Sec. 05.05.01.12. Restrictions on Ownership and Occupancy

A. Change of Ownership. During the loan term, the sponsor of the project may not sell, cease to own, assign, transfer, or dispose of all or any part of the sponsor’s interest in the project or the real property on which it is situated, without the prior written consent of the Department, except for leases of individual units or as set forth in the loan documents.

B. Income-restricted projects are subject to the occupancy requirements set forth in §§C-G of this regulation, which occupancy restrictions shall be evidenced by a covenant running with the land which shall be recorded in the land records of the county where the project is located.

C. Minimum Restricted Occupancy Period. The project shall be maintained as rental housing for households of limited income for a minimum of the greater of:

(1) 15 years; or

(2) The number of years required by federal law.

D. Limited Income Occupancy Requirements.

(1) The minimum number of rental units set aside under this regulation shall be the greater of:

(a) The number that bears the same ratio to the whole number of rental units in the project as the amount the Program loan bears to the whole financing of the project or undertaking; or

(b) The number of rental units chosen by the sponsor to satisfy federal occupancy requirements if the project receives federal low-income housing tax credits or is financed in part with government-issued, federally tax-exempt revenue bonds.

(2) Units restricted for occupancy to meet other federal, State or local occupancy requirements may be counted toward the minimum number of units required under §D(1) of this regulation.

(3) Units occupied by households that continue to meet applicable federal occupancy restrictions under §D(1) of this regulation shall be deemed to continue to meet the applicable restrictions of this regulation.

E. The maximum rent for each unit in a project shall equal the difference between:

(1) 30 percent of the imputed tenant income as calculated in §F of this regulation; and

(2) A utility allowance based on standards established by the Department in accordance with Treasury Regulation 1.42-10, as amended, for the low-income housing tax credit program.

F. The imputed tenant income shall equal the restricted unit income limit for:

(1) A household which is considered to have a size of 1.5 times the number of bedrooms in the unit for units with one or more bedrooms; and

(2) One person for efficiency and single room occupancy units.

G. For units occupied by elderly households, the imputed household size under §F(1) of this regulation may not exceed three persons regardless of the number of bedrooms.

H. If fewer than all of the units in a project are income-restricted, the location of the income-restricted units may change from time to time as tenants move, and the rental housing units in a project which are not income-restricted units are not required by the Program to be occupied by persons meeting income restrictions.

I. Limited Equity Cooperative Housing.

(1) The units in a limited equity cooperative housing project shall be occupied by households of limited income at the time of initial occupancy, and following any subsequent sale, resale, or transfer of shares, or subletting which results in a change in the household occupying the unit.

(2) If existing rental housing is converted to limited equity cooperative housing through the assistance of a loan from the Program, an existing tenant may not be required to vacate the premises solely because the tenant does not elect to become a stockholder in the corporation owning the limited equity cooperative housing.