§ 4030 Housing Development Fund.
(a) The "Housing Development Fund" shall be administered by the Housing Director as a revolving fund for carrying out the purposes of this chapter. DHSA shall report to the General Assembly on an annual basis any private contributions by gift or bequest received and/or deposited in the Housing Development Fund. Sums received from the General Fund, from dedicated sources of revenue, from private contributions by gift or bequest, and in repayment of loans made under this chapter shall be deposited in such Fund. DSHA, with the approval of the Secretary of Finance and the Council on Housing, may borrow from the Fund for any lawful purpose with respect to any housing program or financing with respect thereto, undertaken by DSHA, or for the purpose of investing borrowed funds in accordance with § 4013(17) of this title; any such borrowing to be upon such terms and conditions, and with such security, as the Secretary of Finance and the State's Council on Housing shall direct.
(b) In addition to any further appropriations which may not be reflected in subsection (a) of this section, and in addition to accrued interest on loans, the Housing Development Fund shall retain any interest or other earnings which accrue on uncommitted balances remaining in the Fund undisbursed, and such accrued interest shall not be deposited in the General Fund.
(c)(1) DSHA is hereby authorized to use up to $750,000 of the interest income from the Housing Development Fund for the support of administrative functions associated with that Fund.
(2) DSHA may use appropriated special funds, less the Housing Development Fund line and $750,000 given above, as discretionary operating expenses. Discretionary operating expenses include personnel costs, travel, contractual services, supplies and materials, and other normal business expenses of DSHA which are not required to be made pursuant to bond resolutions, trust indentures, or agreements with the federal Department of Housing and Urban Development, or otherwise required by operating agreements of DSHA.
(3) Nothing herein shall be construed to require any prior approval for DSHA to meet its previously contracted obligations, including debt service requirements under bond resolution or trust indenture of DSHA, nor shall anything contained herein require any such prior approval for any expenditure by DSHA under any such bond resolution or trust indenture or under any agreement with the Federal Department of Housing and Urban Development.
(d) Any other law to the contrary notwithstanding, programs for the disbursement of funds from the Housing Development Fund, and disbursements pursuant to such programs, may include grants as well as loans, including grants to DSHA; provided however, that any program including grants shall not cause the Fund to lose entirely its character as a revolving fund.
(e) In allocating the resources of the Housing Development Fund over time, any program mix or targeting of funds shall account for the demographics of the population in need of housing, should balance the programs appropriately between rental assistance and ownership, and should apportion the available resources statewide according to local need.
(f) When any loan or grant application is submitted to the Housing Development Fund, the Housing Director of the Delaware State Housing Authority shall notify by certified and regular mail any state senators and representatives in whose districts any development project funded by said loan or grant will be located. In addition, the Housing Director shall so notify the chief executive officer of any local government in whose jurisdiction any development project will be located.
(g) When any loan or grant is awarded by the Housing Development Fund, the Housing Director of the Delaware State Housing Authority shall notify by certified and regular mail any state senators and representatives in whose districts any development project funded by said loan or grant will be located. In addition, the Housing Director shall so notify the chief executive officer of any local government in whose jurisdiction any development project will be located.
§ 4031 Powers relative to making mortgage loans and temporary construction loans to housing sponsors and persons and families of low- and moderate-income.
(a) DSHA shall have all the powers necessary or convenient to carry out and effectuate the purpose and provisions of this chapter, including the following powers in addition to others herein granted:
(1) To make and undertake commitments to make mortgage loans, including, without limitation, federally insured mortgage loans and to make temporary loans and advances in anticipation of permanent loans to housing sponsors to finance the construction or rehabilitation of housing designed and planned for persons and families of low- and moderate-income upon the terms and conditions set forth in § 4033 of this title;
(2) To make and undertake commitments to make first mortgage loans to persons of low- or moderate-income who may purchase residential housing, including, without limitation, persons and families of low- and moderate-income who are eligible, or potentially eligible, for federally insured mortgage loans or federal mortgage loans. Such loans shall be made only after a determination by DSHA that long-term first mortgage loans are not otherwise available, wholly or in part, from private lenders upon reasonably equivalent terms and conditions;
(3) To make and publish rules and regulations respecting the grant of mortgage loans pursuant to this section, the regulations of borrowers, the admission of housing developments pursuant to this section, and the construction of ancillary commercial facilities;
(4) To enter into agreements and contracts with housing sponsors under this section;
(5) To institute any action or proceeding against any housing sponsor receiving a loan under this chapter, or owning any housing development hereunder in any court of competent jurisdiction in order to enforce this chapter, or to foreclose its mortgage, or to protect the public interest, persons and families of low- and moderate-income, stockholders or creditors of such sponsor. In connection with any such action or proceeding it may apply for the appointment of a receiver to take over, manage, operate and maintain the affairs of such housing sponsor and DSHA, through such agent as it shall designate, is hereby authorized to accept appointment as receiver of any such sponsor when so appointed by a court of competent jurisdiction.
(b) The reorganization of any housing sponsor shall be subject to the supervision and control of DSHA, and no such reorganization shall be had without the consent of DSHA. Upon any such reorganization the amount of capitalization, including therein all stocks, income debentures and bonds and other evidence of indebtedness shall be such as is authorized by DSHA, but not in excess of the fair value of the property received.
(c) In any foreclosure action involving a housing sponsor other than a foreclosure action instituted by DSHA, the municipality in which any tax exemption or abatement is provided, such housing sponsor and DSHA shall, in addition to other necessary parties, be made parties defendant. DSHA and the municipality shall take all steps in such action necessary to protect the interest of the public therein, and no costs shall be awarded against DSHA or the municipality.
(d) Subject to the terms of any applicable agreement, contract or other instrument entered into or obtained pursuant to this chapter, judgment of foreclosure shall not be entered against a housing sponsor unless the court to which application therefor is made shall be satisfied that the interest of the lienholders or holders cannot be adequately secured or safeguarded except by the sale of the property; and in such proceeding the court shall be authorized to make an order increasing the rental or carrying charges to be charged for the housing accommodations in the housing development involved in such foreclosure, or appoint a member of DSHA or any officer of the municipality in which any tax exemption or abatement with respect to the development is provided, as a receiver of the property, or grant such other and further relief as may be reasonable and proper; and in the event of a foreclosure or other judicial sale, the property shall be sold only to a housing sponsor which will manage, operate and maintain the housing development subject to this chapter, unless the court shall find that the interest and principal on the obligations secured by the lien, which is the subject of foreclosure, cannot be earned under the limitations imposed by this chapter, and that the proceeding was brought in good faith, in which event the property may be sold free of limitations imposed by this chapter or subject to such limitations as the court may deem advisable to protect the public interest.
(e) In the event of a judgment against any housing sponsor in any action not pertaining to the foreclosure of a mortgage, there shall be no sale of any of the real property included in any housing development hereunder of such housing sponsor except upon 60 days' written notice to DSHA. Upon receipt of such notice DSHA shall take such steps as in its judgment may be necessary to protect the rights of all parties.
§ 4032 Power to supervise housing sponsors.
DSHA shall have the power to supervise housing sponsors, including limited profit housing sponsors and their real and personal property, in the following respects:
(1) DSHA may prescribe uniform systems of accounts and records for housing sponsors and may require them to make reports and give answers to specific questions on such forms and at such times as may be necessary for the purposes of this chapter.
(2) Through its agents or employees, DSHA may enter upon and inspect the lands, buildings and equipment of a housing sponsor, including all parts thereof, and may examine all books and records with reference to capital structure, income, expenditures and other payments of a housing sponsor.
(3) DSHA may supervise the operation and maintenance of any housing development and may order such repairs as may be necessary to protect the public interest or the health, welfare or safety of the housing development occupants.
(4) DSHA may fix, and alter from time to time, a schedule of rents and charges for any housing development.
(5) DSHA may determine, for any housing development, standards for tenant selection by a housing sponsor.
(6) DSHA may require any housing sponsor to pay to DSHA such fees as it may prescribe in connection with the examination, inspection, supervision, auditing or other regulations of the housing sponsor.
(7) DSHA may order any housing sponsor to do, or to refrain from doing, such things as may be necessary to comply with the provisions of the law, the rules and regulations of DSHA, and the terms of any contract or agreement to which the housing sponsor may be a party.
(8) DSHA may regulate the retirement of any capital investment or the redemption of stock where any such retirement or redemption, when added to any dividend or other distribution, shall exceed in any 1 fiscal year 10% of the original face amount of any investment by any housing sponsor.
(9) DSHA may prescribe regulations specifying the categories of cost which shall be allowable in the construction or rehabilitation of a housing development. DSHA shall require any housing sponsor to certify the actual housing development costs upon completion of the housing development, subject to audit and determination by DSHA. Notwithstanding this subdivision, DSHA may accept, in lieu of any certification of housing development costs, as provided herein, such other assurances of the said housing development costs, in any form or manner whatsoever, as will enable DSHA to determine with reasonable accuracy the amount of said housing development costs.
§ 4033 Loan terms and conditions.
Loans made by DSHA shall be subject to the following terms and conditions:
(1) No application for a loan for a housing development shall be processed unless the applicant is a housing sponsor as defined in § 4001 of this title.
(2) The ratio of loan to total housing development cost, and the amortization period of loans made under this chapter which are insured by FHA, shall be governed by the FHA mortgage insurance commitment for each housing development but in no event shall such amortization period exceed 50 years.
In the case of a mortgage loan not insured by FHA, the amount of the loan to: (i) limited profit housing sponsors shall not exceed 95% of the total housing development costs, as determined by DSHA, and (ii) other housing sponsors shall not exceed 100% of the total development cost, as determined by DSHA, and the amortization period of such loans shall be determined in accordance with regulations formulated and published by DSHA; provided however, that any such loan shall be subject to an agreement between DSHA and any such housing sponsor prohibiting the transfer of ownership or management responsibilities by such housing sponsor at any time prior to repayment of at least 5% of the original loan, unless the transfer of ownership or management responsibilities has been ordered by a court of competent jurisdiction to a different housing sponsor.
(3) A loan made hereunder may be prepaid to maturity after a period of 15 years with the consent of DSHA, provided DSHA finds that the prepayment of the loan will not result in a material escalation of rents charged to persons and families of low- and moderate-income in the housing development.
(4) DSHA shall have authority to set from time to time the interest rates at which it shall make loans and commitments therefor. Such interest rates shall be established by DSHA at the lowest level consistent with DSHA's cost of operation, and its responsibilities to the holders of its bonds, bond anticipation notes and other obligations. In addition to such interest charges, DSHA may make and collect such fees and charges, including, but not limited to, reimbursement of DSHA's financing costs, service charges, insurance premiums and mortgage insurance premiums, as DSHA determines to be reasonable.
(5) In considering any application for a loan, DSHA shall give first priority to applications for housing developments which will be well-planned, well-designed and which will be a part of or constructed in connection with a major redevelopment program; and shall also give consideration to:
a. The comparative need for housing for persons of low-and moderate-income in the area to be served by the proposed development;
b. The ability of the applicant to construct, operate, manage and maintain the proposed housing development;
c. The existence of zoning or other regulations to protect adequately the proposed housing development against detrimental future uses which could cause undue depreciation in the value of the development; and
d. The availability, where reasonably possible, of adequate parks, recreational areas, utilities, schools, transportation, parking, shopping facilities, churches and other community facilities.
(6) Each mortgage loan shall be evidenced by a mortgage note or bond and by a mortgage which shall be a lien on the housing development and which shall contain such terms and provisions and be in a form approved by DSHA. DSHA shall require the housing sponsor receiving a loan or its contractor to post performance and surety bonds in amounts related to the housing development cost as established by regulation and/or to execute such other assurances and guarantees as DSHA may deem necessary. It may also require the housing sponsors or the contractors to also execute such other assurances and guarantees as DSHA may deem necessary.
(7) Each loan shall be subject to an agreement between DSHA and the housing sponsor which will subject said sponsor and its principals or stockholders to limitations established by DSHA as to rentals and other charges, builders' and developers' profits and fees, and the disposition of its property and franchises to the extent more restrictive limitations are not provided by the law under which the borrower is incorporated or organized.
(8) As a condition of the loan, DSHA shall have the power at all times during the construction and rehabilitation of a housing development by a housing sponsor and the operation thereof:
a. To enter upon and inspect any housing development, including all parts thereof, for the purpose of investigating the physical and financial condition thereof, and its construction, rehabilitation, operation, management and maintenance, and to examine all books and records with respect to capitalization, income and other matters relating thereto and to make such charges as may be required to cover the cost of such inspections and examinations;
b. To order such alterations, changes or repairs as may be necessary to protect the security of its investment in a housing development or the health, safety, and welfare of the occupants thereof;
c. To order any managing agent, housing development manager or owner of a housing development to do such acts as may be necessary to comply with the provisions of all applicable laws or ordinances of any agreement concerning the said development or to refrain from doing any acts in violation thereof and, in this regard, DSHA shall be a proper party to file a complaint and to prosecute thereon for any violations of laws or ordinances as set forth herein.
(9) A limited profit housing sponsor may not make distributions in any 1 year with respect to a housing development financed by DSHA in excess of 10% of a limited profit housing sponsor's equity in such development. Such sponsor's equity in a housing development shall consist of the difference between the mortgage and the total housing development cost. With respect to every housing development, DSHA shall, pursuant to regulations adopted by it, establish such sponsor's equity at the time of the making of the final mortgage advance, and for purposes of this subdivision, that figure shall remain constant during the life of DSHA's mortgage on such development.
(10) Whenever any housing sponsor accumulates earned surplus, in addition to reserves for maintenance, operation and replacement, as DSHA may require in excess of 10% of the initial annual rent roll for the housing development, rents in the housing development shall be reduced to the extent necessary to lower the earned surplus accumulation to such 10% figure in the following fiscal year. Every 10 years the housing sponsor may seek the approval of DSHA for increases in said reserves. To the extent warranted DSHA may grant such approval, if in its judgment there have been increased price levels or unusual maintenance and repayment requirements.
§ 4034 Procedure prior to financing of housing developments undertaken by housing sponsors.
Notwithstanding any other provisions of this chapter, DSHA is not empowered to finance any housing development undertaken by a housing sponsor pursuant to §§ 4031, 4032 and 4033 of this title, unless prior to the financing of any housing development hereunder DSHA finds:
(1) That there exists a shortage of decent, safe and sanitary housing at rentals or prices which persons and families of low-income or moderate-income can afford within the general housing market area to be served by the proposed housing development;
(2) That private enterprise and investment have been unable, without assistance, to provide the needed decent, safe and sanitary housing at rentals or prices which persons or families of low- and moderate-income can afford or to provide sufficient mortgage financing for residential housing for occupancy by such persons or families;
(3) That the housing sponsor or limited-profit housing sponsor or sponsors undertaking the proposed housing development in this State will supply well-planned, well-designed housing for persons or families of low- and moderate-income and that such sponsors are financially responsible;
(4) That the housing development to be assisted pursuant to this chapter will be of public use and will provide a public benefit;
(5) That the housing development will be undertaken within the authority conferred by this chapter upon DSHA and the housing sponsor or sponsors.