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(1) As used in this section:
(a) "Accessory dwelling unit" means the same as that term is defined in Section 10-9a-103.
(b) "Borrower" means a residential property owner who receives a low-income ADU loan from a lender.
(c) "Lender" means a trust company, savings bank, savings and loan association, bank, credit union, or any other entity that provides low-income ADU loans directly to borrowers.
(d) "Low-income ADU loan" means a loan made by a lender to a borrower for the purpose of financing the construction of an accessory dwelling unit that is:
(i) located on the borrower's residential property; and
(ii) rented to a low-income individual.
(e) "Low-income individual" means an individual whose household income is less than 80% of the area median income.
(f) "Pilot program" means the two-year pilot program created in this section.
(2) The executive director shall establish a two-year pilot program to provide loan guarantees on behalf of borrowers for the purpose of insuring the repayment of low-income ADU loans.
(3) The executive director may not provide a loan guarantee for a low-income ADU loan under the pilot program unless:
(a) the lender:
(i) agrees in writing to participate in the pilot program;
(ii) makes available to prospective borrowers the option of receiving a low-income ADU loan that:
(A) has a term of 15 years; and
(B) charges interest at a fixed rate;
(iii) monitors the activities of the borrower on a yearly basis during the term of the loan to ensure the borrower's compliance with:
(A) Subsection (3)(c); and
(B) any other term or condition of the loan; and
(iv) promptly notifies the executive director in writing if the borrower fails to comply with:
(A) Subsection (3)(c); or
(B) any other term or condition of the loan;
(b) the loan terms of the low-income ADU loan:
(i) are consistent with the loan terms described in Subsection (3)(a)(ii); or
(ii) if different from the loan terms described in Subsection (3)(a)(ii), are mutually agreed upon by the lender and the borrower; and
(c) the borrower:
(i) agrees in writing to participate in the pilot program;
(ii) constructs an accessory dwelling unit on the borrower's residential property within one year after the day on which the borrower receives the loan;
(iii) occupies the primary residence to which the accessory dwelling unit is associated:
(A) after the accessory dwelling unit is completed; and
(B) for the remainder of the term of the loan; and
(iv) rents the accessory dwelling unit to a low-income individual:
(A) after the accessory dwelling unit is completed; and
(B) for the remainder of the term of the loan.
(4) At the direction of the board, the executive director shall make rules in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, to establish:
(a) the minimum criteria for lenders and borrowers to participate in the pilot program;
(b) the terms and conditions for loan guarantees provided under the pilot program, consistent with Subsection (3); and
(c) procedures for the pilot program's loan guarantee process.
(5) The executive director shall submit a report on the pilot program to the Business and Labor Interim Committee on or before November 30, 2023.