Department of Housing and Community Development.

The income threshold for 'challenged development' was broadened from 'very low income or extremely low income' to include 'low, very low income, or extremely low income,' making more housing projects eligible for loans and grants.

A new criterion (D) was added to the 'challenged development' definition requiring that the development has an affordability restriction that has expired, has a remaining term of less than 10 years, or is otherwise at risk of conversion to unrestricted use.

A new definition of 'at risk of conversion' was added, listing examples including risk of default or foreclosure, physical obsolescence or life safety deficiencies, significant vacancy with sustained negative cash flow for three or more consecutive years, and demonstrated need for financial support to maintain the property.

The vague requirement to allocate 'a certain percentage' of funds to non-department-funded challenged developments was replaced with a concrete minimum of at least 10 percent of funds in every round. The department may allocate a higher percentage based on demand and resource availability, and may redirect a portion of the 10 percent to department-funded projects if applications from non-department-funded developments are insufficient.

A new paragraph (6) was added authorizing the department to establish separate selection and underwriting standards for developments that meet either of the two main eligibility criteria (department-funded at-risk projects or challenged developments).

Assembly Member Haney was added as a coauthor of the bill.

All amendments to Health and Safety Code Sections 17974.1, 17974.1.5, 17974.3, and 17974.5 were removed. These provisions required cities and counties to perform annual inspections of homeless shelters, issue notices to correct violations, display occupant rights information, submit annual reports, and face state funding withholding for non-compliance.

The bill's stated purpose changed from amending Sections 17974.1, 17974.3, 17974.5, adding Section 17974.1.5, and amending Section 50607 to only amending Section 50607 of the Health and Safety Code.

Removed the provision entitling prevailing plaintiffs to recover attorney's fees and costs in enforcement actions, and removed authorization for the Department of Housing and Community Development to bring civil actions to enforce homeless shelter safety requirements.

Removed the requirement that the department withhold state funding from a city or county that fails to comply with reporting requirements or fails to take action to correct a violation by a homeless shelter.

New Section 50607(a)(1)(5) requires the department to allocate a certain percentage of funds to challenged developments that are not department-funded, based on relative need and availability of resources. The specific percentage is left for the department to determine.

New Section 50607(a)(1)(4) requires the department to evaluate and analyze the preservation and rehabilitation needs of department-funded developments meeting the criteria in subparagraphs (A) and (B) before allocating program funds, to help inform program guidelines and allocation decisions.

The state-mandated local program designation changed from 'yes' to 'no' because the local government obligations (shelter inspections, reporting) were removed. The corresponding state mandate reimbursement section was also deleted.

Coauthors Assembly Members Alanis, Haney, and Schiavo were removed from the bill, likely reflecting that they supported the now-removed homeless shelter safety provisions.

New Section 50607 of the Health and Safety Code is added, authorizing HCD to make loans or grants (upon appropriation) to rehabilitate, capitalize operating subsidy or replacement reserves for, and extend long-term affordability of department-funded housing projects with expired or near-expired (less than 10 years remaining) affordability restrictions, as well as a new category called 'challenged developments.'

The bill's stated purpose now includes amending Section 50607 of the Health and Safety Code in addition to the existing amendments to Sections 17974.1, 17974.3, and 17974.5.

New definition of 'challenged development': a development at least 15 years old that either serves very low income or extremely low income households (average maximum household income not more than 45 percent of area median gross income) or is financed under Section 514 or 521 of the National Housing Act of 1949, and has insufficient access to private or other public resources to complete substantial rehabilitation as determined by HCD.

HCD must grant priority for loans and grants to department-funded projects with expired or near-expired affordability restrictions over challenged developments. Developments financed under the new chapter may layer program funds with other federal, state, and local resources.

If HCD makes a loan to a project that already has an existing HCD multifamily housing loan, the department may approve extension of the existing loan, reinstatement of a qualifying unpaid matured loan, subordination to new indebtedness, or investment of tax credit equity without complying with Chapter 3.9 requirements. The department may also forgive some or all accrued interest on the existing loan if necessary to facilitate the new rehabilitation loan.

HCD may establish loan processing or transaction fees capped at the cost of processing transactions, with authority to waive fees for project feasibility. HCD may charge a monitoring fee in lieu of the required 0.42 percent per annum loan payments and may capitalize such fees to ensure financial feasibility and long-term affordability.

HCD may adopt implementing guidelines that are exempted from Administrative Procedure Act rulemaking requirements.

The state-mandated local program determination appears to have been changed from 'yes' to 'yes no,' though the digest still references a state-mandated local program for the shelter inspection provisions. This may reflect a reclassification given the new department-directed finance provisions.

New subdivision (j) in Section 17974.1 establishes that inspections must be conducted based on the location of the shelter: cities inspect shelters within city limits, counties inspect shelters within county jurisdiction, and cities with a population under 100,000 may partner with their county to conduct inspections.

Section 17974.3(b)(1) removed the phrase 'by the department' from the provision allowing enforcement actions under Code of Civil Procedure Section 1085. The department can still bring a civil action under paragraph (3), but is no longer explicitly named as a party who may bring a mandamus action under paragraph (1).

Fixed a typo in the legislative counsel's digest: 'bring an a civil action' corrected to 'bring a civil action.'

The legislative counsel's digest now includes the phrase 'as prescribed' after describing the annual inspection requirement, reflecting the new jurisdictional rules added in subdivision (j).

A prevailing plaintiff in a legal action to enforce the homeless shelter safety provisions is now entitled to recover reasonable attorney's fees and costs, creating a financial incentive for private parties to bring enforcement actions.

The Department of Housing and Community Development is now explicitly authorized to bring a civil action to enforce the article, notwithstanding any other law that would limit it to administrative enforcement only.

The exemption allowing a city or county to skip its annual report if there were no outstanding violations or corrected violations during the period was removed. Cities and counties must now submit a report every year regardless of whether they received any complaints.