BILL ANALYSIS
AB 1811
Page 1
Date of Hearing: July 5, 2000
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Carole Migden, Chairwoman
AB 1811 (Reyes) - As Amended: May 30, 2000
Policy Committee: Revenue and
Taxation Vote: 8-0
Urgency: No State Mandated Local
Program:NoReimbursable:
SUMMARY :
This bill revises the process for allocating tax credits under
the Farmworker Housing Credit Program to conform to the process
used in the allocation of low-income housing tax credits.
Specifically, this bill:
1)Allows farmworker housing tax credits to be issued before
construction of farmworker housing is completed and units are
occupied.
2)Removes the requirement that applicants for farmworker housing
ax credits obtain credit certification from the Tax Credit
Allocation Committee (TCAC) before paying or incurring costs
to construct or rehabilitate farmworker housing.
FISCAL EFFECT :
No state fiscal effect. The bill does not change the $500,000
cap on the annual allocation of farmworker housing credits in
current law. However, the bill makes it more likely that the
credits actually will be utilized.
COMMENTS :
1)Background. Current state law offers personal income and bank
and corporation tax credits equal to 50% of eligible costs to
construct or rehabilitate housing that is made available to
farmworkers for at least 30 years. 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. Commercial lenders are also eligible for
AB 1811
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a credit equal to 50% of the interest income foregone on loans
used to finance expenditures for qualified farmworker housing.
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.
To date no farmworker housing tax credits have been claimed,
most likely because the credits cannot be claimed until a
project is completed or occupied. This does not provide the
up-front financing needed to make the project feasible and
makes it difficult to use the credit in conjunction with other
state programs that provide incentives to create and
rehabilitate farmworker housing.
2)Purpose. 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.
Analysis Prepared by : Stephen Shea / APPR. / (916) 319-2081