Housing programs: financing.

Senator Reyes' housing finance legislation expands options for property owners to access additional debt financing through the Department of Housing and Community Development for property rehabilitation and affordable housing investments. The measure modifies existing regulations to allow extracted equity to be used for reimbursing predevelopment costs, unreimbursed capital improvements, and operating deficits.

The bill redefines "extracted equity" as distributed funds financed through debt secured by department-regulated properties, while maintaining core requirements for debt approval. Property owners must demonstrate a minimum 1.15 debt-service coverage ratio and positive cash flow projections for 15 years. New debt must remain subordinate to department liens unless subordination is deemed necessary for project feasibility. The department's regulatory agreement continues throughout its term, with monitoring fees preserved to ensure compliance.

Under the revised framework, property owners can utilize extracted equity for department-approved purposes including contributions to deed-restricted affordable housing, purchasing tax credit investor interests, paying deferred developer fees, funding necessary repairs, and establishing project reserves. When equity is extracted for these approved uses, the department's regulatory agreement maintains a senior position in property records.