additions as authorized by this subchapter;

(3) Refinancing;

(4) General property improvements unless such improvements are necessary to correct unsafe, unhealthy or insanitary conditions, including renovations and remodeling, such as remodeling of kitchens and bathrooms, installation of new appliances; landscaping; or the purchase and/or installation of central air conditioning;

(5) Materials, fixtures or equipment of a type of quality which exceeds that customarily used in the locality for properties of the same general type as the property to be rehabilitated;

(6) Appliances not required by rehabilitation standards;

(7) The purchase, installation, or repair of furnishings or trade fixtures;

(8) Local entity administration, consulting, loan packaging, and overhead costs; and

(9) Expenses related to displacement and relocation of tenants in rental units rehabilitated under the program.

(d) Expenses related to rehabilitation activities which result in a decrease in the number of rooms or units in a residence or housing development may be authorized where the following criteria are met:

(1) no permanent displacement will result; and

(2) it is necessary to meet applicable building or housing codes; or

(3) the new unit composition meets a greater housing need than does the existing unit composition; or

(4) the new unit composition is necessary to ensure the economic feasibility of the project.

(e) Expenses related to rehabilitation activities which result in an increase in the number of residential units or conversion of non-residential structures to residential use may be authorized where the following criteria are met:

(1) the additional units will be made available to low income households pursuant to Section 7416 for the purpose of alleviating a shortage of standard rental housing affordable to such households in the community; and

(2) the additional units or conversions are necessary to make rehabilitation and continued maintenance economically feasible.

In cases where nonresidential structures are converted to residential use, the borrower must agree to execute documents to ensure that units created will be reserved for occupancy by low-income households pursuant to Section 7416 for a period of at least fifteen years by agreeing to extend the loan after each five-year term as provided for in Section 7408(d).

(f) In buildings where there are mixed residential and commercial uses, authorized expenses shall include only those expenses attributable to portions of the structure which directly benefit residential uses. Where common elements, such as roofs, are to be rehabilitated, program funds may be used for the residential portion of the total costs, based on the percentage of residential floor area in the structure.

(g) Administrative costs of the Department shall be derived from the Fund.

(h) Related administrative costs of local entities may be derived from the Fund if it is determined by the Department that such payments are necessary for local entities to implement and assure compliance with this program.

Cal. Code Regs. Tit. 25, § 7414

1. Amendment filed 10-2-81; effective thirtieth day thereafter (Register 81, No. 40).
2. Amendment of subsections (b)(1), (d) and (e) filed 11-2-82; effective thirtieth day thereafter (Register 82, No. 45).
3. Amendment filed 6-3-85; effective thirtieth day thereafter (Register 85, No. 23).

Note: Authority cited: Section 50662, Health and Safety Code. Reference: Sections 50660-50668, Health and Safety Code.