BILL NUMBER: AB 884 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 11, 2007
INTRODUCED BY Assembly Member Dymally
FEBRUARY 22, 2007
An act to amend Sections 50199.5, 50199.8, 50199.10,
and 50199.14 , and 50199.20,
of the Health and Safety Code, relating to housing.
LEGISLATIVE COUNSEL'S DIGEST
AB 884, as amended, Dymally. Low-income housing tax credit
allocation program.
Existing law establishes the California Tax Credit Allocation
Committee in state government to provide low-income housing tax
credits to stimulate the production and rehabilitation of shelter for
lower income individuals and families. Existing law requires the
committee to allocate the housing tax credit on a regular basis
consisting of 2 or more periods during which applications may be
filed and considered. The committee is required to use certain
criteria in allocating housing tax credits.
This bill would include 2 additional appointed members in the
committee.
The bill would require the committee to consider whether a project
is an infill project or eliminates neighborhood blight, among the
criteria used in allocating housing tax credits.
Existing law relating to the program established to provide
low-income tax credits to stimulate the production and rehabilitation
of shelter for lower individuals and families authorizes, among
other things, the California Tax Credit Allocation Committee to set
aside up to 2% of the available tax credit for small developments as
determined by the committee.
This bill would increase that amount from 2% to 5% and apply that
new percentage to developments of less than 35 units. This bill would
also include specified additional appointments to the committee,
require the allocation of by a lottery system and on the basis of
other criterion, authorize a joint venture with a partner in the case
the applicant for the credit is a developer, and authorize
allocations to urban infill and neighborhood blight projects, as
provided.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 50199.5 of the Health and Safety Code is
amended to read:
50199.5. The Legislature hereby finds and declares all of the
following:
(a) Section 42 of the Internal Revenue Code has been modified by
the federal Revenue Reconciliation Act of 1989 to require that the
housing credit agency establish a qualified allocation plan which
sets forth selection criteria to be used to determine housing
priorities that are appropriate to local conditions, and which gives
preference in allocating housing credit dollar amounts to projects
serving the lowest income tenants and projects obligated to serve
low-income tenants for the longest periods.
(b) The qualified allocation plan shall encompass and incorporate
the criteria and requirements set forth in Section 50199.14.
(c) Certain provisions of the California Tax Credit should be
modified to conform to the changes to the federal low-income housing
tax credit.
(d) The Tax Credit Allocation Committee should, to the extent
possible, allocate the California low-income housing tax credit using
the same criteria and requirements used in allocating the federal
tax credit.
(e) The public interest is best served by the dissemination of
information regarding the low-income housing tax credit program to
all areas of the state, with special efforts in rural and urban areas
and for projects sponsored by community-based nonprofit
organizations, to ensure greater knowledge and participation in the
program.
(f) The public interest is also best served by the allocation of
tax credits under a system that allows fair competition for new tax
credit sponsors and developers.
SEC. 2. Section 50199.8 of the Health and Safety Code is amended
to read:
50199.8. The committee is composed of the Governor, or in the
Governor's absence, the Director of Finance, the Controller, the
Treasurer , one representative appointed by the Senate
Committee on Rules, and one representative appointed by the Speaker
of the Assembly. The Director of Housing and Community Development,
the Executive Director of the California Housing Finance Agency, and
two representatives of local government, one representative of the
counties appointed by the Senate Committee on Rules, and one
representative of the cities appointed by the Speaker of the Assembly
shall serve as ex officio, nonvoting members. The Treasurer shall be
the chairperson of the committee. The members of the committee shall
serve without compensation. A majority of voting members shall be
empowered to act for the committee. The committee may employ an
executive director to carry out its duties under this chapter. The
committee may delegate to the executive director the authority to
enter contracts on behalf of the committee.
SEC. 3. Section 50199.10 of the Health and
Safety Code is amended to read:
50199.10. (a) For purposes of allocating low-income housing
credits, the committee is hereby designated as this state's only
housing credit agency for purposes of Section 42(h) of the federal
Internal Revenue Code (26 U.S.C. Sec. 42(h)). The committee shall
annually determine and shall allocate the state ceiling in accordance
with this chapter and in conformity with federal law. The committee
shall determine the housing credit ceiling as soon as possible
following the effective date of this chapter and thereafter following
the commencement of each calendar year. The committee shall
undertake any and all responsibilities of housing credit agencies
under Section 42 of Title 26 of the United States Code, including
entering into regulatory agreements relating to projects that are
granted awards.
(b) The committee shall develop and provide application forms for
use by housing credit applicants. The committee shall adopt uniform
procedures for submission and review of applications of housing
credit applicants, including fees to defray the committee's costs in
administering this chapter. In the committee's discretion, the fees
shall be charged to a housing credit applicant as a condition of
submitting an application or as a condition of receiving an
allocation or reservation of the state's current or anticipated
housing credit ceiling, or both.
(c) In addition to allocating the current housing credit ceiling,
the committee may reserve a portion of the state's anticipated
housing credit ceiling for a subsequent year for a housing credit
applicant.
(d) As a condition to making an allocation of the housing credit
ceiling or a reservation of the anticipated housing credit ceiling
for a subsequent year, the committee may require the housing credit
applicant receiving the allocation or reservation to deposit with the
committee an amount of money as a good-faith undertaking. The
committee shall adopt policies for determining when deposits will be
required, prescribing procedures for return of deposits, and
specifying the circumstances under which the deposits will be
forfeited in whole or in part for failure to timely utilize the
allocation or reservation provided to the housing credit applicant.
(e) (1) The committee may make any allocation or reservation of
the state's housing credit ceiling to a housing credit applicant
subject to terms and conditions in furtherance of the purposes of
this part. The committee may condition an allocation or reservation
on the execution of a contract between the housing credit applicant
and the committee requiring the housing credit applicant to comply
with all the terms of Section 42 of the federal Internal Revenue
Code, any applicable state laws, and any additional requirements the
committee deems necessary or appropriate to serve the purposes of
this chapter, and providing for legal action to obtain specific
performance or monetary damages for breach of contract.
(2) No allocations or reservations shall be made pursuant to this
subdivision with respect to projects that do not meet the
requirements of the qualified allocation plan, and no allocations or
reservations shall be made in amounts that do not meet the
requirements of paragraph (2) of subsection (m) of Section 42 of
Title 26 of the United States Code. Notwithstanding any provision of
this chapter to the contrary, all credits shall be allocated pursuant
to the qualified allocation plan as follows:
(A) 50 percent by a lottery system.
(B) 50 percent in accordance with criterion established by the
committee.
SEC. 4. SEC. 3. Section 50199.14 of
the Health and Safety Code is amended to read:
50199.14. (a) The committee shall allocate the housing credit on
a regular basis consisting of two or more periods in each calendar
year during which applications may be filed and considered. The
committee shall establish application filing deadlines, the maximum
percentage of federal and state low-income housing tax credit ceiling
that may be allocated by the committee in that period, and the
approximate date on which allocations shall be made. If the enactment
of federal or state law, or the adoption of rules or regulations, or
other similar events prevent the use of two allocation periods, the
committee may reduce the number of periods and adjust the filing
deadlines, maximum percentage of credit allocated, and the allocation
dates.
(b) The committee shall adopt a qualified allocation plan, as
provided in paragraph (1) of subsection (m) of Section 42 of Title 26
of the United States Code. In adopting this plan, the committee
shall comply with the provisions of subparagraphs (B) and (C) of
paragraph (1) of subsection (m) of Section 42 of Title 26 of the
United States Code.
(c) In order to promote affordable low-income housing within and
throughout the state, the committee shall allocate housing credits in
accordance with the qualified allocation plan and regulations, which
shall include the following provisions:
(1) All housing credit applicants shall demonstrate at the time
the application is filed with the committee, that the project meets
the following threshold requirements:
(A) The housing credit applicant shall demonstrate there is a need
and demand for low-income housing in the community or region for
which it is proposed.
(B) The project's proposed financing, including tax credit
proceeds, shall be sufficient to complete the project and that the
proposed operating income shall be adequate to operate the project
for the extended use period.
(C) The project shall have enforceable financing commitments,
either construction or permanent financing, for at least 50 percent
of the total estimated financing of the project.
(D) The housing credit applicant shall have and maintain control
of the site for the project.
(E) The housing sponsor shall demonstrate that the project
complies with all applicable local land use and zoning ordinances.
(F) The housing credit applicant shall demonstrate that the
project development team has the experience and the financial
capacity to ensure project completion and operation for the
extended use period. If the housing credit applicant is a new
developer, the housing credit applicant may joint venture with a
partner to demonstrate that the project development team has the
experience and the financial capacity to ensure project completion
and operation for the extended use period. extended
use period.
(G) The housing credit applicant shall demonstrate the amount of
tax credit that is necessary for the financial feasibility of the
project and its viability as a qualified low-income housing project
throughout the extended use period, taking into account operating
expenses, supportable debt service, reserves, funds set aside for
rental subsidies, and required equity, and a development fee that
does not exceed a specified percentage of the eligible basis of the
project prior to inclusion of the development fee in the basis, as
determined by the committee.
(2) The committee shall give a preference to those projects
satisfying all of the threshold requirements of paragraph (1) if:
(A) The project serves the lowest income tenants at rents
affordable to those tenants; and
(B) The project is obligated to serve qualified tenants for the
longest period.
(3) In addition to the provisions of paragraphs (1) and (2) of
subdivision (c), the committee shall use the following criteria in
allocating housing credits:
(A) Projects serving large families in which a substantial number,
as defined by the committee, of all residential units are comprised
of low-income units with three and more bedrooms.
(B) Projects providing single room occupancy units serving very
low income tenants.
(C) Existing projects that are "at risk of conversion," as defined
by paragraph (4) of subdivision (c) of Section 17058 of the Revenue
and Taxation Code.
(D) Projects for which a public agency provides direct or indirect
long-term financial support for at least 15 percent of the total
project development costs or projects for which the owner's equity
constitutes at least 30 percent of the total project development
costs.
(E) Projects that provide tenant amenities or services not
generally available to residents of low-income housing projects.
(F) Projects that are urban infill and that
eliminate neighborhood blight.
(d) For purposes of allocating credits pursuant to this section,
the committee shall not give preference to any project by virtue of
the date of submission of its application, except to break a tie when
two or more of the projects have the same rating.
(e) The committee shall allocate credits to a project under this
section prior to allocating credit to that project under Sections
12206, 17058, and 23610.5 of the Revenue and Taxation Code.
(f) The committee shall allocate credits to a project only if the
housing sponsor enters into a regulatory agreement that provides for
an "extended use period" as defined in subparagraph (D) of paragraph
(6) of subsection (h) of Section 42 of the Internal Revenue Code,
which shall terminate on the date specified in the regulatory
agreement or the date the project is acquired in foreclosure,
including any instrument in lieu of foreclosure, whichever occurs
first, and subclause (II) of subparagraph (E) of clause (i) of
paragraph (6) of subsection (h) of Section 42 shall not apply.
SEC. 5. Section 50199.20 of the Health and
Safety Code is amended to read:
50199.20. (a) Not less than 20 percent of the federal ceiling on
low-income housing tax credits shall be set aside for allocation to
rural areas as defined in Section 50199.21. Any amount of credit set
aside for rural areas remaining after the ranking of credits in the
final cycle of any calendar year shall be available for allocation to
any eligible project.
(b) Not less than 5 percent of the low-income housing tax credit
available under this chapter and Sections 12206, 17058, and 23610.5
of the Revenue and Taxation Code may be set aside for small
developments of less than 35 units as determined by the committee.
Any amount of credit set aside for small developments remaining after
the ranking of projects in the final cycle of any calendar year
shall be available for allocation to any eligible project.
(c) Not less than 15 percent of the federal ceiling on low-income
housing tax credits shall be set aside for allocation to urban infill
development areas that eliminate blight. Any amount of the credits
set aside for urban infill development areas remaining after the
ranking of credits in the final cycle of any calendar year shall be
available for allocation to any eligible project.