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54 <br /> Equity Sharing <br /> Orange County provides its financial assistance as deferred second loans secured by a 40-year <br /> Deed of Trust and Promissory Note, forgivable at the end of 40 years. This Deed of Trust and <br /> Promissory Note constitutes a lien on the property, subordinate only to private construction <br /> financing or permanent first mortgage financing. <br /> The 99-year period of affordability for each individual housing unit is secured by a declaration of <br /> restrictive covenants that incorporate a right of first refusal that may be exercised by a sponsoring <br /> nonprofit organization and/or Orange County. This declaration of restrictive covenants is further <br /> secured by a deed of trust. The nonprofit organization and/or the County are responsible for <br /> compliance with the affordability requirement throughout the affordability period, unless <br /> affordability restrictions are terminated due to the sale of the property to a non-qualified buyer. <br /> If the buyer no longer uses the property as a principal residence or is unable to continue <br /> ownership, then the buyer must sell, transfer, or otherwise dispose of their interest in the <br /> property to a new homebuyer whose annual income does not exceed 80% of the area median. <br /> However, if the property is sold during the affordability period to a non-qualified homebuyer to <br /> be used as their principal residence, the net sales proceeds or "equity" will be divided equally <br /> between the seller and the County. If the initial County contribution does not have to be repaid <br /> because the sale occurs more than 40 years after the County contribution is made,then the seller <br /> and the County will divide the entire equity realized from the sale. <br /> Any proceeds from the recapture of funds will be used to facilitate the acquisition, construction, <br /> and/or rehabilitation of housing for the purposes of promoting affordable housing. <br /> 3. A description of the guidelines for resale or recapture that ensures the affordability of <br /> units acquired with HOME funds? See 24 CFR 92.254(a)(4) are as follows: <br /> If the Pi will use HOME funds to refinance existing debt secured by multifamily housing that is <br /> being rehabilitated with HOME funds, it must state its refinancing guidelines required under § <br /> 92.206(b). The guidelines shall describe the conditions under which the Pi will refinance existing <br /> debt. At a minimum these guidelines must: <br /> • Demonstrate that rehabilitation is the primary eligible activity and ensure that this <br /> requirement is met by establishing a minimum level of rehabilitation per unit or a required <br /> ratio between rehabilitation and refinancing. <br /> • Require a review of management practices to demonstrate that disinvestments in the <br /> property have not occurred;that the long-term needs of the project can be met; and that the <br /> feasibility of serving the targeted population over an extended affordability period can be <br /> demonstrated. <br /> • State whether the new investment is being made to maintain current affordable units, create <br /> additional affordable units, or both. <br /> Annual Action Plan 45 <br /> OMB Control No:2506-0117(exp.07/31/2015) <br />