BILL ANALYSIS
SENATE HOUSING & COMMUNITY DEVELOPMENT COMMITTEE
Senator Richard Alarc?n, Chairman
Bill No: AB 1811 Hearing:August 18,
2000
Author: ReyesFiscal: Yes
Version: May 30,
2000Consultant: Mark Stivers
FARMWORKER HOUSING TAX CREDITS
Background and Existing Law :
Since 1997, the California Tax Credit Allocation Committee
(TCAC) has been authorized to allocate up to $500,000 in
farmworker housing tax credits per year. Investors may
receive personal income or 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.
Commercial lenders may also receive tax credits 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.
Among other conditions of the program, existing law
requires taxpayers to apply for the tax credit before
paying or incurring any project costs. In addition,
credits may not be allowed until the first taxable or
income year in which construction or rehabilitation of the
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farmworker housing is completed and the housing is occupied
by eligible farmworkers. TCAC has interpreted this to mean
it may not award credits until the project is occupied.
TCAC is also authorized to adopt regulations for the
farmworker housing tax credit program in accordance with
Office of Administrative Law procedures.
TCAC also administers the state and federal Low-Income
Housing Tax Credit programs. California's 1999 federal tax
credit allocation was approximately $50 million. Earlier
this year, the cap on the state tax credit was permanently
raised from $35 million to $50 million. Based on a
competitive application process, TCAC allocates state and
federal tax credits to housing developers who in turn seek
equity investments from individuals or corporations with
tax liabilities. In return for their investment, the
investors receive the tax credits allocated to the project.
The amount of the investment is generally between 75 and
85 percent of the value of the tax credits. The Internal
Revenue Code provides that project sponsors may apply for
credits before or after they have begun to incur costs, but
no later than the end of the calendar year in which the
housing is placed in service. Sponsors may generally begin
taking the credits allocated to them when the housing is
placed in service.
Proposed Law :
Assembly Bill 1811 modifies the rules used to allocate
farmworker housing tax credits as follows:
Allows TCAC to adopt, amend, or repeal rules and
regulations for the Farmworker Housing Tax Credit Program
and exempts these rules from most of the procedural
requirements related to the Office of Administrative Law.
Allows TCAC to adopt, amend or repeal emergency rules and
regulations and stipulates that the emergency regulations
shall be conclusively presumed to be necessary for the
immediate preservation of the public health, safety, or
general welfare.
Applies certain provisions of federal low-income housing
tax credit law to the state farmworker housing tax credit
program, including the ability to make binding
commitments of future year tax credits for specific
projects.
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Deletes the requirement that farmworker housing tax
credits be allowed only after the farmworker housing is
completed and occupied.
Removes the requirement that applicants for farmworker
housing tax credits apply for credit certification from
TCAC before paying or incurring costs to construct or
rehabilitate farmworker housing.
Comments :
1. Purpose of the bill . According to the author,
California is suffering from a critical shortage of decent
affordable housing. This shortage affects all low-income
workers, but is particularly acute for agricultural
workers, and even worse for migrant laborers. Despite the
fact that California's farmworkers till and reap the most
bountiful farmland in the world, the average farmworker
earns only a subsistence wage of $7,500 a year. At this
income level, these workers are priced out of all but the
most meager housing options. A recent University of
California study estimated that 250,000 farmworkers and
their families currently endure inadequate housing.
While the Farmworker Housing Tax Credit Program was
established to help alleviate this shortage, demand for the
program's $500,000 per year in tax credits has been
virtually nonexistent because the program has proven to be
unworkable. On the one hand, developers cannot spend any
money on construction activities before applying for the
credit. On the other hand, TCAC has interpreted the law to
preclude it from awarding any credits until a project is
completed and occupied. The author believes that AB 1811
will facilitate the construction of affordable farmworker
housing by reforming California's dormant Farmworker
Housing Assistance Program. The bill seeks to mirror the
process for awarding other housing tax credits, in which
TCAC allocates a future tax credit to a project prior to or
during construction and the taxpayer then claims the credit
after the project is placed in service.
2. Technical amendments .
On page 3, line 29 strike "the limitation set forth in"
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Page 4
and insert "the provisions of"
On page 4, line 31 after "(1)" insert "Apply to the
committee for credit certification."
Previous Actions :
Assembly Floor 72-0
Assembly Appropriations 21-0
Assembly Revenue and Taxation 8-0
Support and Opposition : (8/14/)
Support : Lieutenant Governor
Cruz Bustamante (sponsor)
Treasurer Phil Angelides (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 Farm Bureau Federation
California Housing Partnership Corporation, San
Francisco
California Labor Federation
California Legislative Council for Older Americans
California Rural Legal Assistance Foundation
Chicano Federation of San Diego County
City of Concord Housing Department
City of Modesto Housing Department
City of Salinas Planing Department
Coachella Valley Housing Coalition, Indio
Common Ground Communities, Nevada City
Community Economics, Oakland
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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
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
Lake County Alliance for the Mentally Ill
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 Mental Health Association
Los Angeles Housing Partnership, Inc.
Low-Income Housing Fund, Los Angeles
Lutheran Office of Public Policy
Manufactured Housing Institute
Marin City Community Development Corporation
Marin Continuum of Housing and Services, San Rafael
Marin Housing Council, San Rafael
Mercy Charities Housing California, Orange
Metropolitan Area Advisory Committee, National City
Mid-Peninsula Housing Coalition, Redwood City
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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
Sacramento Neighborhood Housing Services
Saint Joseph Health System, Orange
SAMCO, San Jose
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
Thomas Safron and Associates, Los Angeles
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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
WNC, Inc., Costa Mesa
Opposition : Unknown
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