(a)

(1) Upon appropriation by the Legislature for purposes of this chapter, the department may award a forgivable loan or grant to a qualified rental housing development to replace federal and state low-income housing credit equity contained in the application for which the development received the original award letter or, if applicable, a subsequent application to the California Tax Credit Allocation Committee.

(2) The department may, in its sole discretion, adjust the grant or loan amount to account for reduction of fees associated with tax credit syndication, reasonable cost increases, including unforeseeable cost overruns or gaps in financing due to changed market conditions, or other financing sources obtained by the sponsor of the development.

(3) If funds provided under this

chapter are provided as a loan, the loan shall have an interest rate of percent. (b)

(1) A rental housing development that receives a grant or loan under this

chapter shall commence construction within days of issuance of an award letter for funds provided pursuant to this chapter.

(2) The department may, within its sole discretion, extend the 180-day requirement based on conditions beyond the control of the development sponsor, provided the revised construction commencement date is not more than days beyond the 180-day period. (c)

(1) The department shall determine the terms under which a loan or grant is subject to repayment.

(2) The terms established by the department shall include, but not be limited to, conversion of the development to market rate housing or sale or refinancing of the development with a distribution of net equity.

(3) Repayments shall be deposited into the Housing Rehabilitation Loan Fund established by

Section and shall be used for the purposes of the Multifamily Housing Program established by

Chapter 6.7 (commencing with

Section 50675). (d)

(1) The department may establish an application fee for the program.

(2) A loan or grant awarded pursuant to this

chapter shall not be subject to any annual monitoring fees, except for the monitoring fees associated with the original multifamily housing program loan or loans provided by the department.