SEC. 208.

Section 53594 of the Health and Safety Code is amended to read: 53594. (a) A county shall use grants awarded pursuant to this part for one or more of the following: (1) Long-term rental assistance in an amount the county identifies, but no more than two times the fair market rent for the market area where the county is providing long-term rental assistance. (2) Acquisition funding, new construction, gap funding, or reconstruction and rehabilitation. (3) Project-based operating subsidies. (4) Incentives to landlords to accept rental assistance for program participants, including security deposits and holding fees. (5) Administrative costs, as determined by the department, of no more than 5 percent of the total grant awarded, or a higher amount upon approval by the department. (b) Project based operating subsidies may include either or both of the following: (1) Operating subsidies for periods of up to five years. (2) A capitalized operating reserve for at least 15 years to pay for operating costs of an apartment or apartments receiving capital funding to provide supportive housing to people experiencing homelessness.