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Ord. 163-19 enacted this chapter with two sections designated as Sec. 117.1.
For purposes of this Chapter 117, the following terms shall have the following meanings:
“Board” means the Board of Supervisors.
“Borrower” means a recipient of a Loan.
“City” means the City and County of San Francisco.
“Cooperative Living” means communal, non-institutional, neighborhood-based, household settings with 24-7 on call individual and household case management services for Eligible Persons.
“Contractor” means a nonprofit organization that enters into a contract or grant agreement with the Department of Public Health to provide services to Eligible Persons in housing operated under the Cooperative Living Opportunities for Mental Health Program.
“Declaration of Restrictions” means an agreement to be executed by the Borrower and recorded against Property as a condition to the receipt of a Loan that restricts the use of the Property.
“DPH” means the Department of Public Health.
“DPH Director” means the Director of Health, or the Director’s designee.
“Eligible Person” means a person with chronic mental illness and/or a substance use disorder who has been assessed and determined by DPH to be able to live independently and safely in Cooperative Living and to be able to participate in maintaining a cooperative household.
“Fund” means the Cooperative Living Opportunities for Mental Health Loan Fund administered by MOHCD under Administrative Code Chapter 10.100-49.5.
“Loan” means a loan of funds made under the Program, including the modification, refinancing, or restructuring of a loan, with a term of 10 years or longer.
“MOHCD” means the Mayor’s Office of Housing and Community Development, or any successor agency.
“MOHCD Director” means the Director of MOHCD, or the MOHCD Director’s designee.
“Program” means the Cooperative Living Opportunities for Mental Health Program for the acquisition and operation of single-family homes, multi-family residential buildings, and/or residential units for Cooperative Living.
“Program Regulations” means policies, procedures, rules, guidelines, manuals or regulations published by the Directors and designed to implement the Program.
“Property” means any real property used and restricted for Cooperative Living and used to secure a Loan.
(a) MOHCD and DPH shall establish and operate a Cooperative Living Opportunities for Mental Health Program designed to provide financing in the form of long-term loans to and contracts with nonprofit organizations for the purpose of acquiring, retaining, and operating an economical and stable stock of multi-family buildings and/or single-family homes to create cooperative living opportunities for people with chronic mental illness and/or substance abuse disorders.
(b) DPH shall determine client eligibility and authorize client placement in Cooperative Living units. Subject to the requirements of Article 21 of the Administrative Code, or any competitive procurement requirements applicable to grant agreements, DPH shall enter into new contracts or grants, or expand existing contracts or grants, with nonprofit housing providers to support the operation of Cooperative Living opportunities, and associated services, through state programs, City funding, and/or other sources, as available.
(c) MOHCD shall provide loan administration for the Program.
1. So in Ord. 163-19.
(a) Eligible Sites. MOHCD shall make Loans to qualified nonprofit organizations for the purpose of acquiring residential units or buildings as Cooperative Living consistent with the Program Regulations. Eligible properties for acquisition may include any single-family home, multifamily residential building, or other residential unit suitable for Cooperative Living; provided, however, that such property shall not be occupied by renters or be the subject of evictions under Administrative Code 37.9(a)(8) or 37.9(a)(10), except for acquisition of units currently master leased by nonprofit organizations where the acquisition would preserve current occupancy by Eligible Persons. MOHCD and DPH shall establish minimum requirements for site eligibility to ensure that sites are suitable for operation as Cooperative Living and financially feasible.
(b) Program Management. The MOHCD Director shall be responsible for the operation and management of the loans provided under the Program. The MOHCD Director may appoint agents and consultants to assist with the administration of loans under the Program, provided that any such appointment is consistent with the civil service provisions of the Charter.
(c) Program Regulations. The MOHCD Director and DPH Director shall jointly publish from time to time Program Regulations as appropriate to implement the Program, consistent with applicable law and this Chapter 117. The MOHCD Director and DPH Director shall publish all Program Regulations on DPH’s website and in such additional places as the DPH Director deems appropriate, and shall provide copies or electronic links on request. The Program Regulations shall address matters such as Program and Fund administration, public and competitive processes to apply for Loans, compliance with applicable laws and regulations, appraisal of the Property, affordability restrictions for the longest possible term, eligible uses of Funds, underwriting criteria, transaction processing, documentation, compliance monitoring, and enforcement. At a minimum, the Program Regulations shall include, but are not limited to: (1) experienced property management to provide operating and maintenance, rent collection, lease enforcement, financial management and reporting; (2) a harm reduction policy; (3) procedures for lease violation and termination; and (4) limits on rent, which shall not exceed 30% of an Eligible Person’s income.
(a) Loan Term and Repayment. The MOHCD Director shall prepare Loan documents consistent with the Program Regulations. So long as the applicable Property continues to be used for Cooperative Living, the Loan documents may allow payment from net cash flow, defer some or all payments during the term, and allow for debt forgiveness at the end of the term, all as determined by the MOHCD Director.
(b) Security for Loans. The MOHCD Director may require Loans made under this Chapter 117 to be secured by a deed of trust and other security instruments for the benefit of the City consistent with Program Regulations. The MOHCD Director may record and subordinate deeds of trust and other security instruments as needed or appropriate to achieve and preserve Cooperative Living.
(c) Declaration of Restrictions. Any Loan shall be subject to a Declaration of Restrictions with the longest possible term as determined by the MOHCD Director, including, but not limited to terms of 55 years or longer or for the life of the applicable building or unit. MOHCD shall not subordinate a Declaration of Restrictions to any third party financing instrument, except to the extent required by federal or state funding sources or financing for the acquisition of Cooperative Living.
(d) Combining Loans. Subject to any applicable requirements of a funding source, MOHCD may issue one or more Loans, in any combination, that the MOHCD Director deems appropriate to fund acquisitions for Cooperative Living. A Borrower shall comply with the requirements of each applicable funding source, which shall be included in the Loan documents.
(e) Purchase Option. To ensure long-term affordability, MOHCD may require Borrowers to execute and record against the Property an agreement that provides the City an option to purchase the Property at a restricted value.
(f) Compliance with Transaction Documents and Applicable Laws. Each Loan agreement shall require Borrowers to comply with applicable laws and regulations, including federal, state, and City regulations and Program Regulations. In addition, MOHCD shall work with the Controller, the City Attorney, and non-City funding sources to monitor compliance with all Loan agreements, Program Regulations, and applicable laws.
(a) Agreements. MOHCD shall prepare standard form Loan agreements, which will be subject to negotiation as deemed appropriate by the MOHCD Director.
(b) Funding Disbursement. MOHCD shall be responsible for approving the disbursement of Loan proceeds and monitoring the performance of Borrowers under this Chapter 117 and enforcing the applicable agreements. MOHCD shall establish commercially reasonable protocols to oversee the use and expenditure of Loan proceeds.
(c) Loan Servicing. MOHCD shall collect revenues due and owing under Loans, maintain records of all such revenues, and maintain annual statements of such accounts. Loan repayments shall be deposited into the applicable Fund in accordance with Program Regulations.
(d) Fees for Services. MOHCD may charge reasonable fees, including Loan origination and monitoring fees, and such other necessary fees of consultants and agents retained to administer the Program. MOHCD shall include a statement of the fees in the Program Regulations for the Program.
(e) Refinance and Loan Workouts. To preserve and maintain any Cooperative Housing, the Director is authorized to refinance, restructure, modify, or extend the term of any Loan and any related agreements, provided that a new Declaration of Restrictions is recorded against the Property.
(f) Monitoring and Enforcement.
(1) DPH shall monitor Contractor compliance with Program Regulations related to delivery of services and enrollment of tenants who meet eligibility criteria. DPH shall establish annual reporting requirements for Contractors and shall report annually to the Board of Supervisors on the number and types of Cooperative Living units established and maintained under the Program. DPH may take such actions as may be reasonably necessary to enforce the terms of any contracts or grants entered into with Contractors for the delivery of services to Eligible Persons as part of the Program.
(2) MOHCD may take such actions as may be reasonably necessary to enforce Loan requirements and collect on any security, including the foreclosure of any deed of trust, possession of rents and other revenues, or the demand and collection under any guaranty or other security instrument.
(3) MOHCD may also take action to protect its security or its interest in a Property, including curing a default under a senior loan or acquiring property at a tax sale, foreclosure, through a deed in lieu of foreclosure, or through a judicial process. The Board authorizes and delegates to the MOHCD Director, following consultation by the MOHCD Director with the DPH Director, the Director of Property, and the City Attorney, the right to accept a deed or other security or interest in property as part of any remedy or as may be needed to preserve any Cooperative Housing.