Acquisition, Preservation, New Construction, and Stabilization

All housing acquired, preserved, constructed or stabilized by HSF funds shall meet the following requirements, except for housing meeting the requirements of 760 CMR 24.04(2): (1) For Projects funded pursuant to the HSF I or HSF II Legislation: (a) For the first 20 years after a HSF loan or grant is provided, substantially all of the assisted units shall be rented to or owned by Low or Moderate Income Persons or Families. (b) After the first 20 years, the assisted units may be rented or sold to persons or families whose adjusted income is less than or equal to 100% of the Area Median Income; provided that, if the units are sold, they shall remain subject to such affordability restrictions as determined by the Department to be reasonable and necessary to maintain long-term affordability. (2) For Projects funded pursuant to the HSF III Legislation or M.G.L. c. 121F: (a) For the first 40 years after a HSF loan or grant is provided, substantially all of the assisted units shall be rented to or owned by Low or Moderate Income Persons or Families, and not less than 25% of the assisted units shall be rented to or owned by Extremely Low Income Persons or Families, unless the Department has made a determination at the end of the relevant fiscal year in accordance with the HSF III Legislation or M.G.L. c. 121F that it is not feasible to require 25% of assisted units to be so reserved. (b) After the first 40 years, the assisted units may be rented or sold to persons or families whose adjusted income is less than or equal to 100% of the Area Median Income; provided that, if the units are sold, they shall remain subject to such affordability and appreciation restrictions as determined by the Department to be reasonable and necessary to maintain long-term affordability. Notwithstanding anything in 760 CMR 24.05(2)(b), an owner may not terminate the tenancy or refuse to renew the lease of the tenant of an assisted rental unit except: 1. for serious or repeated violations of the lease; 2. for violations of applicable federal, state, or local law; or 3. for other good cause. (3) For Projects funded pursuant to the HSF IV Legislation: (a) For the first 50 years after a HSF loan or grant is provided, substantially all of the assisted units shall be rented to or owned by Low or Moderate Income Persons or families, and not less than 25% of the assisted units shall be rented to or owned by Extremely Low Income Persons or Families, unless the Department has made a determination at the end of the relevant fiscal year in accordance with the HSF IV Legislation that it is not feasible to require 25% of assisted units to be so reserved. (b) If the assisted units are sold, they shall remain subject to such affordability restrictions and appreciation as determined by the Department to be reasonable and necessary to maintain long-term affordability. Notwithstanding anything in 760 CMR 24.05(3)(b), an owner may not terminate the tenancy or refuse to renew the lease of the tenant of an assisted rental unit except: 1. for serious or repeated violations of the lease; 2. for violations of applicable federal, state, or local law; or 3. for other good cause. (4) HSF III Projects and Projects under M.G.L. c. 121F - Purchase Option and First Refusal Option: For Eligible Projects funded pursuant to the HSF III Legislation and M.G.L. c. 121F, the Department shall be granted a purchase option and a first refusal option to purchase the Project: (a) Purchase Option. Upon the expiration of the term of the Affordable Housing Restriction, the Department shall have an option to purchase the Project from the owner at a price equal to the then-current appraised value of the Project less the total outstanding balance of all principal, interest and any other charges payable under the applicable HSF loan (as more fully described in, respectively, the HSF III Legislation and M.G.L. c. 121F and the documents evidencing the applicable HSF funding, the “Purchase Option”). The appraised value of the Project shall be determined in the manner described in the HSF III Legislation or M.G.L. c. 121F, as applicable. The Department may exercise the Purchase Option by sending notice of its intention to exercise the Purchase Option to the owner within 120 days after the expiration of the term of the affordability restrictions imposed by the Affordable Housing Restriction (the “Option Exercise Deadline”). (b) First Refusal Option. If at any time the owner of a Project wishes to sell or otherwise dispose of (“transfer”) the Project where the Department has not previously exercised the Purchase Option, the owner shall send a notice to the Department by regular and certified mail, return receipt requested, setting forth the owner’s intention to sell or otherwise dispose of the Project and the terms of any bona fide offer by a third party to purchase the Project (the “Owner’s Notice”). The Department shall have the right to purchase the Project at the same price and on the same terms as those contained in such bona fide offer (as more fully described in, respectively, the HSF III Legislation and M.G.L. c. 121F and the documents evidencing the applicable HSF funding, the “First Refusal Option”). The Department may exercise the First Refusal Option by sending notice to the owner of its intention to exercise the First Refusal Option by certified mail and recording/filing a copy of such notice in the registry of deeds or registry district of the land court within 120 days after its receipt of the Owner’s Notice. If the Department fails to exercise the First Refusal Option by such deadline, the First Refusal Option shall automatically terminate; however, if the sale contemplated in the offer by a third party is not effected on the same terms and conditions as those contained in the offer by a third party within six months after the Department’s receipt of the Owner’s Notice, the First Refusal Option shall be revived. (c) The Department may assign the Purchase Option or the First Refusal Option to a Qualified Developer. A Qualified Developer is a Developer who: 1. has completed a Housing Stabilization Fund Application (or such equivalent application as may be in use at the time of the assignment) (“Application”) with respect to its proposed purchase of the Project; the Department will issue a “Notice of Project Availability” that will include instructions for completing an Application for this purpose; 2. has been selected to purchase the Project based on the Department’s review and underwriting of the Application; 3. agrees that, upon purchasing the Project, it will execute an Affordable Housing Restriction providing for the Project to remain an Eligible Project for a term of at least 40 years; and 4. provides any due diligence materials not part of the Application that may be required by the Department. (d) If the Department exercises the Purchase Option, the Department or its assignee shall have 120 days after the expiration of the Option Exercise Deadline (i.e., 240 days after the term of the affordability restrictions imposed by the Affordable Housing Restriction) to purchase the Project. If the Department exercises the First Refusal Option, the Department or its assignee shall have 120 days after the expiration of the First Refusal Option period (i.e., 240 days after the Department’s receipt of the Owner’s Notice) to purchase the Project. Promptly upon request by the Department or its assignee, the owner will provide the Department or its assignee with such due diligence material and opportunity to inspect the Project as would be reasonably required by any third-party purchaser. The date for closing under the Purchase Option or the First Refusal Option may be extended by agreement of the parties and the agreed upon extension shall be recorded/filed in the registry of deeds or registry district of the land court. The Department or its assignee may extend the date for closing to a reasonable date if it determines that additional time is needed due to delays in closing preparations caused by the owner. After exercising the Purchase Option or First Refusal Option, the Department may at any time terminate the Purchase Option or First Refusal Option if it determines it is not in the best interests of the Department to effect the purchase (but such termination right shall apply to the Department only, and not to any assignee). (5) HSF IV Projects – First Refusal Option. For Eligible Projects funded pursuant to the HSF IV Legislation, a city, town, LHA, or the Department shall have a first refusal option to purchase the Project: (a) If property on which the Project is located was previously leased or sold to an owner by a city, town, or LHA, the owner shall send a notice to the city, town, or LHA by regular and certified mail, return receipt requested, setting forth the owner’s intention to sell, transfer, or otherwise dispose of the Project and the terms of any bona fide offer by a third party to purchase the Project (the “First Owner’s Notice”). The city, town, or LHA shall have the right to purchase the Project at the same price and on the same terms as those contained in such bona fide offer (as more fully described in the HSF IV Legislation and the documents evidencing the HSF IV funding, the “Municipal Option”). The city, town, or LHA may exercise the Municipal Option by sending notice to the owner of its intention to exercise the Municipal Option by certified mail and recording/filing a copy of such notice in the registry of deeds or registry district of the land court within 60 days after its receipt of the First Owner’s Notice (the “Municipal Option Exercise Deadline”). (b) If the city, town, or LHA fails to exercise the Municipal Option by the Municipal Option Exercise Deadline, the owner shall send a notice to the Department by regular and certified mail, return receipt requested, setting forth the owner’s intention to sell, transfer, or otherwise dispose of the Project and the terms of any bona fide offer by a third party to purchase the Project (the “Second Owner’s Notice”). The Department shall have the right to purchase the Project at the same price and on the same terms as those contained in the bona fide offer by a third party to purchase the Project (as more fully described in the HSF IV Legislation and the documents evidencing the HSF IV funding, the “Department Secondary Option”). The Department may exercise the Department Secondary Option by sending notice to the owner of its intention to exercise the Department Secondary Option by certified mail and recording/filing a copy of such notice in the registry of deeds or registry district of the land court within 120 days after its receipt of the Second Owner’s Notice (the “Department Secondary Option Exercise Deadline”). In no event shall the Department Secondary Option Exercise Deadline be less than 120 days after the Municipal Option Exercise Deadline. (c) If property on which the Project is located was not previously leased or sold to an owner by a city, town, or LHA, the owner shall send a notice to the Department by regular and certified mail, return receipt requested, setting forth the owner’s intention to sell, transfer, or otherwise dispose of the Project and the terms of any bona fide offer by a third party to purchase the Project (the “Owner’s Department Notice”). The Department shall have the right to purchase the Project at the same price and on the same terms as those contained in such bona fide offer (as more fully described in the HSF IV Legislation and the documents evidencing the HSF IV funding, the “Department Option”). The Department may exercise the Department Option by sending notice to the owner of its intention to exercise the Municipal Option by certified mail and recording/filing a copy of such notice in the registry of deeds or registry district of the land court within 120 days after its receipt of the Owner’s Department Notice (the “Department Option Exercise Deadline”). (d) The city, town, LHA, or Department may assign the Municipal Option, the Department Secondary Option, or the Department Option, as the case may be, to a Qualified Developer. A Qualified Developer is a developer who: 1. has completed a Housing Stabilization Fund Application (or such equivalent application as may be in use at the time of the assignment) (“Application”) with respect to its proposed purchase of the Project; the Department will issue a “Notice of Project Availability” that will include instructions for completing an Application for this purpose; 2. has been selected to purchase the Project based on the city’s, town’s, LHA’s, or Department’s review and underwriting of the Application; 3. agrees that, upon purchasing the Project, it will execute an Affordable Housing Restriction providing for the Project to remain an Eligible Project for a term of at least 50 years; and 4. provides any due diligence materials not part of the Application that may be required by the city, town, LHA, or Department. (e) If the city, town, LHA, or Department has exercised the Municipal Option, the Department Secondary Option, or the Department Option, as the case may be, then the city, town, LHA, Department, or its assignee who has been designated a Qualified Developer, shall have the right to purchase the Project: 1. the city, town, LHA, or its assignee shall have 120 days after the Municipal Option Exercise Deadline (i.e., 180 days after the city, town, or LHA’s receipt of the First Owner’s Notice) to purchase the Project. 2. the Department, or its assignee, shall have 120 days after the Department Secondary Option Exercise Deadline (i.e., 180 days after the Department’s receipt of the Second Owner’s Notice) to purchase the Project. 3. the Department, or its assignee, shall have 120 days after the Department Option Exercise Deadline (i.e., 180 days after the Department’s receipt of the Owner’s Department Notice) to purchase the Project. 4. promptly upon request by the city, town, LHA, Department, or its assignee, the owner will provide the city, town, LHA, Department, or its assignee with such due diligence material and opportunity to inspect the Project as would be reasonably required by any third-party purchaser. The date for closing under the Municipal Option, Department Secondary Option, or Department Option may be extended by agreement of the parties and the agreed-upon extension shall be recorded/filed in the registry of deeds or registry district of the land court. The city, town, LHA, Department, or its assignee may extend the date for closing to a reasonable date if it determines that additional time is needed due to delays in closing preparations caused by the owner. After exercising the Municipal Option, the Department Secondary Option, or the Department Option, the city, town, LHA, or Department, as the case may be, may at any time terminate the Municipal Option, Department Secondary Option, or the Department Option if it determines it is not in the best interests of the city, town, LHA, or Department to effect the purchase (but such termination right shall not apply to any assignee of the city, town, LHA, or Department). (f) If the city, town, or LHA fails to exercise the Municipal Option by the Municipal Option Exercise Deadline and the Department fails to exercise the Department Secondary Option by the Department Secondary Option Exercise Deadline, the Municipal Option and the Department Secondary Option shall automatically terminate; however, if the sale contemplated in the offer by a third party is not effected on the same terms and conditions as those contained in the offer by a third party within six months after the Department’s receipt of the Second Owner’s Notice, the Municipal Option and the Department Secondary Option shall be revived. If the Department fails to exercise the Department Option by the Department Option Exercise Deadline, the Department Option shall automatically terminate; however, if the sale contemplated in the offer by a third party is not effected on the same terms and conditions as those contained in the offer by a third party within six months after the Department’s receipt of the Owner’s Department Notice, the Department Notice shall be revived. (g) A city, town, or LHA may not use state funds to effect the purchase of the Project pursuant to the Municipal Option. (h) The Department or its assignee may purchase the Project pursuant to the Department Secondary Option or the Department Option only for the purposes of preserving or providing affordable housing. (3) The affordability restrictions applicable to the homeownership opportunity program and to Soft Second Mortgage loans made pursuant to 760 CMR 24.04(1)(d), shall be the restrictions generally in effect for that program at the time of application.