Housing programs: financing

The change gives the department discretion to support the financial stability of a rental housing project using limited surplus funds from another project under the same ownership. It protects payment and reserve rights held by other lenders and public entities.

What the law does ​

• Authorizes the department to transfer its share of project cash flow or qualifying excess reserves as equity from one department-regulated rental development to another owned by the same sponsor or affiliate.
• Allows transfers only at the department’s discretion and only to improve a development’s fiscal integrity.
• Bars transfers that reduce, offset, subordinate, or impair amounts owed to other lenders, public agencies, or governmental entities.
• Limits transferable replacement reserves to amounts above immediate and short-term repair needs, requires a recent independent physical-needs assessment, and preserves at least $1,000 per unit and required annual reserve deposits.

Who it affects ​

• Sponsors and affiliates that own multiple rental housing developments subject to Department of Housing and Community Development regulatory agreements.
• Lenders, public agencies, and governmental entities with payment or reserve rights in affected developments.
• Residents of rental developments whose financial stability may be supported through authorized transfers.

Context ​

The transferred funds must come from the department’s otherwise payable share of project cash flow or reserves exceeding specified project needs.