BILL ANALYSIS Ó
AB 952
Page 1
Date of Hearing: May 24, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 952 (Atkins) - As Amended: May 2, 2013
Policy Committee: Revenue and
Taxation Vote: 9-0
Housing and Community Development 7-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill makes changes to the state low-income housing tax
credit (LIHTC) Program. Specifically, this bill:
1)Allows the Tax Credit Allocation Committee (TCAC) to award
state LIHTCs to developments in a qualified census tract (QCT)
or a difficult to develop area (DDA) if the project is also
receiving federal LIHTC and if the development is restricted
so at least 50% of the units are for special needs households
and meet other specified conditions.
2)Allows TCAC to replace federal LIHTC with state LIHTC of up to
30% of a project's eligible basis if the federal LIHTC is
reduced in an equivalent amount.
FISCAL EFFECT
This bill grants TCAC expanded authority to reallocate millions
of dollars of tax credits. However, the purpose for the tax
credits is unchanged and the state tax credits are from a fixed
pool of credits that TCAC receives annually.
COMMENTS
1)Purpose . According to the author, AB 952 will remove the
restriction on using state LIHTCs in the areas that need them
most. The author notes housing projects that wish to access
this financing tool will need to set aside 50% of their units
to serve special needs populations such as the homeless,
pregnant and parenting teens and the disabled. The author
AB 952
Page 2
argues removing the restriction on using state LIHTCs in the
neediest areas makes sense from both a business and
humanitarian viewpoint. AB 952 will ensure that no state tax
credits go unused, while also benefiting Californian's with
the greatest need for housing.
2)Support. The sponsor, State Treasurer Bill Lockyer, explains
there is a danger of state credits going unused because
federal LIHTCs offer a larger financial benefit than state
LIHTCs. As such, California tends to accumulate a large sum
of state credits at the end of each year. By regulation, TCAC
may place state LIHTCs into projects in exchange for federal
LIHTCs. To use the state tax credit, TCAC carries out
exchanges to use up the available credits. By expanding the
projects that may apply for state LIHTC, the Treasurer hopes
to eliminate the need to exchange state LIHTCs for federal
LIHTCs.
3)Background . In 1986, the federal government authorized the
Low-Income Housing Tax Credit (LIHTC) program to enable
affordable housing developers to raise private capital through
the sale of tax benefits to investors. The Tax Credit
Allocation Committee (TCAC) administers the program and awards
credits to qualified developers who can then sell those
credits to private investors who use the credits to reduce
their federal tax liability. The developer in turn invests the
capital into the affordable housing project.
In 1987, the Legislature authorized a state LIHTC program to
augment the federal tax credit program. State tax credits can
only be awarded to projects that also receive federal LIHTCs,
except for farmworker housing projects, which can receive
state credits without federal credits. Investors may claim
the state credit over four years.
Projects that receive either state or federal tax credits are
required to keep the housing at affordable levels for 55
years. Both the federal and state tax credits are capped,
which limits the amount of credit that TCAC can award each
year. Each state receives an annual ceiling of federal
credits. In 2012 it was $2.25 per capita, which worked out to
$84.7 million in credits in California that can be taken by
investors each year for 10 years. Federal LIHTCs are
oversubscribed by a 3:1 ratio. TCAC has authority for
approximately $90 million in state tax credits each year but
AB 952
Page 3
has as many as $25 million in credits remaining at the end of
the year due to lack of demand.
4)There is no registered opposition to this bill .
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081