(a) The department shall ensure that not less than 20 percent of the moneys in the Emergency Housing and Assistance Fund shall be allocated to nonurban counties during any given fiscal year. If the funds designated for facilities operation that are allocated to nonurban counties are not awarded by the end of that fiscal year, then those unencumbered funds shall be allocated in the next fiscal year to urban counties. Funds for capital development that are not awarded by the end of the second fiscal year shall be awarded in the subsequent fiscal year to urban counties.

(b) The amount of funds that the department allocates from the Emergency Housing and Assistance Fund to each region, excluding funds allocated pursuant to subdivision (a), shall be based upon a formula that accords at least 20 percent weight to each of the following factors:

(1) The relative number of persons in the region below the poverty line according to the most recent federal census, updated, if possible, with an estimate by the Department of Finance, compared to the total of the urban counties.

(2) The relative number of persons unemployed within each region, based on the most recent one-year period for which data is available, compared to the total of the urban counties.

(c) Grant funds shall be disbursed as expeditiously as possible by the department.

(d) The department shall use not more than 5 percent of the amount available for funds pursuant to this chapter to defray the department’s administrative costs pursuant to this chapter.

(e) Notwithstanding any other provision of this chapter, the department shall distribute funds appropriated for purposes of the activities specified in paragraphs (2) and (7) of subdivision (a) of Section 50803 as grants in the form of forgivable deferred loans, subject to all of the following:

(1) (A) Funding shall be made available to each project as a loan with a term of five years for rehabilitation, seven years for substantial rehabilitation, 10 years for acquisition and rehabilitation or new construction, or 20 years for conversion to permanent supportive housing for homeless families and individuals. Each deferred loan shall be secured by a deed of trust and promissory note. Repayment of the loan shall be deferred as long as the project is used as an emergency shelter, permanent supportive housing, or transitional housing. At the completion of the specified year term, the loan shall be forgiven. If a transfer or conveyance of the project property, however, occurs prior to that time that results in the property no longer being used as an emergency shelter, permanent supportive housing, or transitional housing, the department shall terminate the grant and require the repayment of the deferred loan in full.

(B) If the property is transitioned from an emergency shelter or transitional housing to permanent supportive housing, and serves people who are homeless or at risk of homelessness, the loan may also be deferred and forgiven according to subparagraph (A), as if it had remained an emergency shelter or transitional housing. Prior to a transition, a project shall obtain department approval to transition to permanent supportive housing to ensure that the proposed transition is consistent with this subdivision. In considering whether to approve a transition, the department shall evaluate the following factors: the suitability of the building for use as permanent supportive housing and project financial feasibility. A project transitioned to permanent supportive housing pursuant to this subdivision shall have a loan term of 20 years from the beginning of its approved use as permanent supportive housing for people who are homeless or at risk of homelessness. If a transitioned project property is no longer being used as permanent supportive housing for people who are homeless or at risk of homelessness, the department shall terminate the loan and require repayment of the deferred loan in full.

(i) For purposes of this subparagraph, “permanent supportive housing” has the same meaning as the term “supportive housing,” as defined in paragraph (2) of subdivision (b) of Section 50675.14.

(ii) For purposes of this subparagraph, “people who are homeless” means individuals described in Section 11302 of Title 42 of the United States Code, and paragraph (2) of subdivision (e) of Section 11139.3 of the Government Code.

(2) Applications for funding shall be made pursuant to department-issued statewide “Notices of Funding Availability” without the need for additional regulations.

(3) The department shall set forth the criteria for evaluating applications in the “Notices of Funding Availability” and shall make deferred loans based on those applications that best meet the criteria.

(4) The department shall specify in the “Notice of Funding Availability” both maximum and minimum grant amounts that may be varied for urban and nonurban counties.

(5) Contracts for projects that have not begun construction within the initial 12-month period shall be terminated and funds reallocated. The department, however, may extend this period by a period not to exceed 12 months.

(Amended by Stats. 2013, Ch. 495, Sec. 1.5. (AB 1109) Effective January 1, 2014.)