(1)(a) The Housing and Community Services Department may hold and use the principal that is credited to the Housing Development and Guarantee Account as the Guarantee Fund. The department may use the fund to guarantee repayment of loans made to finance the construction, development, acquisition or rehabilitation of low income housing, of the commercial component of a structure that contains both commercial property and low income housing, or of both. The department, by rule, shall specify the grounds on which it may deny loan guarantees for a structure that contains both commercial and low income housing components. The grounds for denial specified by the department must include, but need not be limited to, a commercial component that is excessive in scope or that is designed for commercial activity of a type incompatible with residential housing. The State Housing Council shall review loans that are guaranteed by the fund to ensure that the loans meet prudent underwriting standards.
(b) A guarantee may not be prepared or construed in such a manner as to violate the provisions of section 7, Article XI of the Oregon Constitution.
(2) The department may not issue any loan guarantee under this section that guarantees the repayment of more than 50 percent of the original principal balance of any loan.
(3) The department may not issue a loan guarantee if the guarantee would cause the aggregate dollar total of all loan guarantees issued by the department under this section to exceed two times the total amount then in the Guarantee Fund established under subsection (1) of this section. Notwithstanding ORS 458.625, whenever payouts on loan guarantees cause the fund principal to decrease by five percent or more, the interest on the fund shall be deposited only to the principal account until the amount of the fund principal lost due to payouts on loan guarantees is restored.
(4) Subject to council review under subsection (1) of this section, the department shall give preference for loan guarantees under this section to loans for the construction, development, acquisition or rehabilitation of low income housing, or of structures containing both commercial and low income housing components, that the department determines will:
(a) Provide the greatest number of low income housing units constructed, acquired, developed or rehabilitated for the amount of guarantee allowed;
(b) Ensure the longest possible use for the units as low income housing units. Pursuant to this end, the State Housing Council may adopt a formula that optimizes the interests of the lender and the developer and the working life of the low income units; or
(c) Include a program of services for the occupants of the proposed housing including, but not limited to, programs that address home health care, mental health services, alcohol and drug treatment and post-treatment care, child care and case management.
(5) The council may adopt a policy that gives loan guarantee preference to loans for low income housing, or structures containing both commercial and low income housing components, for which the department has provided a grant, loan, tax credit or other investment. [1991 c.740 §6; 1993 c.2 §1; 1997 c.329 §1; 2003 c.20 §1; 2003 c.743 §6; 2007 c.607 §25]
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