BILL ANALYSIS
AB 1811
Page 1
Date of Hearing: June 26, 2000
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Wally Knox, Chair
AB 1811 (Reyes) - As Amended: May 30, 2000
Majority vote. Tax levy. Fiscal committee.
SUBJECT : Income Taxes: Farmworker Housing Credits
SUMMARY : Modifies the rules used to allocate farmworker housing
tax credits by allocating them in much the same way as
low-income housing tax credits are allocated. Specifically,
this bill:
1)Revises the eligibility rules for the Farmworker Housing
Credit Program by allowing farmworker housing tax credits to
be issued before construction of farmworker housing is
completed and occupied.
2)Removes the requirement that applicants for farmworker housing
tax credits obtain credit certification from the Tax Credit
Allocation Committee (TCAC) before paying or incurring costs
to construct or rehabilitate farmworker housing.
EXISTING LAW :
1)Current state law offers personal income and bank and
corporation tax credits equal to 50% of eligible costs to
construct or rehabilitate qualified farmworker housing.
Qualified farmworker housing is housing located in California
that satisfies the requirements of the Farmworker Housing
Assistance Program . Eligible costs include those expended to
finance, construct, excavate, install, and/or obtain permits
to construct or rehabilitate qualified farmworker housing,
including improvements to ensure compliance with laws
governing access for persons with disabilities and costs
related to reducing utility expenses. Eligible costs do not
include land or costs financed by grants and below-market
financing. The housing must be made available to farmworkers
for at least 30 years.
2)Provides that taxpayers are required to obtain credit
certification from TCAC before paying or incurring costs in
order to be eligible to claim farmworker housing tax credits.
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3)Provides that commercial lenders are also eligible for a
credit equal to 50% of the interest income foregone on loans
used to finance expenditures for qualified farmworker housing.
These credits must be taken in equal installment amounts over
a 10-year period or for the term of the loan, whichever is
shorter. Loans must be pre-certified by TCAC and must be for
terms of at least three years.
4)Provides that the aggregate amount of farmworker housing
credits allocated annually equals $500,000 per year.
Unallocated credits may be carried forward into the future.
Credits may not be claimed until the first taxable or income
year in which construction or rehabilitation is completed and
the constructed or rehabilitated farmworker housing is
occupied by eligible farmworkers.
FISCAL EFFECT : This bill is likely to result in farmworker
housing tax credits being awarded sooner than they would be
under current law. However, the bill is not expected to result
in an overall revenue loss, because the annual $500,000 cap on
authorized farmworker housing credit allocations remains
unchanged under the bill.
COMMENTS :
1)This bill is co-sponsored by the State Treasurer and the
Lieutenant Governor and is intended to increase utilization of
farmworker housing tax credits. By patterning the farmworker
housing tax credit program on the highly successful and overly
subscribed low-income housing tax credit program, the sponsors
hope to make farmworker housing tax credits more attractive to
investors.
2)Sponsors note that the current farmworker housing tax credit
program does not provide up-front cash to be used for project
development, because the project owner is unable to incur any
project costs until they have been certified by TCAC.
Additionally, the owner is unable to obtain credits until the
project is complete and the units are occupied. These time
constraints mean that the tax credits cannot be used in
conjunction with other state programs that provide incentives
to create and rehabilitate farmworker housing.
3)To date no farmworker housing tax credits have been claimed,
AB 1811
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most likely because the credits cannot be claimed until a
project is completed and occupied. This bill will allow the
owner of qualified farmworker housing to obtain tax credits up
front (before the project is completed and occupied), thereby
increasing the owner's ability to obtain up-front capital for
the project.
4)The primary reason for the popularity of low-income housing
tax credits is their transferability. Commonly, developers
who receive tax credit allocations sell their ownership
interest in the property to investors (typically at about 70
cents on the dollar) in order to generate the capital
necessary to build low-income units. Because low-income
housing tax credits are transferable, investors who purchase
the ownership interest in low-income housing developments
obtain the credits associated with the property and can then
use the credits to offset their tax liabilities. The
Treasurer's Office (one of the bill's co-sponsors) intends
that farmworker housing tax credits be transferable in a
similar manner as low-income housing tax credits; however, the
bill is silent on this issue.
REGISTERED SUPPORT / OPPOSITION :
Support
State Treasurer (co-sponsor)
Lieutenant Governor (co-sponsor)
Affordable Homes, Avila Beach
Affordable Housing Foundation, San Francisco
Agora Group, Goleta
Agricultural Council of California
Archdiocese of Los Angeles Peace and Justice Commission
Asian Law Alliance, San Jose
Bakersfield Homeless Center
Bank of America
Burbank Housing Development Corporation, Santa Rosa
California Affordable Housing Law Project, Oakland
California Building Industry Association
California Catholic Conference
California Church Impact
California Community Reinvestment Committee, Glendale
California Housing Partnership Corporation, San Francisco
California Labor Federation
California Legislative Council for Older Americans
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California Manufactured Housing Institute
California Rural Legal Assistance Foundation
Chicano Federation of San Diego County
City of Concord Housing Department
City of Modesto Housing Department
City of Salinas Planning Department
Coachella Valley Housing Coalition, Indio
Common Ground Communities, Nevada City
Community Economics, Oakland
Community Housing Opportunities Corporation, Davis
Community Resource Associates, Clayton
Congress of California Seniors
Corporation for Supportive Housing, Oakland
Council of Community Housing Organizations, San Francisco
East LA Community Corporation (ELACC)
East Palo Alto Council of Tenants
Ecumenical Association for Housing, San Rafael
Eden Housing, Inc., Hayward
Emergency Housing Consortium, San Jose
Enterprise Foundation, Los Angeles
Fair Housing Council of Riverside County
Fair Housing of Marin
Family Assistance Program, Los Angeles
Foundation for Quality Housing Opportunities, North Hollywood
Friends Committee on Legislation
Friends Committee on Legislation
Gubb & Barshay LLP, San Francisco
H&L Properties, Long Beach
Herman and Coliver Architecture, San Francisco
Homes for Life Foundation, Los Angeles
Housing Authority of the City of Santa Barbara
Inquilinos Unidos, Los Angeles
Interpersonal Developmental Facilitators, Inc., Pasadena
Jericho, Voice for Justice
Kings County Housing Authority
LINC Housing, Long Beach
Local Initiatives Support Corporation, San Francisco
Long Beach Housing Development Company
Los Angeles Community Design Center
Los Angeles Council of Society of St Vincent de Paul
Los Angeles County Metal Health Association
Los Angeles Housing Partnership, Inc.
Low-Income Housing Fund, Los Angeles
Lutheran Office of Public Policy
Marin City Community Development Corporation
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Marin Continuum of Housing and Services, San Rafael
Marin Housing Council, San Rafael
Mercy Charities Housing California, Orange
Metropolitan Area Advisory Committee, National City
Mexican American Legal Defense and Educational Fund
Mid-Peninsula Housing Coalition, Redwood City
Mission Housing Development Corporation, San Francisco
Nancy Lewis and Associates, Los Angeles
Napa Valley Community Housing, Napa
Neighborhood Housing Services of Orange County
Nevada County Housing and Community Services, Grass Valley
New Directions, Inc., Los Angeles
Orange County Community Housing Corporation, Santa Ana
Penny Lane, North Hills
People's Self-Help Housing Corporation, San Luis Obispo
Planning for Elders in the Central City, San Francisco
Public Law Center, Santa Ana
Related Companies of California, Irvine
Renee Franken and Associates
Resources for Community Development, Berkeley
Rural Communities Housing Corporation, Ukiah
Rural Community Assistance Corporation, Sacramento
Saben Investments, Inc., North Hills
Sacramento Housing and Redevelopment Agency
Sacramento Loaves and Fishes
Sacramento Mutual Housing Association Lake County Alliance for
the Mentally Ill
Sacramento Neighborhood Housing Services
Saint Joseph Health System, Orange
SAMCO, San Hose
San Joaquin County Housing Authority
San Leandro Shelter for Women and Children
Santa Barbara County Legal Aid Foundation
Santa Monica Commission on Older Americans
Sentinel Fair Housing, Oakland
Shelter for the Homeless, Midway City
Shelter Partnership, Inc., Los Angeles
Shelter, Inc., Concord
Skid Row Housing Trust, Los Angeles
Sober Living Network, Santa Monica
Sonoma County Mobilehome Owners Association
Southern California Association of Non-Profit Housing
St. Mary's Center, Oakland
Thai Community Development Center, Los Angeles
Thomas Lauderbach Development Consultants, El Cerrito
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Thomas Safron and Associates, Los Angeles
Venice Community Housing Corporation, Venice
West Contra Costa Conservation League, El Cerrito
West Hollywood Community Housing Corporation
Western Center on Law and Poverty
Wine Institute
Wine Institute
WNC, Inc., Costa Mesa
Opposition
None on file
Analysis Prepared by : Eileen A. Roush / REV. & TAX. / (916)
319-2098