BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1811|
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THIRD READING
Bill No: AB 1811
Author: Reyes (D)
Amended: 8/18/00 in Senate
Vote: 21
SENATE HOUSING & COMM. DEV. COMMITTEE : 5-0, 8/18/00
AYES: Alarcon, Costa, Johannessen, Monteith, Vasconcellos
ASSEMBLY FLOOR : 72-0, 8/7/00 - See last page for vote
SUBJECT : Taxation: credit: qualified farmworker
housing
SOURCE : Lt. Governor Bustamante
Treasurer Angelides
DIGEST : This bill allows the Tax Credit Allocation
Committee to commit future years' tax credits for the
farmworker housing program for specified projects, allows
the credit to be awarded before coss are incurred, and
allows the credit to be used by the taxpayer once the
farmworker housing is placed in service.
ANALYSIS : 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
CONTINUED
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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 belowmarket 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 10year period or for the term of the loan, whichever
is shorter. Loans must be precertified 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
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
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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.
This bill modifies the rules used to allocate farmworker
housing tax credits as follows:
1. 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.
2. 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.
3. Applies certain provisions of federal lowincome 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.
4. Deletes the requirement that farmworker housing tax
credits be allowed only after the farmworker housing is
completed and occupied.
5. 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 :
Purpose of the bill . According to the author, California
is suffering from a critical shortage of decent affordable
housing. This shortage affects all lowincome 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
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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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
Although the Tax Credit Allocation Committee is authorized
to allocate up to $500,000 a year in credits and to roll
over any unallocated credits into future years, no credits
have been allocated yet. This means that there is $1.5
million (for 1998, 1999, and 2000) in credits available to
be allocated. To the extent that the changes made by AB
1811 make it more attractive to taxpayers to build
low-income housing, there will be a revenue loss.
SUPPORT : (Verified 8/14/00)
Lieutenant Governor Cruz Bustamante (source)
Treasurer Phil Angelides (source)
Affordable Homes, Avila Beach
Affordable Housing Foundation, San Francisco
Agora Group, Goleta
Agricultural Council of California
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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
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
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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
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
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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
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
ASSEMBLY FLOOR :
AYES: Aanestad, Ackerman, Alquist, Bates, Battin, Baugh,
Bock, Brewer, Briggs, Campbell, Cardenas, Cardoza,
Cedillo, Corbett, Correa, Cox, Cunneen, Davis, Dickerson,
Ducheny, Dutra, Firebaugh, Florez, Floyd, Gallegos,
Granlund, Havice, Honda, House, Jackson, Kaloogian,
Keeley, Kuehl, Leach, Lempert, Leonard, Longville,
Lowenthal, Machado, Maddox, Maldonado, Margett, Mazzoni,
Migden, Nakano, Olberg, Oller, Robert Pacheco, Rod
Pacheco, Papan, Pescetti, Reyes, Romero, Runner, Scott,
Shelley, Steinberg, Strickland, Strom-Martin, Thompson,
Thomson, Torlakson, Villaraigosa, Vincent, Washington,
Wayne, Wesson, Wiggins, Wildman, Wright, Zettel,
Hertzberg
NC:jk 8/30/00 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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