BILL ANALYSIS Ó
AB 1920
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Date of Hearing: March 30, 2016
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
David Chiu, Chair
AB 1920
(Chau) - As Amended March 18, 2016
SUBJECT: California Tax Credit Allocation Committee:
low-income housing credit: fines
SUMMARY: Allows the California Tax Credit Allocation Committee
(TCAC) to establish a schedule of fines for violations of the
terms and conditions, the regulatory agreement, covenants, or
program regulations for affordable housing developments that
received low-income housing tax credits (LIHTC). Specifically,
this bill:
1) Allows TCAC to charge up to $500 per violation or double
the amount of the financial gain to the housing credit
application because of the violation, whichever is greater.
2) Allows the fine to be reoccurring if the violation is
not corrected within a reasonable period of time, as
determined by TCAC.
3) Requires TCAC to adopt and revise, by resolution at a
public meeting, the schedule of fines for specific
violations and the fine amounts for each violation.
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4) Requires all fines collected to be deposited into the
Housing Rehabilitation Loan Fund.
5) Provides that if a fine is not paid within six months
from the date when the fine was initially assessed by TCAC
and reasonable notice is given to the housing credit
applicant, the committee may record a lien against the
property.
6) Provides that any lien recorded by TCAC against a
property, to secure fines, shall be junior to any liens
recorded before it.
EXISTING LAW: Designates the TCAC as the state's only housing
credit agency responsible for administering federal and
low-income housing tax credits.
FISCAL EFFECT: Unknown.
COMMENTS:
Background :
In 1986, the federal government authorized the LIHTC program to
enable affordable housing developers to raise private capital
through the sale of tax credits to investors. Two types of
federal tax credits are available and are generally referred to
as nine percent (9%) and four percent (4%) credits. 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
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developer in turn invests the capital into the affordable
housing project.
Rental housing developments that receive low-income housing tax
credits from TCAC are required to rent to income eligible
applicants, limit rents, and maintain the physical condition of
the units for 55 years. Owners agree to further commitments,
such as more deeply targeting units to be affordable to
extremely-low income households, as part of the competitive
scoring process. The Internal Revenue Service (IRS) enforces
the basic program requirements for 15 years, but does not
enforce deeper affordability or other requirements imposed by
TCAC during the first 15 years, or any requirements after year
15. TCAC has few enforcement remedies for an owner's failure
to comply with program requirements that the IRS does not
enforce. TCAC can impose negative points, which only work if
the owner wants to propose new applications. TCAC can also bring
a lawsuit to seek compliance or receivership, however this
expensive and time-consuming.
AB 1920 would provide TCAC with the legislative authority to
levy fines for non-compliance with the terms and conditions, the
regulatory agreement, covenants, or program regulations. Fines
may not exceed the greater of $500 or double the amount of the
financial gain to the violator and could be recurring if the
violations are not corrected in a reasonable amount of time.
Fines would be deposited in the Housing Rehabilitation Loan Fund
and be made available to the Multifamily Housing Program at the
Department of Housing and Community Development. TCAC could
record a lien on the property, if fines are not paid within 6
months of being assessed. TCAC would adopt the fine schedule
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through a public process and provide for due process through
appeals to the Committee.
Purpose of this bill : According to the author, "AB 1920 would
provide TCAC with a more efficient and effective enforcement
tool by giving TCAC the legislative authority to levy fines for
non-compliance with the terms and conditions, the regulatory
agreement, covenants, or program regulations."
REGISTERED SUPPORT / OPPOSITION:
Support
The Arc California
United Cerebral Palsy California Collaboration
Opposition
None on file.
Analysis Prepared by:Lisa Engel / H. & C.D. / (916) 319-2085
AB 1920
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