California Tax Credit Allocation Committee Update. Mark Stivers Executive Director

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1 California Tax Credit Allocation Committee Update Mark Stivers Executive Director 1

2 2017 9% Tax Credit Results Awarded 35 second round projects in September, totaling 1913 units. Total 2017 units to date equal TCAC is likely to award a few more projects off the waiting list. TCAC will swap out state credits for federal credits in selected projects to reduce state credit overallocation of $40 million. 2

3 2017 9% Tax Credit Results To date, TCAC has funded 63 of 167 applications, a success rate of 38%. New construction equals 84% of units, up from 77% in 2016 Federal tax credits per unit is $24,750, an increase of more than $4300 from Average number of units per project is 60.6, up from 56.7 in

4 2017 4% Applica9ons to Date Through the August meeting, we have funded 6365 total units, equal to 48% of the 2016 units through August. 41% of the units are in new construction projects, compared to 30% for all of resyndications to date, down from 36 at this point last year. TCAC has received 12 applications for October, compared to 34 last year. 4

5 Cer9ficated State Credits 14 of 27 projects receiving state credits in 2017 have elected to certificate the credits. 5

6 Highlights of Proposed Regulation Changes 6

7 Improving Choice and Opportunity Between 2003 and 2015, 62% of 9% new construction large family units were located in lowest resource areas. 17% were located in the highest or high resources areas, which represent roughly 40% of all census tracts. 7

8 Improving Choice and Opportunity Three incentives for new construction large family projects in higher resource areas site amenity points for such projects in highest resource areas and 4 points in high resource areas. 2. In most cases, a 10% threshold basis limit increase for projects in highest resource areas and 5% in high resource areas % tiebreaker add-on (10% in rural set-aside) for such projects in highest resource areas and 10% (5% rural) in high resource areas. 8

9 Improving Choice and Opportunity Between 2003 and 2015, 35% of all 9% federal and state tax credits went to large family new construction projects in the lowest resource areas. TCAC proposes a 30% housing type goal for such projects, excluding: 1. Projects receiving 6 transit amenity points. 2. Projects in which at least 75% of the low-income units are replacing existing affordable housing. 9

10 Special Needs Projects Reduce the minimum threshold for special needs units in special needs projects from 50% to 25%. Ø Note that homeless assistance projects and projects seeking the 130% basis boost and state credits still have a 50% minimum threshold. Fold the SRO housing type into the Special Needs housing type and set the combined housing type goal at 30%. 10

11 Point Categories Eliminate the leveraging point category. Revise the lowest-income point table. 11

12 Hybrid Tiebreaker Benefit Allow specified hybrid developments to include in the size factor the tax credit units from the 4% project. Ø The 4% project must be eligible for maximum points in the 9% housing type, service amenity, sustainability, and lowest income points categories, except that the income targeting can be met across both the 4% and 9% projects. Ø Any amount of the combined 4% and 9% developer fees in cost that are in excess of the limit for the 9% project by itself must be deferred or contributed as equity to the projects. 12

13 Maximum 9% Awards and Fees Increase the maximum 9% credit award for projects with more than 100 low-income units from $2.5 million to $3 million. Create an exception to the developer fee rule for simultaneously phased all-9% credit developments when the preceding phase is at least 150 units. 13

14 New Northern California Region Remove Butte and Shasta Counties from the Capital and Northern Region. Remove Marin, Napa, Solano, and Sonoma from the North and East Bay Region. Group these six counties into a new Northern California region. 14

15 4% Projects Eliminate the re-application process. Apply the high-cost test to 4% projects seeking competitive state credits. Increase from $20,000 per unit to $25,000 per unit the threshold at which a 4% applicant may receive a developer fee equal to 15% of the acquisition basis. 15

16 CA U9lity Allowance Calculator Expand use of the CUAC to: 1. Rehabilitation applicants. 2. Existing projects with new photovoltaics installed through a municipal utility or joint powers authority solar program, which offset tenant loads. Allow existing buildings to use EPBB calculator to establish solar values. 16

17 Other Allow a credit year exchange in the event that a development is significantly delayed due to damage directly caused by fire, war, or act of God. Require resyndication projects to demonstrate a rehabilitation need of at least $5000 per unit over the first three years, unless the project receives a waiver from the transfer event requirements or has less than 10 years remaining on a TCAC regulatory agreement. 17

18 Other Allow units in a special needs project designated at reservation for homeless youth to be occupied entirely by full-time students who are not dependents of another individual during the extended use period. Impose appeal fees only for appeals to the full Committee. Impose a $1000 fee for tax form amendments not due to TCAC error. 18

19 Public Hearings Tuesday, October 10, 2017 Monday, October 16, 2017 Oakland, 11:00 am Los Angeles, 11:00 am Elihu M. Harris Building Ronald Reagan State Building 1515 Clay Street, Auditorium 300 South Spring Street, Auditorium Thursday, October 12, 2017 Tuesday, October 17, 2017 Sacramento, 1:30 pm San Diego, 9:30 am EDD San Diego Housing Commission 722 Capitol Mall, Auditorium 1122 Broadway, Conference Room

20 Mark Stivers