california state preservation notice laws los angeles affordable housing preservation summit may 10,...
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![Page 1: California State Preservation Notice Laws Los Angeles Affordable Housing Preservation Summit May 10, 2011](https://reader030.vdocuments.site/reader030/viewer/2022032523/56649d815503460f94a656c7/html5/thumbnails/1.jpg)
California State Preservation Notice LawsLos Angeles Affordable Housing
Preservation Summit
May 10, 2011
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Overview of State Notice Laws
Basic understanding of regulatory framework
Ability to find the answer to any question (handouts)
Q & A table later todayNot legal advice - consult your
attorney!!!
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Roadmap to Notice LawsRefers to California Government
Code §§ 65863.10, 65863.11 and 65863.13
.10 = notice to affected tenants &
affected public entities.11 = notice to qualified entities.13 = exemption from .10
and .11 for sale with 30+ year regulatory agreement
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Notice to Affected Tenants and Affected Public EntitiesCovered Properties = Assisted Housing
DevelopmentsAssisted Housing Developments =
multifamily rental housing developments, receiving assistance under:
◦ New Construction, Substantial Rehab, Mod Rehab, LMSA Any PROJECT-BASED Section 8
◦ Sections 221(d)(3) bmir, 236, 202◦ Section 42 of the IRC◦ Chapter 1138 of the Statutes of 1987
.10
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Notice to Affected Tenants and Affected Public EntitiesCovered Properties = Assisted Housing
DevelopmentsAssisted Housing Developments = multifamily,
rental housing developments, receiving assistance under:
◦ And many, many other programs: Rent Supplement Rural housing programs Section 142(d) tax-exempt bonds, CDBG, HOME, McKinney-Vento HCD grants and loans Tax-increment financing Local housing trust funds Density bonuses And more… (see .10(a)(3)(A))
.10
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Notice to Affected Tenants and Affected Public Entities
What triggers the notices (ETP):◦Expiration of Rental Restrictions:
Unless other recorded agreements for 50 percent
◦Termination: Owner’s decision not to extend or renew
participation in federal, state or local subsidy program
◦Prepayment: Federally insured/held mortgage with effect of
removing current rent or occupancy restrictions
.10
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Notice to Affected Tenants and Affected Public Entities
What notices must be sent:◦Twelve-month notice to affected
tenants and affected public entities◦Six-month notice to affected tenants◦Six-month notice to affected public
entities
.10
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Notice to Affected Tenants and Affected Public Entities
Contents of Twelve-Month Notice to Affected Tenants & Public Entities (8 items):
◦Statement of ET or P◦Whether owner intends to increase rents in
twelve months following ETP◦Anticipated date & name of program◦Affordability restrictions will be removed◦Owner may elect to remain in program◦Whether other assistance will be provided◦Six-month notice will be sent◦Notice of opportunity to submit purchase offer
.10
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Notice to Affected Tenants and Affected Public Entities
Exception to twelve-month notice requirements:◦If owner provides copy of “federally
required” notice of termination or prepayment at least twelve months prior to proposed change
◦Does not satisfy six-month notice requirement or .11 notices
Example: ◦One year federal notice requirement for
project-based Section 8 opt-out (42 U.S.C. § 1437f(c)(8)(A)
.10
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Notice to Affected Tenants and Affected Public Entities
Contents of Six-Month Notice to Tenants (6 items):◦Anticipated date of ETP◦Current rent and anticipated rent◦Statement of notice to public entities◦Owner may elect to remain in program◦Whether owner intends to participate in any replacement subsidy program◦Contact information for public entities and a legal services organization
.10
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Notice to Affected Tenants and Affected Public Entities
Contents of Six-Month Notice to Public Entities (12 items):◦ All the same info in six-month tenant notice◦ Number of affected tenants◦ Number of units w/ assistance & type◦ Number of units w/o assistance◦ Number of bedrooms in assisted units◦ Ages and income of affected tenants◦ Brief description of owner plans
Attach copy of any federally required notice of TP provided six-months prior
Information based on “reasonably available” data from existing written tenant and project records
.10
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Notice to Affected Tenants and Affected Public Entities
Two other notice requirements:◦Notice of “significant changes” to six-
month notice E.g. Change in anticipated date or new rent Notice to affected tenants and public entities Notice must be provided within seven business
days
◦Prospective Tenants Any notice issued to existing tenants at time of
eligibility interview
.10
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Notice to Affected Tenants and Affected Public Entities
Final .10 Details:◦No additional info gathering
required; not liable to any party for providing notices
◦All notices sent by first-class mail◦Injunctive relief to any affected
tenant or public entity aggrieved of violation
◦Forms to be used on HCD website
.10
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Roadmap to Notice Laws.10 = notice to affected tenants
& affected public entities
.11 = notice to qualified entities
.13 = exemption from .10 and .11 for 30+
year regulatory agreement
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Notice to Qualified EntitiesCovered Properties =
SAME AS .10(…project-Based Section 8, subsidized
mortgage programs, LIHTC, TIF, Chapter 1138 of the Statutes of 1987, etc!)
.11
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Notice to Qualified EntitiesWhat triggers the notice =
SAME AS .10(expiration, termination,
prepayment)
PLUS:◦Sale or disposition within 5 years of E or
eligibility for TP
.11
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Notice to Qualified EntitiesWhat notice must be sent:
◦Notice of the opportunity to offer to purchase
◦Must be given prior to or concurrently with the twelve-month notice to affected tenants and public entities
.11
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Notice to Qualified EntitiesWho can be a QE:
◦Tenant association of the development◦Local nonprofit organizations and public
agencies◦Regional or national nonprofit
organizations and regional or national public agencies
◦Profit-motivated organizations or individuals
.11
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Notice to Qualified EntitiesRequirements to be a QE:
◦ Capable of managing the housing and related facilities for its remaining useful life
◦ Agree to obligate self and successors to maintain affordability for greater of 30 years or remaining term of existing assistance (.11(e)(2))
◦ Development shall be continuously occupied in approx. % as households that occupied development on date of notice or in use agreements, whichever more stringent
◦ Regulatory agreement must require renewal of subsidies
◦ Economic feasibility exception from rent and occupancy requirements for 1+ unit(s) (.11(f))
.11
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Notice to Qualified EntitiesHow does owner contact QEs:
◦Contact HCD to obtain list of QEs HCD website has list of QEs that have
contacted it or that it has identified as interested in program
◦Send notice to QEs on HCD list◦Also send to any QE that directly
contacts ◦Notices sent by registered or certified
mail◦Also post notice in common area
.11
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Notice to Qualified EntitiesContents of twelve-month notice to QEs:
◦All owners: Whether the owner intends to maintain the
current # of affordable units & level of affordability
Whether the owner has an interest in selling Whether the owner has executed
contract/agreement to continue/replace subsidy to maintain equal or greater number of units at equal or deeper level of affordability for at least five years
A statement about qualified entities opportunity to submit purchase offer
A statement that sent .10 twelve-month notice
.11
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Notice to Qualified Entities Additional contents of twelve-month notice to QEs for
properties with > 25% of units subject to affordability restrictions:
◦ Statement that additional info will be made available within 15 business days of QE request:
Itemized lists of monthly operating expenses Capital improvements made within last two years Amount of project reserves Two most recent financial & physical inspection
reports filed with fed/state/local agency (if any) Most recent rent roll (rent paid + unit subsidy) Vacancy rate for last two years Terms of assumable financing, terms of subsidy
contract and proposed improvements in connection w/ sale (if any)
.11
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Notice to Qualified EntitiesTimeline Framework:
◦ During first 180-day period from notice, owner can only accept offer from QE
◦ During next 180-day period, owner can accept offer from non-QE but must provide all QEs that submitted bona fide offer in first 180-day period option to buy on same terms and conditions
◦ QE has 30 days to submit matching offer◦ Owner exempt from notifying QES of pending sale if
purchaser complies with 30+ year restrictions (.11(e)(2))
No requirement to sell:◦ Some states do require sale (Illinois, Maine, Rhode
Island)
.11
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Notice to Qualified EntitiesSection .11 does not apply to:
◦Eminent domain or publicly negotiated purchase
◦Forced sale pursuant to foreclosure◦Transfer by gift, devise, or operation
of law◦Sale to certain descendants◦Owner who certifies, under penalty
of perjury, the existence of a financial emergency
.11
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Notice to Qualified EntitiesFinal .11 Details:
◦Prior to close of escrow in sale or disposition to non-QE entity, owner must certify compliance with .10 and .11 under penalty of perjury
◦Provisions of .11 may be enforced by any adversely affected QE by owner failure to comply
◦QE notices sent by certified mail
.11
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Roadmap to Notice Laws.10 = notice to affected tenants
& affected public entities
.11 = notice to qualified entities
.13 = exemption from .10 and .11 for 30+
year regulatory agreement
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Exemption from .10 & .11 for 30+ Year Regulatory Agreement No requirement to provide .10 & .11 notices if all
following conditions contained in a regulatory agreement that has been or will be recorded against property at close of escrow of sale:◦ No involuntary displacement of current low-income tenants◦ Fully accept, utilize all PB Sec 8 renewals◦ Accept all enhanced and regular vouchers◦ Good cause eviction for low-income tenants◦ Owner may consider applicant income as long as consider
other factors relevant to ability to pay◦ Restriction of rents and incomes of previously restricted units
to equal or greater level A few exceptions, see .13(a)(7) - (9).
Regulatory agreement = agreement with government agency for greater of term of existing fed/state/local assistance or 30 years.
.13
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Roadmap to Notice Laws.10 = notice to affected tenants
& affected public entities
.11 = notice to qualified entities
.13 = exemption from .10 and .11 for 30+
year regulatory agreement
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.10, .11 and .13Review of Notice Law Framework:
◦Twelve-month notice to affected tenants and public entities Not required if delivered other one-year federally
required notice of termination or prepayment
◦Six-month notice to tenants◦Six-month notice to affected public entities◦Twelve-month notice to QEs
First 180-day period, only accept QE offers Second 180-day period, provide QEs chance to
match
◦Exempt if new 30+ year regulatory agreement recorded at close of escrow
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How to Find out More
Q & A Table HCD websiteAsk your attorney!!!
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SB 454 (Lowenthal)Changed 4 things:
◦Removed sunset of Jan 1, 2011 – laws now permanent
◦Added information need to provide (covered)
◦Certain information no need to provide in QE notice if only 25% units restricted (covered)
◦Public entities/CHPC may share QE info with other prospective purchasers, no confidentiality agreement
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California State Preservation Notice LawsLos Angeles Affordable Housing
Preservation Summit
May 10, 2011