CA SB686

Expands conditions under which the Department of Housing and Community Development must allow property owners with regulatory agreements to take on additional debt for property rehabilitation or new affordable housing investment

Adds a new permitted use for extracted equity: reimbursement of borrower advances for predevelopment costs, unreimbursed capital improvements, and unreimbursed operating deficits

Revises the definition of "extracted equity" from "debt added to a department-regulated property" to "distributed funds that are financed with debt that is secured by a department-regulated property" not used for specified purposes

Maintains existing requirements that all hard debt must have a minimum 1.15 debt-service coverage ratio and project positive cash flow for 15 consecutive years

Preserves the department's regulatory agreement and lien position, with new debt generally required to be subordinate to the department's existing agreements