PH Do not assume vacancy rate for commercial space leased by See above response to Eden (#2). credit-worthy sponsor. Jamboree Allow balloon payment loans more broadly, as few lenders offer Under the revised proposal, balloon payments loan may be fully amortizing loans, and these loans are expensive. Also, few approved when affordability covenant is recorded senior HCD’s lenders will subordinate to regulatory agreement. (through a bifurcated regulatory agreement). See §8310(f) for the Additionally, HCD should rethink the proposed provisions for proposed change. purchase options, as the standard is fair market value or debt plus taxes. HCD has removed the initial proposed provisions for purchase options. §8310b MPH The standards for commercial underwriting are too subjective. §8310(b) has been rewritten to establish less subjective Have either better definitions or a pre-approval process. Also, standards, and to address master leased commercial space. include the sponsor's master lease in the underwriting. BH We support reducing vacancy rate to 25% if the provisional HCD is now proposing to defer to the underwriting of other conditions are met. funding sources, under specified circumstances. This could lead to reducing the vacancy rate assumption to 25% or lower, The high credit-worthy standard may be a problem for some in some cases. groups. The revised proposal does not require a determination of creditworthiness. Mercy Do not assume a vacancy loss when a financially strong HCD has made changes in line with this comment. See the sponsor leases space. responses to the above comments. SF Assume 50% vacancy in the first-year and 20% or other figure experience relying on market studies alone has not been HCD’s (determined based on market study) in later years. good, especially in areas with weaker markets. NPH
PH Do not assume vacancy rate for commercial space leased by credit-worthy sponsor. See above response to Eden (#2). Jamboree Allow balloon payment loans more broadly, as few lenders offer fully amortizing loans, and these loans are expensive. Also, few lenders will subordinate to regulatory agreement. Additionally, HCD should rethink the proposed provisions for purchase options, as the standard is fair market value or debt plus taxes. Under the revised proposal, balloon payments loan may be approved when HCD’s affordability covenant is recorded senior (through a bifurcated regulatory agreement). See §8310(f) for the proposed change. HCD has removed the initial proposed provisions for purchase options. §8310b MPH The standards for commercial underwriting are too subjective. Have either better definitions or a pre-approval process. Also, include the sponsor's master lease in the underwriting. §8310(b) has been rewritten to establish less subjective standards, and to address master leased commercial space. BH We support reducing vacancy rate to 25% if the provisional conditions are met. The high credit-worthy standard may be a problem for some groups. HCD is now proposing to defer to the underwriting of other funding sources, under specified circumstances. This could lead to reducing the vacancy rate assumption to 25% or lower, in some cases. The revised proposal does not require a determination of creditworthiness. Mercy Do not assume a vacancy loss when a financially strong sponsor leases space. HCD has made changes in line with this comment. See the responses to the above comments. SF Assume 50% vacancy in the first-year and 20% or other figure (determined based on market study) in later years. HCD’s experience relying on market studies alone has not been good, especially in areas with weaker markets. NPH