June 16, 2021 Adopted Regulations

CALIFORNIA TAX CREDIT ALLOCATION COMMITTEE REGULATIONS IMPLEMENTING THE

FEDERAL AND STATE LOW INCOME HOUSING TAX CREDIT LAWS

CALIFORNIA CODE OF REGULATIONS

TITLE 4, DIVISION 17, CHAPTER 1

June 16, 2021

Section 10300. Purpose and Scope

These regulations establish procedures for the reservation, allocation and compliance monitoring of the

Federal and State Low-Income Housing Tax Credit Programs (“Housing Tax Credit Programs”,

“Programs”, or individually, “Federal Program” or “State Program”) and establish policies and procedures

for use of the Tax Credits to meet the purposes contained in Section 252 of Public Law No. 99-514

(October 22, 1986), known as the Federal Tax Reform Act of 1986, as amended, and Chapter 658,

California Statutes of 1987, as amended, and Chapter 1138, California Statutes of 1987, as amended.

Internal Revenue Code (“IRC”) Section 42 provides for state administration of the Federal Program.

California Health and Safety (H & S) Code Sections 50199.4 through 50199.22, and California Revenue

and Taxation (R & T) Code Sections 12205, 12206, 17057.5, 17058, 23610.4 and 23610.5 establish the

California State Program and designate the California Tax Credit Allocation Committee (“CTCAC”) as

the Housing Credit Agency to administer both the Federal and State Housing Tax Credit programs in

California. These regulations set forth the policies and procedures governing the Committee’s

management of the Programs. In addition to these regulations, program participants shall comply with

the rules applicable to the Federal Program as set forth in Section 42 and other applicable sections of

the Internal Revenue Code. In the event that Congress, the California Legislature, or the IRS add or

change any statutory or regulatory requirements concerning the use or management of the Programs,

participants shall comply with such requirements.

Note: Authority cited: Section 50199.17, Health and Safety Code.

Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4,

50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14,

50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.

Section 10302. Definitions

Adaptive reuse. Adaptive reuse means retrofitting and repurposing of existing buildings that create

new residential rental units, and expressly excludes a project that involves rehabilitation of a

construction

affecting existing residential units. Adaptive reuse may include retrofitting and

repurposing of existing hotels or motels if the hotel or motel is not currently a place of residence fo

the occupan

ts, and/or sites that have been received a Project Homekey allocation.

AHP. The Affordable Housing Program of the Federal Home Loa

n Bank.

Allocation. The certification by the Committee of the amount of Federal, or Federal and

State,

Credits

awarded to the applicant for purposes of income tax reporting to the IRS and/or the

California Franchise Tax

Board (“FTB”).

Applicable Credit Percentage. The monthly rate, published in IRS revenue rulings pursuant to IRC

Section 42(b)(1), applicable to the Federal Program for purposes of calculating annual Tax Cre

dit

amounts.

Bath or bathroom. A bath or bathroom must be equipped with an exhaust fan, a toilet, a sink,

shower or bathtub, and

a receptacle outlet.

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f) Bedroom. A bedroom be at least 70 square feet, must include an interior door, a closet or free-

standing wardrobe provided by the project owner, and at least one receptacle outlet.

g) Capital Needs Assessment or CNA. The physical needs assessment report required for all

rehabilitation projects, described in Section 10322(h)(26)(B).

h) Chairperson. The Chairperson of the California Tax Credit Allocation Committee.

i) Committee. The California Tax Credit Allocation Committee (“CTCAC”) or its successor.

j) Community Foundation. A local foundation organized as a public charity under section 509(a)(1)

of the Internal Revenue Code.

k) Compliance Period. That period defined by IRC Section 42(i)(1) and modified by R & T Code

Section 12206(h), and further modified by the provisions of these regulations.

l) Credit(s). Housing Tax Credit(s), or Tax Credit(s).

m) Credit Ceiling. The amount specified in IRC Section 42(h)(3)(C) for Federal Program purposes

(including the unused credits from the preceding calendar year, the current year’s population based

credits, returned credits and national pool credits), and in R & T Code Section 17058(g) for State

Program purposes.

n) CTCAC. California Tax Credit Allocation Committee.

o) Developer Fee. All Funds paid at any time as compensation for developing the proposed project,

to include all processing agent fees, developer overhead and profit, construction management

oversight fees if provided by the developer, personal guarantee fees, syndicator consulting fees,

and reserves in excess of those customarily required by multi-family housing lenders.

p) Development Team. The group of professionals identified by the applicant to carry out the

development of a Tax Credit project, as identified in the application pursuant to subsection

10322(h)(5).

q) Eligible Project. A proposed 9% Tax Credit project that has met all of the Basic Threshold

Requirements and Additional Threshold Requirements described in Sections 10325(f) and (g)

below.

r) Executive Director. The executive director of the California Tax Credit Allocation Committee.

s) Farmworker Housing. A development of permanent housing for agricultural workers (as defined by

California Labor Code Section 1140.4(b)) in which at least 50 percent of the units are available to,

and occupied by, farmworkers and their households. The Committee may permit an owner to

temporarily house nonfarmworkers in vacant units in the event of a disaster or other critical

occurrence. However, such emergency shelter shall only be permitted if there are no pending

qualified farmworker household applications for residency.

t) Federally Subsidized. As defined by IRC Section 42(i)(2).

u) Federal Credit. The Tax Credit for low-income rental housing provided under IRC Section 42 and

implemented in California by the Committee.

v) Financial Feasibility. As required by, IRC Section 42(m)(2), and further defined by these

regulations in Section 10327.

w) FTB. State of California Franchise Tax Board.

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x) Hard construction costs. The amount of the construction contract, excluding contractor profit,

general requirements and contractor overhead.

y) High-Rise Project(s). A project which applies for a Credit reservation pursuant to Section 10325 in

which 100 percent (100%) of the residential units are Tax Credit Units and for which the project

architect has certified concurrently with the submission of an application to the Committee that (1)

one

or more of the buildings in the project would have at least six stories; and (2) the

construction

period for the project is reasonably expected to be in excess of 18 months.

z) Hybrid project or development. A new construction development constructed with separate 9%

and 4% Federal Credit Allocations. The development must meet the conditions set forth in Section

10325(c)(9)(A).

aa) IRS. United States Internal Revenue Service.

bb) Local Development Impact Fees. The amount of impact fees, mitigation fees, or capital facilities

fees imposed by municipalities, county agencies, or other jurisdictions such as public utility districts,

school districts, water agencies, resource conservation districts, etc.

cc) Local Reviewing Agency. An agency designated by the local government having jurisdiction t

hat

will perform evaluations of proposed projects in its locale according to criteria set forth by the

Committee.

dd) Low-Income Unit. As defined by IRC Section 42(i)(3).

ee) Market-Rate Unit. A unit other than a Tax Credit Unit as defined by these regulations.

ff) MHP. Multifamily Housing Program of California’s Department of Housing and Community

Development.

gg) “Net Project Equity” shall mean the total sale or refinancing proceeds resulting from a Transfer

Event less the payment of all obligations and liabilities of the owner, including any secured and

unsecured related and third party debt thereof (including, without limitation, repayment of deferred

developer fees and repayment of any advances made by a partner to fund operating and/or

development deficits).

hh) Net Tax Credit Factor. The estimated or actual equity amount raised or to be raised from a tax

credit syndication or other instrument, not including syndication related expenses, divided by the

total amount of Federal and State Tax Credits reserved or allocated to a project. The calculation

must include the full ten-year amount of Federal Tax Credits and the total amount of State Tax

Credits.

ii) QAP. The “Low Income Housing Tax Credit Program Qualified Allocation Plan,” as adopted in

regulation

Sections 10300 et. seq., and in accordance with the standards and procedures of

IRC

Section 42(m)(1)(B).

jj) “Qualified Capital Needs Assessment” shall mean a capital needs assessment for a property

subject to a Transfer Event dated within one hundred eighty (180) days of the proposed Transfer

Event which (i) meets the requirements of (a) the Fannie Mae Multifamily Instructions for the PNA

Property Evaluator, (b) Freddie Mac’s Property Condition Report requirements in Chapter 14 of the

Small Balance Loan Addendum, (c) HUD’s Multifamily Capital Needs Assessment section in

Appendix 5G of the Multifamily Accelerated Process Guide, or (d) Standard Guide for Property

Condition Assessments: Baseline Property Condition Assessment Process (ASTM Designation E

2018-08) utilizing a recognized industry standard to establish useful life estimates for the

replacement reserve analysis, and (ii) clearly sets forth (a) the capital needs of the project for the

next three (3) years (the “Short-Term Work”) and the projected costs thereof, and (b) the capital

needs of the project for the subsequent twelve (12) years (the “Long Term Work”) and the projected

contributions to reserves that will be needed to accomplish that work.

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kk) Qualified Nonprofit Organization. An organization that meets the requirements of IRC Section

42(h)(5), whose exempt purposes include the development of low-income housing as described in

IRC Section 42, and which, if a State Tax Credit is requested, also qualifies under H & S Code

Section 50091.

ll) RHS. United States Rural Housing Service, formerly Rural Housing and Community Development

Service or RHCDS, formerly Farmers Home Administration or FmHA

mm) Related Party.

(1) the brothers, sisters, spouse, ancestors, and direct descendants of a person;

(2) a person and corporation where that person owns more than 50% in value of the

outstanding stock of that corporation;

(3) two or more corporations, general partnership(s), limited partnership(s) or limited liability

corporations connected through debt or equity ownership, in which

(A) stock is held by the same persons or entities for

(i) at least 50% of the total combined voting power of all classes that can vote, or

(ii) at least 50% of the total value of shares of all classes of stock of each of the

corporations or

(iii) at least 50% of the total value of shares of all classes of stock of at least one of

the other corporations, excluding, in computing that voting power or value, stock

owned directly by that other corporation;

(B) concurrent ownership by a parent or related entity, regardless of the percentage of

ownership, or a separate entity from which income is derived;

ownership, or a separate entity where a sale-leaseback transaction provides the

parent or related entity with income from the property leased or that creates an

undue influence on the separate entity as a result of the sale-leaseback transaction;

(D) concurrent ownership by a parent or related entity, regardless of the percentage of

ownership, of a separate entity where an interlocking directorate exists between the

parent or related entity and the separate entity.

(4) a grantor and fiduciary of any trust;

(5) a fiduciary of one trust and a fiduciary of another trust, if the same person is a grantor of

both trusts;

(6) a fiduciary of a trust and a beneficiary of that trust;

(7) a fiduciary of a trust and a corporation where more than 50% in value of the outstanding

stock is owned by or for the trust or by or for a person who is a grantor of the trust;

(8) a person or organization and an organization that is tax-exempt under Subsection 501(c)(3)

or (4) of the IRC and that is affiliated with or controlled by that person or the person’s family

members or by that organization;

(9) a corporation and a partnership or joint venture if the same persons own more than:

(A) 50% in value of the outstanding stock of the corporation; and

(B) 50% of the capital interest, or the profits’ interest, in the partnership or joint venture;

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(10) one S corporation or limited liability corporation and another S corporation or limited liability

corporation if the same persons own more than 50% in value of the outstanding stock of

each corporation;

(11) an S corporation or limited liability corporation and a C corporation, if the same persons

own more than 50% in value of the outstanding stock of each corporation;

(12) a partnership and a person or organization owning more than 50% of the capital interest, or

the profits’ interest, in that partnership; or

(13) two partnerships where the same person or organization owns more than 50% of the capital

interests or profits’ interests.

The constructive ownership provisions of IRC Section 267 also apply to subsections 1 through 13

above. The more stringent of regulations shall apply as to the ownership provisions of this section.

nn) Reservation. As provided for in H & S Code Section 50199.10(e) the initial award of Tax Credits

to an Eligible project. Reservations may be conditional.

oo) Rural. An area defined in H & S Code Section 50199.21.

pp) Scattered Site Project. A project in which the parcels of land are not contiguous except for the

interposition of a road, street, stream or similar interposition.

(1) For acquisition and/or rehabilitation projects with one pre-existing project-based Section 8

contract in effect for all the sites, there shall be no limit on the number or proximity of

sites.

(2) For acquisition and/or rehabilitation projects with any of the following: (A) existing federal or

state rental assistance or operating subsidies, (B) an existing CTCAC Regulatory

Agreement, or (C) an existing regulatory agreement with a federal, state, or local public

entity, the number of sites shall be limited to five, unless the Executive Director approves a

higher number, and all sites shall be either within the boundaries of the same city, within a

10-mile diameter circle in the same county, or within the same county if no location is within

a city having a population of five-hundred thousand (500,000) or more.

(3) For new construction projects and all other acquisition and/or rehabilitation projects, the

number of sites shall be limited to five, and all sites shall be within a 1 mile diameter circle

within the same county.

qq) State Credit. The Tax Credit for low-income rental housing provided by the Revenue and Taxation

Code Sections 12205, 12206, 17057.5, 17058, 23610.4 and 23610.5, including the State

Farmworker Credit, formerly the Farmworker Housing Assistance Program provided by the

Revenue and Taxation Code Sections 12206,17058, and 23610.5 and by the Health and Safety

Code Sections 50199.2 and 50199.7.

rr) Tax Credit Units. Low-Income Units and manager units.

ss) Tax-Exempt Bond Project. A project that meets the definition provided in IRC Section 42(h)(4).

tt) Tax forms. Income tax forms for claiming Tax Credits: for Federal Tax Credits, IRS Form 8609;

and, for State Tax Credits, FTB Form 3521A.

uu) “Transfer Event” shall mean (i) a transfer of the ownership of a project, (ii) the sale or assignment

of a partnership interest in a project owner and/or (iii) the refinancing of secured debt on a project.

The following shall not be deemed a Transfer Event: (i) the transfer of the project or a partnership

or membership interest in a project owner in which reserves remain with the project and the debt

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encumbering the project is not increased, refinanced or otherwise modified, (ii) the refinancing of

project debt which does not increase the outstanding principal balance of the debt other than in the

amount of the closing costs and fees paid to the project lender and third parties as transaction

costs, provided that reserves remain with the project, (iii) the replacement of a general partner by

a limited partner upon the occurrence of a default by a general partner in accordance with

partnership agreement of the project owner, (iv) a transfer pursuant to a foreclosure or deed in lieu

of foreclosure to a non-related party, (v) a “Subsequent Transfer” pursuant to Section

10320(b)(4)(B) hereof, (vi) a transfer of the ownership of a project subject to an existing tax credit

regulatory agreement with a remaining term of five (5) or less years if the transfer is made in

connection with a new reservation of 9% or 4% tax credits, or (vii) the sale of a project, or the sale

or assignment of a partnership interest in a project owner, to an unrelated party for which the parties

entered into a purchase agreement prior to October 9, 2015. Notwithstanding the foregoing, the

term “Transfer Event” shall be applicable only to projects in which at least 50% of the units are Tax

Credit Units.

vv) Threshold Basis Limit. The aggregate limit on amounts of unadjusted eligible basis allowed by the

Committee for purposes of calculating Tax Credit amounts. These limits are published by CTCAC

on its website, by unit size and project location, and are based upon average development costs

reported within CTCAC applications and certified development cost reports. CTCAC staff shall use

new construction cost data from both 9 percent and 4 percent funded projects, and shall eliminate

extreme outliers from the calculation of averages. Staff shall publicly disclose the standard

deviation percentage used in establishing the limits, and shall provide a worksheet for applicant

use. CTCAC staff shall establish the limits in a manner that seeks to avoid a precipitous reduction

in the volume of 9 percent projects awarded credits from year to year.

ww) Tribe. A federally recognized Indian tribe located in California, or an entity established by the

tribe to undertake Indian housing projects, including projects funded with federal Low Income

Housing Tax Credits.

xx) Tribal Trust Land. Real property located within the State of California that meets both the

following criteria:

(1) is trust land for which the United States holds title to the tract or interest in trust for the

benefit of one or more tribes or individual Indians, or is restricted Indian land for which one

or more tribes or individual Indians holds fee title to the tract or interest but can alienate or

encumber it only with the approval of the United States.

(2) the land may be leased for housing development and residential purposes under Federal

law.

yy) Waiting List. A list of Eligible Projects approved by CTCAC following the last application cycle of

any calendar year, pursuant to Section 10325(h) below.

zz) TCAC/HCD Opportunity Area Map. A map or series of maps approved annually by the Committee

as the TCAC/HCD Opportunity Area Map.

Note: Authority cited: Section 50199.17, Health and Safety Code.

Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4,

50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14,

50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.

Section 10305. General Provisions

(a) Meetings. The Committee shall meet on the call of the Chairperson.

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(b) Report. At each meeting of the Committee at which Tax Credit reservations from the Credit Ceiling

are

made, the Executive Director shall make a report to the Committee on the status of the

Federal

and State Tax Credits reserved and allocated.

(c)

Forms. CTCAC shall develop such forms as are necessary to administer the programs and

authorized

to request such additional information from applicants as is appropriate to further the

purposes of the Programs. Failure to provide such additional information may cause an application

to be disqualified or render a reservation null and

void.

(d)

Tax Credit Limitations. No applicant shall be eligible to receive Tax Credits if, together with the

amount of Federal or State Tax Credits being requested, the applicant would have, in the capacity

of individual owner, corporate shareholder, general partner, sponsor, or developer, received a

reservation or allocation greater than fifteen percent (15%) of the total Federal Credit Ceiling fo

any calendar year, calcu

lated as of February first of the calen

dar year.

(e)

Notification. Upon receipt of an application, CTCAC shall notify the Chief Executive Officer (e g.,

city manager, county administrative officer, tribal chairperson) of the local jurisdiction within

which

the

proposed project is located and provide such individual an opportunity to comment on the

proposed pr

oject (IRC Section 42(m)(1)(ii)).

(f)

Conflicting provisions. These regulations shall take precedence with respect to any and all conflicts

with provisions of the QAP or other guidance provided by the Committee. This subsection

shall

not

be construed to limit the effect of the QAP and other guidance in cases where said documents

seek to fulfill, without conflict, the requirements of federal and state statutes pertaining to the

Tax

Credit Programs.

(g)

The Committee may, at its sole discretion, reject an application if the proposed project fails to

meet

the

minimum point requirements established by the Committee prior to that funding round. T

Committee

may establish a minimum point requirement for competitive rounds under either S

ection

10325 or 10326.

(h)

Notwithstanding any other provision of these regulations, the State Tax Credits allocated

pursuant

subsection (g)(1)(B) of Sections 12206, 17058, and 23610.5 of the Revenue and Taxation Code

shall be awarded to applicants for eligible projects receiving an allocation of State Ceiling

from

CDLAC

and the applicant criteria shall be applied in accordance with Section 10326. Projects

shall

begin

construction within 180 days of award pursuant to Section 10317(j). Up to two

hundred

million

dollars ($200,000,000) may be allocated for housing financed by CalHFA’s Mixed-Inco

Program,

and this amount may be reduced upon agreement of the Executive Directors of CalHFA

and CTCAC.

Note: Authority cited: Section 50199.

17, Health and Safety Code.

Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4,

50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14,

50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.

Section 10310. Reservations of Tax Credits

(a)

Reservation cycles. The Committee shall reserve Tax Credits on a regular basis in

accordance

with

H. & S Code Section 50199.14(a), pursuant to these regulations and the QAP, i

ncorporated

by reference in full.

(b)

Credit Ceiling available. The approximate amount of Tax Credits available in each reservation

cycle may be established by the Committee at a public meeting designated for that purpose as of

February first of the calendar year, in accordance with the following provisions:

(1)

Amount of Federal Tax Credits. The amount of Federal Tax Credits available for rese

rvation

in a reservation cycle sh

all be equal t

o the sum of:

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(A) the per capita amount authorized by law for the year, plus or minus the unused,

Federal Credit Ceiling balance from the preceding calendar year, multiplied by a

percentage amount established by the Committee for said cycle;

(B) the amount allocated, and available, under IRC Section 42(h)(3)(D) as of the date

that is thirty days following the application deadline for said cycle;

thirty days following the application deadline for said cycle; and,

(D) additional amounts of Federal Credit Ceiling, from the current or subsequent year,

necessary to fully fund projects pursuant to the allocation procedures set forth in

these regulations.

For calendar year 2020, and 2021 if applicable, the amount of the Federal Credit Ceiling

established by the Further Consolidated Appropriations Act, 2020 (“FCAA”) shall be

allocated pursuant to Section 10325(d)(1). For calendar year 2021, and 2022 if applicable,

the amount of the Federal Credit Ceiling established by the Consolidated Appropriations

Act, 2021 (“CAA”) shall be allocated pursuant to Section 10325(d)(1).

(2) Amount of State Tax Credits. The amount of State Tax Credits available for reservation in

a reservation cycle shall be equal to:

(A) the amount authorized by law for the year, less any amount set-aside for use with

certain tax-exempt bond financed projects, plus the unused State Credit Ceiling

balance from the preceding calendar year, multiplied by a percentage amount

established by the Committee for said cycle;

(B) the amount of State Credit Ceiling returned, and available, by the date that is thirty

days following the application deadline for said cycle; plus,

necessary to fully fund projects pursuant to the allocation procedures set forth in

these regulations and,

(D) five hundred thousand dollars ($500,000) per calendar year in State Farmworker

Credits to provide Farmworker Housing, plus any returned and unused State

Farmworker Credit balance from the preceding calendar year.

(3) Waiting List Tax Credits. Tax Credits returned (other than those returned pursuant to

Section 10328(g)) and Tax Credits allocated under IRC Section 42(h)(3)(D) during any

calendar year, and not made available in a reservation cycle, shall be made available to

applications on Committee Waiting Lists, pursuant to subsection 10325(h).

Note: Authority cited: Section 50199.17, Health and Safety Code.

Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4,

50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14,

50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.

Section 10315. Set-asides and Apportionments

CTCAC will accept applications from Qualified Nonprofit Organizations for the Nonprofit set-aside upon

the request of the qualified applicant, regardless of the proposed housing type. Thereafter, CTCAC shall

review each non-rural pending competitive application applying as an at-risk or special needs housing type

under subsection (h) below, first, within that housing type’s relevant set-aside. Non-rural applicants

meeting the criteria for both the special needs and at-risk housing types pursuant to Section 10325(g) may

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request to be considered in both set-asides. Applicants receiving an award from either the At-Risk or

Special Needs set-aside shall be considered as that housing type for purposes of paragraph (h).

(a)

Nonprofit set-aside. Ten percent (10%) of the Federal Credit Ceiling for any calendar y

ear,

calculated

as of February first of the calendar year, shall be set-aside for projects involving, o

ver

the

entire restricted use period, Qualified Nonprofit Organizations as the only general partners an

developers, as defined b

y these regulations, and in accordance with IRC Section (42)

(h)(5).

(b)

Each funding round, credits available in the Nonprofit set-aside shall be made available as a first-

priority, to projects providing housing to homeless households at affordable rents, consistent wit

Section 103

25(g)(3) in the following

priority order:



First, projects with 1) McKinney-Vento Homeless Assistance Act, MHP-Supportive H

ousing

Program,

HCD Veterans Housing and Homeless Prevention Program, Mental Health S

ervices

Act

(MHSA), CalHFA Local Government Special Needs Housing Program,

Governor’s

Homeless

Initiative, Housing

for a Healthy California, or HCD No Place Like Home development

capital funding committed for which the amount of development capital funding committed

shall

be at least

$500,000 or $10,000 per unit for all Low-Income Units in the project (irrespective of

the number of units assisted by the referenced programs), whichever is greater; or 2)

projects

with

rental or operating assistance funding commitments from federal, state, or

local

government

al funding sources. The rental assistance must be sponsor-based or p

roject-based

and

the remaining term of the project-based assistance contract shall be no less than one

(1)

year

and shall apply to no less than fifty percent (50%) of the Low-Income Units in the

proposed

project.

For local government funding sources, ongoing assistance may be in the form of a

letter of intent from the government

al entity.



Second, other qualified homeless assistance projects.

To compete as a homeless assistance project, at least fifty percent (50%) of the Low-Income Units

within the project must be designated for homeless households as described in category (1)

immediately below:

(1)

Individual or family who lacks a fixed, regular, and adequate nighttime residence, m

eaning:

(A)

Has a primary nighttime residence that is a public or private place not meant f

human habitation;

(B)

Is living in a publicly or privately operated shelter designated to provide

temporary

living

arrangements (including congregate shelters, transitional housing, and

hotels

and

motels paid for by charitable organizations or by federal, state, and lo

cal

government

rograms); or

(C)

Is exiting an institution and resided in an emergency shelter or place not meant for

human habitation immediately before entering that institution.

(2)

Individual or family who will imminently lose their primary nighttime residence, provided

that:

(A)

Residence will be lost within 14 days of the date of application for

homeless

assistan

ce;

(B)

No subsequent residence has been identified; and

(C)

The individual or family lacks the resources or support networks needed to obtain

other permanent housin

(3)

Unaccompanied youth under 25 years of age, or families with children and youth, who

not otherwise qualify as

homeless under this definition, but wh

(A)

Are defined as homeless under the other listed federal statut

es;

(B)

Have not had a lease, ownership interest, or occupancy agreement in pe

rmanent

housing during the 60 da

ys prior to the homeless assistance application;

(C)

Have experienced persistent instability as measured by two moves or more during

the preceding

60 days; and

(D)

Can be expected to continue in such status for an extended period of time due to

special needs or barrier

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Page 10 of 99

(4)

Any individu

al or family who:

(A)

Is fleeing, or is attempting to flee, dom

estic violence;

(B)

Has no other residence;

and

(C)

Lacks the resources or support networks to obtain other permanent housing.

For all projects receiving a reservation under the first or second priority, owners, property

managers, and service providers shall comply with the core components of Housing First, as

defined in Welfare and Institutions Code Section 8255(b), with respect to the units designated for

homeless households. For projects receiving a reservation under the first or second priority, the

applicant also shall commit to reserving vacant homeless assistance units for 60 days for

occupancy by persons or households referred, where such systems or lists exist, by either 1) the

relevant coordinated entry or access system, 2) the relevant county health department from a list

of frequent health care users; or 3) the relevant behavioral health department from a list of persons

with chronic behavioral health conditions who require supportive housing. The applicant shall enter

into a memorandum of understanding with the relevant department or system administrator prior to

placing in service unless a reasonable memorandum is refused by the department or administrator.

Any amount of Tax Credits not reserved for homeless assistance projects during a reservation

cycle shall be available for other applications qualified under the Non-profit set-side.

(c)

Rural set-aside. Twenty percent (20%) of the Federal Credit Ceiling for any calendar y

ear,

calculated

as of February first of the calendar year, shall be set-aside for projects in rural areas as

defined in H & S Code Section 50199.21 and as identified in supplemental application

material

prepared

by CTCAC. For purposes of implementing Section 50199.21(a), an area is eligible

under

the

Section 515 program on January 1 of the calendar year in question if it either resides on th

Section

515 designated places list in effect the prior September 30, or is so designated in w

riting

the USDA Multifamily Housing Program Director. All Projects located in eligible census tract

defined

by this Section must compete in the rural set-aside and will not be eligible to compete in

other set-asides or in the geographic areas unless the Geographic Region in which they are locat

has

had no other Eligible Projects for reservation within the current calendar year. In such c

ases

the

rural project may receive a reservation in the last round for the year, from the geographic region

in which it is located, if any.

Within the rural set-aside competition, the first tiebreaker shall be applied as described in Section

10325(c)(9), except that the Senior and Large Family New Construction in Highest or High

Resource Tract housing type goals established by Section 10315(h) shall be calculated relative to

the rural set-aside dollars available each round, rather than against the total credits

available

statewide e

ch round.

(1)

RHS and HOME program apportionment. In each reservation cycle, fourteen percent (

14%)

the rural set-aside shall be available for new construction projects which have a f

unding

commitment

from RHS of at least $1,000,000 from either RHS’s Section 514 Farm

Labor

Housing

Loan Program, RHS’s Section 515 Rural Rental Housing Loan Program, or a

reservation from a Participating Jurisdiction or the State of California of at least $1,00

0,000

in HOME funding.

All

projects meeting the RHS and HOME program apportionment eligibility require

ments

shall

compete under the RHS and HOME program apportionment. Projects that are

unsuccessful under the apportionment shall then compete within the general rural set-a

side

described in subsection (c). Any amount reserved under this subsection for which RHS or

HOME

funding does not become available in the calendar year in which the reservation

made,

or any amount of Credit apportioned by this subsection and not reserved during a

reservation cycle shall be available for applications qualified under the Rural set-asid

(2)

Native American apportionment. One million dollars ($1 million) in annual federal c

redits

shall

be available during the first round and, if any credits remain, in the second round for

applications proposing projects on land to be owned by a Tribe, whether the land is owned

Regulations

Section 10315

Page 11 of 99

in fee or in trust, and in which occupancy will be legally limited to tribal households, except

that up to 20% of Low-Income Units may serve non-tribal households if required by the

HOME Program. Apportioned dollars shall be awarded to projects sponsored by Tribes

using the scoring criteria in Section 10325(c), and achieving the minimum score established

by TCAC under Section 10305(h). In addition, the application shall receive the minimum

points available for both general partner and management company experience under

Section 10325(c)(1), except that the management company minimum scoring cannot be

obtained through the point category for a housing tax credit certification examination.

(d)

“At-Risk” set-aside. After accounting for the second supplemental set-aside described in (g), f

ive

percent

(5%) of the Federal Credit Ceiling for any calendar year, calculated as of February first of

the calendar year, shall be set aside for projects that qualify and apply as an “At risk” housing type

pursuant to subsection (h) below. Any proposed project that applies and is eligible under the

Nonprofit set-aside but is not awarded credits from that set-aside shall be eligible to be consider

under this A

t-Risk set-aside if the project meets the housing t

ype requirements.

(e)

Special Needs set-aside. After accounting for the second supplemental set-aside described in (g)

four

percent (4%) of the Federal Credit Ceiling for any calendar year, calculated as of February

first

the calendar year, shall be set aside for projects that qualify and apply as a Special

Needs

housing

type project pursuant to subsection (h) below. Any proposed project that applies and

eligible

under the Nonprofit set-aside, but is not awarded credits from that set-aside, shall be

eligible

be considered under this Special Needs set-aside if the project meets the housing type

requirements.

(f)

First supplemental set-aside. After accounting for the second supplemental set-aside described in

(g), an amount equal to three percent (3%) of the Federal Credit Ceiling for any calendar y

ear,

calculated

as of February first of the calendar year, shall be held back to fund overages that occu

the second funding round set-asides and/or in the Geographic Apportionments because of

funding projects in excess of the amounts available to those Set Asides or Geographic

Apportionments, the funding of large projects, such as HOPE VI projects, or other Waiting List or

priority projects. In addition to this initial funding, returned Tax Credits and unused Tax Credits f

rom

Set

Asides and Geographic Apportionments will be added to this Supplemental Set Aside, and

used to fund projects at year end so as to avoid loss of access

to National Pool credits.

(g)

Second supplemental set-aside. For each calendar year an amount of the Federal Credit

Ceiling

determined by the Executive Director, calculated

as of February first of the calendar year, shall be

held back to fund projects designated as DDA project pursuant to Section

10327(d)(3).

(h)

Housing types. To be eligible for Tax Credits, all applicants must select and compete in only one

of the categories listed below, exclusive of the Acquisition and/or Rehabilitation and Large

Family

New

Construction located in a Highest or High Resource Area housing types which are listed here

solely for purposes of the tiebreaker, and must meet the applicable “additional thresho

requirements”

of Section 10325(g), in addition to the Basic Threshold Requirements in

10325(f).

The

Committee will employ the tiebreaker at Section 10325(c)(9) in an effort to assure that no

single

housing

type will exceed the following percentage goals where other housing type maximums a

not yet reached:

Housing T

ype Goal

Large Family 65%

Large Family New Construction receiving the 30%

tiebreaker increase for being located in census

tracts, or census block groups as applicable,

designated on the TCAC/HCD Opportunity

Area Map as Highest or High Resource Areas

(effective for 2019 and later reservations)

Regulations

Section 10315

Page 12 of 99

Special Needs 30%

Single Room Occupancy (SRO) 15%

At-Risk 15%

Seniors 15%

Acquisition and/or Rehabilitation

30% of the credits

within the rural set-aside only available in the rural

set-aside

For purposes of the Acquisition and/or Rehabilitation Housing Type

Goal, a project will be

considered an acquisition and/or rehabilitation project if at least 50% of the units were previously

residential dwelling units.

A large family new construction project that receives a tiebreaker increase for being located in a

Highest or High Resource census tract shall count against both that housing type and the general

Large Family housing type.

(i)

Geographic Apportionments. Annual apportionments of Federal and State Credit Ceiling shall be

made in approximately the amounts shown below

Geographic

Area Apportionments

City of Los Angeles 17.6%

Balance of Los Angeles County 17.2%

Central Valley Region (Fresno, Kern, Kings, Madera,

8.6%

Merced, San Joaquin, Stanislaus, Tulare Counties)

San Diego County 8.6%

Inland Empire Region (San Bernardino, Riverside, 8.3%

Imperial Counties)

East Bay Region (Alameda and Contra Costa Counties) 7.4%

Orange County 7.3%

South and West Bay Region (San Mateo, Santa 6.0%

Clara Counties)

Capital Region (El Dorado, 5.7%

Placer, Sacramento, Sutter, Yuba, Yolo Counties)

Central Coast Region (Monterey, San Benito, San Luis 5.2%

Obispo, Santa Barbara, Santa Cruz, Ventura Counties)

Northern Region (Butte, Marin, Napa, Shasta, Solano, 4.4%

and Sonoma Counties)

San Francisco County 3.7%

(j)

Credit available for geographic apportionments. Geographic apportionments, as described in t

his

Section,

shall be determined prior to, and made available during each reservation cycle in the

approximate percentages of the total Federal and State Credit Ceiling available pursuant t

Subsection

10310(b), after CTCAC deducts the federal credits set aside in accordance with S

ection

10315(a) through (g) from the annual Credit Ceiling.

Regulations

Section 10317

Page 13 of 99

Note: Authority cited: Section 50199.17, Health and Safety Code.

Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4,

50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14,

50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.

Section 10317. State Tax Credit Eligibility Requirements

(a) General. In accordance with the R & T Code Sections 12205, 12206, 17057.5, 17058, 23610.4

and 23610.5, there shall be allowed as a Credit against the “tax” (as defined by R & T Code Section

12201) a State Tax Credit for Federal Credit Ceiling projects pursuant to subsection (g)(1)(A) of

Sections 12206, 17058, and 23610.5 of the Revenue and Taxation Code and Tax Exempt Bond

Projects pursuant to subsection (g)(1)(B) of Sections 12206, 17058, and 23610.5 of the Revenue

and Taxation Code in an amount equal to no more than 30 percent (30%) of the project’s requested

construction-related eligible basis. Except for State Farmworker Credits

and projects meeting

subparagraphs (A) through (D) in subsection (c)(4) of Sections 12206, 17058, and 23610.5 of the

Revenue and Taxation Code, the maximum State Tax Credit award amount for a Tax Exempt Bond

Project pursuant to subsection (g)(1)(A) of Sections 12206, 17058, and 23610.5 of the Revenue

and Taxation Code, or basis described in paragraph (f) below, is 13 percent (13%) of that project’s

requested eligible basis. The maximum State Farmworker Credit award amount for a Tax Exempt

Bond Project, or basis described in paragraph (f) below, is 75 percent (75%) of that project’s

requested eligible basis. The maximum State Credit award for a project meeting subparagraphs

(A) through (D) in subsection (c)(4) of 12206 of the Revenue and Taxation Code, or basis described

in paragraph (f) below, is 95 percent (95%) of that project’s requested eligible basis. Insufficient

credits due to a low appraised value as described in Subparagraph (C) shall be evidenced as

defined in Section 10322(h)(9)(A) of these Regulations: the sum of third party debt encumbering

the seller’s property exceeds the appraised value. Substantial rehabilitation as described in

Subparagraph (D) shall be evidenced by Section 10326(g)(7) of these Regulations. Award

amounts shall be computed in accordance with IRC Section 42, except as otherwise provided in

applicable sections of the R & T Code.

(b) Allocation of Federal Tax Credits required. State Tax Credit recipients shall have first been

awarded Federal Tax Credits, or shall qualify for Tax Credits under Section 42(h)(4)(b), as required

under H & S Code Section 50199.14(e) and the R & T Code Section 12206(b)(1)(A). State

Farmworker Credits are exempt from this requirement.

applications may request State credits provided the project application is not requesting the federal

130% basis adjustment for purposes of calculating the federal credit award amount. Projects are

eligible for State credits regardless of their location within a federal Qualified Census Tract (QCT)

or a Difficult Development Area (DDA). Notwithstanding paragraph (d) below, applications for the

Federal Credit established by the Further Consolidated Appropriations Act, 2020 or the

Consolidated Appropriations Act, 2021 are not eligible for State Tax Credits.

An applicant requesting state credits shall not reduce basis related to federal tax credits except to

reduce requested basis to the project’s threshold basis limit or the credit request to the amount

available in the project’s geographic region or the limits described in Section 10325(f)(9)(C).

CTCAC shall revise the basis and credit request if the applicant fails to meet this requirement.

In the event that reservations of state credits to credit ceiling applications exceed the amount of

state credits available, CTCAC post-reservation shall designate applications for which there are

insufficient state credits as difficult development area (DDA) projects pursuant to Section

10327(d)(3) and exchange state credits for federal credits in an amount that will yield equal equity

based solely on the tax credit factors stated in the application.

(d) (1) Under authority granted by Revenue and Taxation Code Sections 12206(b)(2)(E)(ii),

17058(b)(2)(E)(ii), and 23610.5(b)(2)(E)(ii), applications for Special Needs projects with at

least 50% special needs units and within a QCT or DDA may request the federal 130%

Regulations

Section 10317

Page 14 of 99

basis boost and may also request State credits, provided that the applicant does not reduce

basis related to federal tax credits except to reduce requested basis to the project’s

threshold basis limit or the credit request to the amount available in the project’s geographic

region or the limits described in Section 10325(f)(9)(C). CTCAC shall revise the basis and

credit request if the application fails to meet this requirement. Under authority granted by

Internal Revenue Code Section 42(d)(5)(B)(v), CTCAC designates Special Needs housing

type applicants for credit ceiling credits as Difficult Development Area projects, regardless

of their location within a federally-designated QCT or DDA.

(2)

Under authority granted by Revenue and Taxation Code Sectio

12206(b)(2)(E)(iii),17058

(b)(2)(E)(iii), and 23610.5(b)(2)(E)(iii), applications for 4% fe

deral

tax

credits plus State Farmworker Credits within a QCT or DDA may request the

federal

130% basis

boost and may also request State cr

edits

(3)

Under authority granted by Revenue and Taxation Code Sections

12206(b)(2)(E)(iii),

17058(b)(2)(E)(iii),

and 23610.5(b)(2)(E)(iii), new construction applications for 4%

federal

tax

credits plus State Credits pursuant to subsection (g)(1)(B) of Sections 12206, 17

058,

and

23610.5 of the Revenue and Taxation Code within a QCT or DDA may request

the

federal 130

% basis boost and may also request State credits

Applications

for the Federal Credit established by the Further Consolidated Appropriations Act,

2020 or the Consolidated Appropriations Act, 2021, including Special Needs projects described in

this section (d), are not eligible for State Tax Credits.

(e)

State Tax Credit exchange. Applications for projects not possessing one of the allocation priorities

described in subsection (d) may also include a request for State Tax Credits. During an

reservation

cycle and/or following any reservation or allocation of State Tax Credits to

all

application

s meeting the above allocation priorities, remaining balances of State Tax Credits maybe

awarded to applicants having received a reservation of Federal Tax Credits during the same year,

in exchange for the “equivalent” amount of Federal Tax Credits. Said exchanges shall be offered

at the discretion of the Executive Director, who may consider and account for any fiscal or

administrative impacts on the project or applicant pool when deciding to whom he/she will of

fer

State Tax Credits.

(f)

Acquisition Tax Credits. State Tax Credits for acquisition basis are allowed only for projects

meeting the definition of a project “at risk of conversion,” pursuant to Section 42 and R & T Code

Section 170

58(c)(4).

(g)

Tax-Exempt Bond Financing. Projects financed under the tax-exempt bond financing provisions of

Section 42(h)(4)(b) of the IRC, subsection (g)(1)(A) of Sections 12206, 17058, and 23610.5 of the

Revenue and Taxation Code and Section 10326 of these regulations may apply for State

Tax

Credits if th

e following conditions are

met:

(1)

the project is comprised of 100% Tax Credit Units. Excepted from this rule are

projects

proposed

for acquisition and rehabilitation that were developed under the HUD Section

236

202 programs, and are subject to those programs’ use restrictions. Projects under t

hose

circumstances

may propose a lesser percentage of Tax Credit Units to

accommodate

existing

over-income residents who originally qualified under Section 236 or 202 in

come

eligibility;

(2)

one or more buildings is not eligible for the 130% basis adjustment, in which case the State

Tax

Credits shall be available only for the buildings not eligible for the 130%

basis

adjustment. This paragr

aph shall not apply to projects referenced in Section 10317(d)

;

(3)

State Tax Credits will not be available to projects that have already received a reservation

of 4% credit

in the previous year; and

Regulations

Section 10317

Page 15 of 99

(4) the applicant must demonstrate, by no later than 10 business days after the tax credit

preliminary

reservation, that a tax-exempt bond allocation has been received or applied

for.

For projects

financed under the tax-exempt bond financing provisions of Section 42(h)(4)(b) of the

IRC, subsection (g)(1)(B) of Sections 12206, 17058, and 23610.5 of the Revenue and Taxation

Code and Section 10326 of these regulations applying for State Tax Credits. State Tax Credits will

not be available to projects that have already received a reservation of 4% credit in a previous year.

(h)

State Farmworker Credit. Applicants may request State Farmworker Credits for eligible

Farmworker

Housing

in combination with federal credits, or they may request State Farmworker Credits only. If

seeking a federal Credit Ceiling reservation, applicants may apply only during competitive

rounds

announced by CTCAC and shall compete under the provisions of Section 10325(c) et. seq. If

requesting federal credits for use with tax exempt bond financing, or State Farmworker Cred

its

only,

applicants may apply over the counter and shall meet the threshold requirements for

projects

requesting 4

% federal credits.

(1)

If more than one applicant is requesting nine percent (9%) federal credits in combinat

ion

with State Farmworker

Credits during a competitive round, CTCAC shal

l award available

State Farmworker Credits to the hig

hest scoring Farmworker Housing application th

at will

receive a reservation of federal credits.

available State Farmworker Credits are inadequate to fully fund a pending request for eligible

Farmworker Housing, CTCAC may reserve a forward commitment of subsequent year’s State

Farmworker Credits for that project alone.

(i)

State Tax Credit Allocations

pursuant to subsection (g)(1)(A) of Sections 12206, 17058, and

23610.5

of the Revenue and Taxation Code to bond financed projects. The following

parameters

apply:

(1)

In calendar years where there are additional state tax credits available to bond

financed

projects,

an amount equal to fifteen percent (15%) of the annual State Tax Credit authorit

will

be available for acquisition and/or rehabilitation bond financed projects, with a ranking

priority for projects meeting subparagraphs (A) through (D) in subsection (c)(4) of 12206

the Revenue and Tax C

ode. In all other years, an amount equal to fifteen percent (15%) of

the annual State Tax Credit authority will be available for bond financed projects of

any

construction

type. CTCAC shall make reservations up to the 15% limit beginning with the

first application review period of a calendar year for tax-exempt bond financed projects

;

(2)

The project will be competitively scored by CDLAC according to the CDLAC scoring and

ranking system delineated in Section 5230 of the CDLAC Regulations. Notwithstanding the

foregoing, existing tax credit projects must comply with the requirements of S

ection

10326(g)(8)(A);

(3)

If the 15% set-aside has not been reserved prior to year end it may be used in a State

Tax

Credit exchange for projects that ha

ve received 9% Tax Credit r

eservations;

(4)

The Committee may reserve an amount in excess of the 15% set-aside of State Tax C

redits

for

the last funded tax-exempt bond financed project if that project requires more than the

State Tax Credits remaining in this set aside if (1) fewer than half of the State Tax C

redits

annually

available for the credit ceiling competition are reserved in the first competitive

credit round, or (2) if State Credits remain available after funding of competitive projects i

the second

CTCAC funding round.

(5)

Staff shall identify high cost projects by comparing each scored project’s total eligible basis

against its total adjusted threshold basis limits, excluding any increase for deeper ta

rgeting

pursuant

to Section 10327(c)(5)(C). CTCAC shall calculate total eligible basis consistent

with the method described in Section 10325(d), except that the amount of developer fee in

Regulations

Section 10317-10320

Page 16 of 99

basis that exceeds the project’s deferral/contribution threshold described in Section

10327(c)(2)(B) shall be excluded. A project will be designated “high cost” if a project’s total

eligible basis exceeds its total adjusted threshold basis limit by 30%. Staff shall not

recommend such project for credits. Any project may be subject to negative points if the

project’s total eligible basis at placed in service exceeds the revised total adjusted threshold

basis limits for the year the project is placed in service (or the original total eligible threshold

basis limit if higher) by 40%.

(j) State Tax Credit Allocations pursuant to subsection (g)(1)(B) of Sections 12206, 17058, and

23610.5 of the Revenue and Taxation Code. For calendar years beginning in 2021, an amount up

to five hundred million dollars ($500,000,000) in total State Tax Credit authority will be available (if

authorized in the California Budget Act or related legislation) for new construction Tax Exempt Bond

Projects subject to the requirements of the California Debt Limit Allocation Committee regulations

and the requirements of Section 10326 of these regulations, for projects that can begin construction

within 180 days from award. Failure to begin construction within 180 days of award shall result in

rescission of the Tax Credit Reservation and may result in assessment of negative points.

Readiness to begin construction within 180 days from award shall be evidenced in the application

as set forth in Section 10325(c)(7) of these regulations. Within 180 days of the award the applicant

must submit to CTCAC building permits (a grading permit does not suffice to meet this requirement

except that in the event that the city or county as a rule does not issue building permits prior to the

completion of grading, a grading permit shall suffice; if the project is a design-build project in which

the city or county does not issue building permits until designs are fully complete, the city or county

shall have approved construction to begin) or the applicable tribal documents, and notice to

proceed delivered to the contractor.

Failure to begin construction within 180 days of award shall result in rescission of the Tax Credit

Reservation and may result in assessment of negative points.

(k) All projects that have received state credits shall comply with the limitations on cash distributions

required pursuant to Sections 12206(d), 17058(d), and 23610.5(d) of the Revenue and Taxation

Code.

(1) In the initial application, applicants requesting state credits shall make an election to sell

(“certificate”) or not sell all or any portion of the state credit, as allowed pursuant to Revenue

and Taxation Code Sections 12206(o), 17058(q), and 23610.5(r). The applicant for a

certificated credit shall be a non-profit entity and the state credit price shall not be less than

eighty (80) cents per dollar of credit. The applicant may, only once, revoke an election to

sell at any time before CTCAC issues the Form(s) 3521A for the project, at which the point

the election shall become irrevocable.

(2) An applicant who elects to sell any portion of the state credit and a buyer who later resells

any portion of the credit shall report to CTCAC within 10 days of the sale of the credit, in a

form specified by CTCAC, all required information regarding the purchase and sale of the

credit, including the social security or other taxpayer identification number of the party or

parties to whom the credit has been sold, the face amount of the credit sold, and the amount

of consideration received for the sale of the credit. At the request of the owner, CTCAC

shall reissue the Form(s) 3521A in the name of the buyer.

Note: Authority cited: Section 50199.17, Health and Safety Code.

Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4,

50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14,

50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.

Section 10320. Actions by the Committee

Regulations

Section 10320

Page 17 of 99

(a) Meetings. Except for reservations made pursuant to Section 10325(h) of these Regulations,

Reservations of Tax Credits shall occur only at scheduled meetings of the Committee, which sha

announce

application-filing deadlines and the approximate dates of reservation meetings as early

in the year as possible.

(b)

Approvals required by this Section 10320(b) shall not be unreasonably withheld if all of the following

requirements, as applicable, are satisfied:

(1)

No allocation of the Federal or State Credits, or ownership of a Tax Credit project, may

transferred

without prior written approval of the Executive Director. In the event that

prior

written

approval is not obtained, the Executive Director may assess negative

points

pursuant

to section 10325(c)(2)(M), in addition to other remedies. The

following

requirements

apply to all ownership or Tax Credit transfers requested after January 31,

2014:

(A)

Any transfer of project ownership (including changes to any general partner,

member, or equivalent responsible party), or allocation of Tax Credits shall be

evidenced by a written agreement between the parties to the transfer, including

agreements entered into b

y the transferee and the Committee.

(B)

The entity replacing a party or acquiring ownership or Tax Credits shall be subject

to a “qualifications review” by the Committee to determine if sufficient p

roject

developmen

t and management experience is present for owning and operating a

Tax Credit project. Information regarding the names of the purchaser(s) or

transferee(s), and detailed information describing the experience and f

inancial

capacity

of said persons, shall be provided to the Committee. Any general

partner

change

during the 15-year federal compliance and extended use period must be to

a party earning equal capacity points pursuant to Section 10325(c)(1)(A) as t

exiting

general partner. At a minimum this must be three (3) projects in service m

ore

than

three years, or the demonstrated training required under Section

10326(g)(5).

Two

of the three projects must be Low Income Housing Tax Credit projects

California. If the new general partner does not meet these experience requirements,

then substit

ution of general partner shall not be permitted. Th

e requirements of this

paragraph

apply to a change to any general partner, member, or

equivalent

responsible

party where an exiting party meets the experience capacity and

the

remaining party does not have experience equal

to the minimum s

tated above.

(C)

The transferor shall deliver all tenant files, inspection records, financial stat

ements,

and

reserve balances to the transferee prior to or concurrent with the

transfer.

Failure

to deliver such records may subject the transferor to negative points or a

fine.

(2)

In addition to any applicable requirements set forth in Section 10320(b)(1), all

Transfer

Events

shall be subject to the prior written approval of the Executive Director. In the event

that prior written approval is not obtained, the Executive Director may assess negative

points pursuant to section 10325(c)(2)(M), in addition to other remedies. The

following

requirements

apply to all Transfer Events for which approval is requested on or after

October 21, 2015:

(A)

Prior to a Transfer Event, the owner of the project shall submit to the Executive

Director a Qualified Capital Needs Assessment. In the case of a Transfer Event in

which a third-party lender is providing financing, the Qualified Capital

Needs

Assessment

shall be commissioned by said thir

d-party lender.

(B)

The entity which shall own the project subsequent to the Transfer Event (the

“Post

Transfer

Owner”) shall covenant to the Committee (the “Capital Needs C

ovenant”)

that the Post Transfer Owner (and any assignee

thereof) sh

all:

Regulations

Section 10320

Page 18 of 99

(i) set aside at the closing of the Transfer Event adequate funds to perform the

Short Term

Work (the “Short Term

Work Reserve Amount”);

(ii)

perform the Short Term Work within three (3) years from the date of t

Transfer Event;

(iii)

make deposits to reserves as are necessary to fund the Long Term

Work,

taking

into account any balance in replacement reserve accounts upon

the

conclusion

of the Transfer Event beyond those required by clause (i).

Notwithstanding the foregoing, the Post Transfer Owner shall have no

obligation to fund any reserve amount from annual operations to the extent

that the funding of the reserve causes the project to have a debt ser

vice

coverage ratio of less than 1.00 to 1.00. In calculating the debt service

coverage

ratio for the purposes herein, the property management fee

shall

not

exceed the greater of (a) 7% the project’s effective gross income, or (

such

amount approved by HUD or USDA, as applicable. Any propert

managemen

t fee in excess of these limitations shall be subordinate to the

funding of the required reserves and shall not be considered when calculating

the debt service coverage ratio; and

(iv)

complete the Long Term Work when required, or prior thereto, pursuant to

the Qualifie

d Capital Needs Assessment.

The

Executive Director may waive or modify the requirements of this Section 10320(b)(2)(A)

and (B) if the owner can demonstrate that the Transfer Event will not produce, prior to any

distributions of Net Project Equity to parties related to the sponsor, developer, limited

partner(s) or general partner(s), sufficient Net Project Equity to fund all or any portion of the

work contemplated by the Qualified Capital Needs Assessment. There shall be a

presumption that a Transfer Event has insufficient Net Project Equity (and the requirements

of this Section 10320(b)(2)(A) and (B) shall be waived) if no Net Project Equity from the

Transfer Event is distributed to parties related to the sponsor, developer, general partner(s)

or limited partner(s) of the owner other than a distribution or a payment to the limited

partner(s) of the selling entity in the amount equal to, or less than, all federal, state, and

local taxes incurred by the limited partner(s) as a result of the Transfer Event.

(3)

The Capital Needs Covenant shall at all times be subordinate to any deed of trust given

any

third party lender to a project. The owner of a project subject to a Capital Needs

Covenant shall certify compliance with the terms of said Capital Needs Covenant to

CTCAC

annually

for the term of the Capital Needs Covenant on a form to be developed by t

Executive

Director. Failure to comply with the terms of the Capital Needs Covenant

may

subject the

owner to negative points and/or a ban on buying or

receiving future properties.

(4)

If a project seeks to receive a new reservation of 9% or 4% tax credits concurrently with

Transfer

Event or during the time that the project is subject to a Capital Needs Covenant,

the following provisions shall apply in lieu of parag

raph (2):

(A)

The applicant shall submit a Qualified Capital Needs Assessment. In cases in which

a third-party lender is providing financing, the Qualified Capital Needs Assessment

shall be commissioned by said thir

d-party lender.

(B)

The rehabilitation scope of work shall include all of the Short Term Work. The

applicant may receive eligible basis for the costs of the Short Term Work only if the

applicant can demonstrate that the Short Term Work was funded by one of the

following:

(i)

a credit from the seller of the project equal to the costs of Sho

rt Term Work.

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(ii) a reduction in the purchase price of the project as compared to the purchase

price of the project had the project not been subject to the Transfer Event

requirement, as shown by an appraisal that calculates the impact of the Short

Term Work requirement on value.

(iii)

general part

ner equity.

(iv)

developer fee contributed to the project (a deferred developer fee does n

qualify).

(C)

After the Transfer Event giving rise to the covenant required pursuant to

Section

10320(b)(2)(B)

(the “Initial Transfer”), if the project will be subsequently transferred

in connection with the closing of the new reservation of 9% or 4% credits (a

“Subsequent Transfer”), any increase in acquisition price (if the Initial Transfer w

a sale) or the project valuation (if the Initial Transfer was a refinancing) between the

Initial

Transfer and the Subsequent Transfer which is attributable to a reduction in

the amount of annual deposits into the replacement reserve account from

those

required

pursuant to Section 10320(b)(2)(B)(iii) because all or a portion of the Long

Term Work will be performed in connection with the new reservation of 9% or 4%

credits, must be evidenced in the form of (i) a seller carryback note or (ii) a general

partner equity contribution.

(D)

Upon the closing of the syndication of the new 9% or 4% credits reserved for

the

project,

any Capital Needs Covenant shall automatically terminate without

any

further action of the project owner and/or the Committee.

The

Executive Director shall waive or modify the requirements of this Section 10320(b)(4)

if the owner can demonstrate that the Transfer Event will not produce, prior to any

distributions of Net Project Equity to parties related to the sponsor, developer, limited

partner(s) or general partner(s), sufficient Net Project Equity to fund all or any portion of the

work contemplated by the Qualified Capital Needs Assessment. There shall be a

presumption that a Transfer Event has insufficient Net Project Equity if no Net Project

Equity from the Transfer Event is distributed to parties related to the sponsor, developer,

general partner(s) or limited partner(s) of the owner other than a distribution or a payment

to the limited partner(s) of the selling entity in the amount equal to, or less than, all federal,

state, and local taxes incurred by the limited partner(s) as a result of the Transfer Event.

Sections 10320(b)(4)(B) and 10320(b)(4)(C) shall not be applicable to any project with an

existing tax credit regulatory agreement with a remaining term of five (5) or less years.

(5)

No management company of an existing or new tax credit project shall be replaced wit

hout

prior

written approval of the Executive Director. In the event that prior written approval i

not

obtained, the Executive Director may assess negative points or a fine. With respect to

4% tax credit projects, management companies ineligible for at least two manag

ement

company

experience points pursuant to Section 10325(c)(1)(B) shall obtain training

project operations, on-site certification, fair housing law, and manager certification in IRS

Section

42 program requirements from CTCAC or a CTCAC-approved,

nationally

recognized

entity. The out-going management company shall deliver all tenant files,

inspection records, financial statements, and reserve balances to the in-coming

management company prior to or concurrent with the transfer. Failure to deliver such

records may subject the out-going management company to negative points or a fine.

(6)

Except for resyndication applications without a distribution of Net Project Equity, if a project

seeks to receive a new reservation of 9% or 4% tax credits, any uncorrected Form(s) 8823

for life and safety violations (life-threatening and non-life threatening) and for

Uniform

Physical

Condition Standards violations that are in existence at the time of the

CTCAC

application

must be corrected by the project owner that received the Form(s) 8823.

The

resyndicatio

n application shall not include any costs to correct these Fo

rm(s) 8823.

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Page 20 of 99

(7) An applicant seeking to (1) demolish or similarly alter any of the existing structures currently

subject to CTCAC regulatory restrictions when seeking a new reservation of 9% and/or 4%

tax credits; and/or (2) separate an existing project currently subject to CTCAC regulatory

restrictions into multiple projects must request and receive prior written approval of the

Executive Director. Projects that involve the demolition of existing residential units or

separating an existing project must increase the unit count by (i) 25 or (ii) 50% of the existing

demolished units, whichever is greater.

(8) A project owner seeking to sell a portion of vacant or unused land must request and receive

prior written approval of the Executive Director. The sales proceeds must either: 1) be

contributed (not loaned) to a new multifamily affordable housing restricted project; or 2)

reduce rents at the existing property by the aggregate amount of the proceeds. The project

owner must request and receive prior written approval of the Executive Director.

not subordinate existing regulatory contracts to acquisition or refinancing debt, except in relation to

new Deeds of Trust for rehabilitation loans, FHA-insured loans, restructured public loans, or as

otherwise permitted by the Executive Director. At the request of the owner, CTCAC shall enter into

a stand-still agreement permitting the acquisition or refinance lender 60 days to work with the owner

to remedy a breach of the regulatory contract prior to CTCAC implementing any of the remedies in

the regulatory contract, except that CTCAC shall not enter into a stand-still agreement related to a

Transfer Event requested on or after October 21, 2015 unless the conditions of Section 10320(b)(2)

have been satisfied. If CTCAC enters into a stand-still agreement related to a Transfer Event,

Sections 10320(b)(2), (b)(3) and (b)(4) shall apply to the project.

(d) False information. Upon being informed, or finding, that information supplied by an applicant, any

person acting on behalf of an applicant, or any team member identified in the application, pursuant

to these regulations, is false or no longer true, and the applicant has not notified CTCAC in writing,

the Committee may take appropriate action as described in H & S Code Section 50199.22(b) and

in section 10325(c)(2) of these regulations. Additionally the Executive Director may assess

negative points to any or all members of the development team as described in Section

10322(h)(5).

(e) CTCAC shall not enter into a qualified contract, as defined in IRC Section 42(h)(6)(F).

Note: Authority cited: Section 50199.17, Health and Safety Code.

Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4,

50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14,

50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.

Section 10322. Application Requirements

(a) Separate Application. A separate application is required for each project.

(b) Application forms. Applications shall be submitted on forms provided by the Committee. Applicants

shall submit the most current Committee forms and supplementary materials in a manner, format,

and number prescribed by the Committee.

(d) Incomplete application. Determination of completeness, compliance with all Basic and Additional

Thresholds, the scoring of the application, and any application submission requirements pursuant

to these regulations and the application form shall be based on the documents contained in the

application as of the final filing deadline. Application omissions may be accepted after the

application-filing deadline pursuant to Section 10322(e) if the Executive Director, at his or her sole

discretion, determines that the deficiency is an application omission of either a document existing

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as of the application-filing deadline, or a document certifying to a condition existing at the time of

the application-filing deadline. Applications not meeting these requirements shall be considered

incomplete, and shall be disqualified from receiving a reservation of Tax Credits during the cycle in

which the application was determined incomplete. An applicant shall be notified by the Committee

should its application be deemed incomplete and the application will not be scored.

(e)

Complete application. No additional documents pertaining to: the Basic or Additional

Threshold

Requiremen

ts; scoring categories; and

any application submission requirements pursuant to these

regulations and the application form shall be accepted after the application-filing deadline

unless

the

Executive Director, at his or her sole discretion, determines that the deficiency is an application

omission of either a document existing as of the application-filing deadline, or a document certifying

to a condition existing at the time of the application-filing deadline. In such cases, applicants shal

given up to five (5) business days from the date of receipt of staff notification, to submit s

aid

documents

to complete the application. For application omissions, the Executive Director m

request

additional clarifying information from third party sources, such as local government entities,

or the applicant, but this is entirely at the Executive Director’s discretion. Upon the Executive

Director’s request, the information sources shall be given up to five (5) business days, from the

date of receipt of staff notification, to submit said documents to clarify the application. The thir

party

sources shall certify that all evidentiary documents deemed to be missing from the application

had been executed, and were in the third-party source’s possession, on or prior to, the application-

filing deadlin

required documents are not submitted within the time provided, the application shall

considered i

ncomplete and no appeal will be entertained.

(f)

Application changes. Only the Committee may change an application as permitted by Sections

10317(d), 10325(c)(6)(B), and 10327(a). Any changes made by the Committee pursuant to thos

sections

shall never increase the score or credit amount of the application as submitted, and ma

reduce the a

pplication’s score and/or

credit amount.

(g)

Applications not fully evaluated. Incomplete applications or others not expected to receive a

reservation of Tax Credits due to relatively low scores, may or may not be fully evaluated by the

Committee.

(h)

Standard application documents. The following documentation relevant to the proposed

project is

required to

be submitted with all applications:

(1)

Applicant’s Statement. A signed statement signifying the responsibility of the applican

t to:

(A)

provide application related documentation to the Committee

upon request;

(B)

be familiar with and comply with Credit program statutes and regulatio

ns;

(C)

hold the Committee and its employees harmless from program-related matters;

(D)

acknowledge the potential for program modifications resulting from statutory o

regulatory actions;

(E)

acknowledge that Credit amounts reserved or allocated may be reduced in some

cases when the terms and amounts of project sources and uses of funds are

modified

(F)

agree to comply with laws outlawing discriminat

ion;

(G)

acknowledge that the Committee has recommended the applicant seek ta

x advice;

(H)

acknowledge that the application will be evaluated according to C

ommittee

regulations,

and that Credit is not an

entitlement;

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Page 22 of 99

(I) acknowledge that continued compliance with program requirements is the

responsibilit

y of the applicant;

(J)

acknowledge that information submitted to the Committee is subject to the

Public

Records Act

;

(K)

agree to enter with the Committee into a regulatory contract if Credit is a

llocated;

and,

(L)

acknowledge, under penalty of perjury, that all information provided to the

Committee is true and correct, and that applicant has an affirmative duty to notify

the Committee of changes causing information in the application or other

submittals

to become false.

(2)

The Application form. Completion of all applicable parts of Committee-provided

application

forms which shall in

clude, but not be limited to:

(A)

General Application Info

rmation

(i)

Credit amounts requeste

(ii)

minimum set-aside electi

(iii)

application stage selecti

(iv

) set-aside selection

(v) housing type

(B)

Applicant Info

rmation

(i) applicant role in ownership

(ii)

applicant le

gal status

(iii) developer type

(iv)

ontact person

(C)

Developmen

t Team Information

(D) Subject Property Information

(E) Proposed Project Information

(i) project type

(ii)

redit type

(iii)

building and

unit types

(F) Land Use Approvals

(G)

Developmen

t Timetable

(H)

Identification and Commitment Status of Fund

Sources

(I)

Identificatio

n of Fund Uses

(J)

Calculation of Eligible, Qualified an

d Requested Basis

(K) Syndication Cost Description

(L)

Determination of Credit Need and Maximum Cred

it Allowable

(M)

Project Income Determination

(N)

Restricted Residential Rent and Inco

me Proposal

(O) Subsidy Information

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(P) Operating Expense Information

(Q)

Projected Cash Flow Calculation

(R) Basic Threshold Compliance Summary

(S)

Additional Threshold Selection

(T)

Tax-exempt Financing In

formation

(U) Market Study

(3)

Organizational documents. An organizational chart and a detailed plan describing

the

ownership

role of the applicant throughout the low-income use period of the proposed

project, and the California Secretary of State certificate for the project owner (if available).

An executed limited partnership agreement may be submitted as documentation that the

project ownership entity is formed. If the project owner is not yet formed, provide the

certificate for the managing general partner or the parent company of the proposed project

owner. A reservation of credit cannot be made to a to-be-formed entity.

(4)

Designated contact person. A contract between the applicant and the designated contact

person for the applicant signifying the contact person’s authority to represent and act on

behalf of the applicant with respect to the Application. The Committee reserves its right to

contact the applicant d

irectly.

(5)

Identification of project participants. For purposes of this Section all of the following p

roject

participant

s, if applicable will be considered to be members of the Development Team. The

application must contain the company name and contact person, address, telephone

number, and fax number of each:

(A) developer;

(B)

general cont

ractor;

(C)

architect;

(D) attorney

(E) tax professional;

(F)

property management company;

(G)

consultant;

(H)

market analyst and/or appraiser; and

(I) CNA consultant.

any members of the Development Team have not yet been selected at the application

filing deadline, each must be named and materials required above must be submitted at the

180 or 194 day deadline described in Section 10325(c)(7).

(6)

Identities of interest. Identification of any persons or entities (including affiliated entities)

that plan to provide development or operational services to the proposed project in

than one ca

pacity, and full disclosure of Related Parties, as defined.

(7)

Legal description. A legal description of the subject prop

erty.

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Page 24 of 99

(8)

Site Layout, Location, Unique Features and Surrounding Area

(A)

A narrative description of the current use of the subject pro

perty;

(B)

A narrative description of all adjacent property land uses, the surrounding

neighborhood, and identification and proximity of services, including transportation

(C)

Labeled photographs, or color copies of photographs of the subject property and

all

adjacent pro

perties;

(D)

A layout of the subject property, including the location and dimensions of

existing

buildings, utilities, and other pertinent features.

(E)

A site or parcel map indicating the location of the subject property and showing

exactly where the buildings comprising the Tax Credit Project will be situated. (If a

subdivision is anticipated, the boundaries of the parcel for the proposed project

must

be clearly marked; and

(F)

A description of any unique features of the site, noting those that may increase

project costs or require environmental mitigation.

(9)

Appraisals. Appraisals are required for 1) all rehabilitation applications except as noted in

(A), 2) all competitive applications except for new construction projects that are on tribal

trust land or that have submitted a third party purchase contract with, or evidence of a

purchase from, an unrelated third party, 3) all applications seeking tiebreaker credit for

donated or leased land, and 4) all new construction applications involving a land sale f

rom

related party. For purposes of this paragraph only, a purchase contract or sale with

party shall be deemed to be a purchase contract or sale with an unrelated party if

the applicant demonstrates that the related party is acting solely as a pass-through

entity

and

the tax credit partnership is only paying the acquisition price from the last a

rms-length

transaction,

plus any applicable and reasonable carrying costs. Appraisals shall not inc

lude

the value of favorable financing.

Appraisals

must be prepared by a California certified general appraiser having no

identity

interest with the development’s partner(s) or intended partner or general contractor,

acceptable to the Committee, and include, at a minimum, the fol

lowing:

(i)

the highest and best use value of the proposed project as residential re

ntal

property, taking into account any on-going record

ed rent restri

ctions;

(ii)

for rehabilitation and new construction applications, the Sales Comparison

Approach and Income Approach valuation methodologies shall be used; f

adaptive

reuse applications, the Cost Approach valuation methodology s

hall

used for adaptive reuse of office buildings, retail buildings, and similar,

and the Sales Comparison and Income Approaches may be used for hotels

motels, and similar;

(iii)

the appraiser’s reconciled value except in the case of an adaptive reuse

conversion as mentioned in (ii) above;

(iv)

a value for the land of the subject property (“as if vacant” for rehabilitation or

adaptive reuse applicatio

ns);

(v)

an on site inspection; and

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(vi) a purchase contract verifying the sales price of the subject property.

(A) Rehabilitation applications. An “as-is” appraisal is required with a date of value

that

within 120 days before or after the execution of: a purchase contract; for leased

land, an executed development agreement negotiated between the land owner

and

the

applicant or developer; an option agreement; any other site control document

pursuant to Section 10325(f)(2); or the transfer of ownership b

y all the parties

For

tax-exempt bond-funded properties receiving credits under Section 10326

only

in combination with State Tax Credits, the applicant may elect to forego the

appraisal required pursuant to this section and use an acquisition value equal to

the

sum

of the third party debt encumbering the seller’s property, which may increase

during subsequent reviews to reflect the actual a

mount.

(B)

New construction applications. Projects for which an appraisal is required above

shall provide an “as-is” appraisal with a date of value that is within either

(i)

120 days before or after the execution of a purchase contract; for leased land,

an executed development agreement negotiated between the land owner and

the applicant or developer; an option agreement; any other site c

ontrol

document

pursuant to Section 10325(f)(2); the transfer of ownership by all the

parties, or

(ii)

one year of the application date if the latest purchase contract, develop

ment

agreement,

option agreement, or any other site control document pursuant to

Section 103

25(f)(2) was executed within that year.

amendment to an agreement does not constitute any of the agreements listed in

(i) or (ii) abo

ve.

(C)

Adaptive reuse applications. All adaptive reuse applications must submit

appraisal

using an “as-is” appraisal date of value as stated in (B) above.

For

application

s required to use the Cost Approach, the appraisal must consider t

age,

condition, and depreciated value of the existing building(s) when utilizing

newly

constructed

“shell” sales comparisons and must include these calculations in

the

report.

For

applications with existing project-based rental subsidy, the Income Approach shall not

include post-rehabilitation contract rent(s). Rent(s) used in the Income Approach, if not the

existing approved contract rent, must be supported by a rent comparable study or similar.

For applications with existing affordability restrictions, the Income Approach must be based

on the affordability restrictions and restricted rents encumbering the property (a “restricted

value”) unless all affordability restrictions will expire within five years.

CTCAC may contract with an appraisal reviewer who may review submitted appraisals. If

it does so, CTCAC shall commission an appraisal review. If the appraisal review finds the

submitted appraisal to be inappropriate, misleading, or inconsistent with the data reported

and with other generally known information, then the reviewer shall develop his or her own

opinion of value and CTCAC shall use the opinion of value established by the appraisal

reviewer.

(10)

Market Studies. A full market study prepared within 180 days of the filing deadline by

independent

party having no identity of interest with the development’s partners,

intended partners, or any other member of the Development Team described in Subsection

(5)

above. The study must meet the current market study guidelines distributed by t

Committee,

and establish both need and demand for the proposed project. CTCAC s

hall

publicly

notice any changes to its market study guidelines and shall take public comment

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Page 26 of 99

consistent with the comment period and hearing provisions of Health and Safety Code

Section 50199.17. For scattered site projects, a market study may combine information for

all sites into one report, provided that the market study has separate rent comparability

matrices for each site. A new construction hybrid 9% and 4% tax credit development may

combine information for both component projects into one report and, if not, shall reflect the

other component project as a development in the planning or construction stages.

A market study shall be updated when either proposed subject project rents change by

more than five percent (5%), or the distribution of higher rents increases by more than 5%,

or 180 days have passed since the first site inspection date of the subject property and

comparable properties. CTCAC shall not accept an updated market study when more than

twelve (12) months have passed between the earliest listed site inspection date of either

the subject property or any comparable property and the filing deadline. In such cases,

applicants shall provide a new market study. If the market study does not meet the

guidelines or support sufficient need and demand for the project, the application may be

considered ineligible to receive Tax Credits.

For acquisition/rehabilitation projects meeting all of the following criteria, a comprehensive

market study as outlined in IRS Section 42(m)(1)(A)(iii) shall mean a written statement by

a third party market analyst certifying that the project meets these criteria:

 All of the buildings in the project are subject to existing federal or state rental assistance

or operating subsidies, an existing TCAC Regulatory Agreement, or an existing

regulatory agreement with a federal, state, or local public ent

ity.



The proposed tenant-paid rents and income targeting levels shall not increase by mor

than

five percent (5%) (except that proposed rents and income targeting levels for units

subject to a continuing state or federal project-based rental assistance contract m

increase

more and proposed rents and income targeting levels for resyndicati

projects sha

ll be consistent with Section 10325(f)(11) or Section 10326(g

)(8)).



The project shall have a vacancy rate of no more than ten percent (10%) for specia

needs

units and non-special needs SRO units without a significant project-based

public

rental

subsidy and five percent (5%) for all other units at the time of the tax credit

application.

(11)

Construction and design description. A detailed narrative description of the

proposed

project

construction and design, including how the design will serve the targeted populat

ion.

(12)

Architectural drawings. Preliminary drawings of the proposed project, including a site plan,

building elevations, and unit floor plans (including square footage of each unit). The project

architect shall certify that the development will comply with building codes and the physical

building requirements of all applicable fair housing laws. In the case of rehabilitation

projects proceeding without an architect, the entity performing the Capital

Needs

Assessment

shall note necessary fair housing improvements, and the applicant shall budget

for and implement the related construction work. The site plan shall identify all areas

features proposed as project amenities, laundry facilities, recreation facilities and

community

space. Drawings shall be to a scale that clearly shows all requested information.

Blueprints need not be submitted. A project applying as a High-Rise Project must include

the project architect certification required by Section 10302(v

(13)

Placed-in-service schedule. A schedule of the projected placed-in-service date for each

building.

(14)

Identification of local jurisdiction. The following information related to the local jur

isdiction

within which the proposed project is located:

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Page 27 of 99

(A) jurisdiction or tribe (e.g., City of Sacramento)

(B) chief executive officer or tribal chairperson and title (e.g., Susan Smith, Cit

Manager)

(D)

telephone nu

mber

(E) fax number

(15)

Sources and uses of funds. The sources and uses of funds description shall sepa

rately

detail apport

ioned amounts for residential space and commercial space.

(16)

Financing plan. A detailed description of the financing plan, and proposed sources and

uses of funds, to include construction, permanent, and bridge loan sources, and other

fund

sources,

including rent or operating subsidies and reserves. The commitment status of a

fund

sources shall be described, and non-traditional financing arrangements shall be

explained.

(17)

Eligible basis certification. A certification from a third party certified public accountant or t

attorney

that project costs included in applicant’s calculation of eligible basis are allowed

IRC

Section 42, as amended, and are presented in accordance with standard accounting

procedures. This must be delivered on the tax professional’s corporate letterhead, in

the

prescribed

CTCAC format and must include a statement that the Sources and Uses Budget

was reviewed and that the accountant or attorney discussed the budget with the applicant

as needed.

(18)

Use of tax benefits description. If the Tax Credits are not to be offered to investors, a

detailed explanation of how the tax benefits will be used by the applicant.

(19)

Terms of syndication agreement. Written estimate(s) from syndicator(s) or f

inancial

consultant

s on their corporate letterhead and in the prescribed CTCAC format, of

equity

dollars

expected to be raised for the proposed project, based on the amount of Tax Credits

requested, including gross and net proceeds, pay-in schedules, syndication

costs

(including

syndicator consulting fees), and an estimated net tax Credit factor, for both

Federal and State Tax Credits if both are to be used or if State Tax Credits exchange

points

are

requested. The syndicator shall not pay any fees or provide any other financial or o

ther

substantive

benefit to a partnership developer unless all such fees or benefits are fully and

completely disclosed to CTCAC in the Executed Letter of Intent.

(20)

Tax Credit certification. If the Tax Credits are not to be syndicated, a letter from a t

hird

party certifie

d public accountant establishing the Tax Credit factor.

(21)

Utility allowance estimates. Current utility allowance estimates consistent with 26 C

Section

1.42-10. The applicant must indicate which components of the utility allo

wance

schedule

apply to the project. For buildings that are using an energy consumption

model

utility

allowance estimate, the estimate shall be calculated using the most recent version of

the California Utility Allowance Calculator (CUAC) developed by the California

Energy

Commission

(CEC), with any solar values for new construction or adaptive reuse

determined from the CEC’s Photovoltaic Calculator and any solar values for existing

residential buildings determined from the CEC’s Photovoltaic Calculator or the Expected

Performance Based Buydown (EPBB) calculator with monthly scalars to be determined

CTCAC.

The CUAC estimate shall be signed by a California Association of Building E

nergy

Consultants

(CABEC) Certified Energy Analyst (CEA). Measures that are used in the

CUAC that require field verification shall be verified by a certified HERS Rater, i

accordance

with current HERS regulations. Use of CUAC is limit

ed to (i) new construction

projects,

(ii) rehabilitation projects applying for tax credits for which the rehab

ilitation

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Page 28 of 99

improves energy efficiency by at least 20%, as determined consistent with the requirements

of Section 10325(c)(5)(D) and (G), or installs solar generation that offsets 50% of tenant

loads, as determined consistent with the requirements of Section 10325(c)(5)(G), and (iii)

existing tax credit projects with new photovoltaics installed through the Multifamily

Affordable Solar Housing (MASH) program or a solar program administered by a municipal

utility or joint powers authority, which offsets tenants’ electrical load. All CUAC utility

allowances require a quality control review and approval. CTCAC will submit modeled

CUAC utility allowance estimates to a quality control reviewer and shall establish a fee to

cover the costs of this review. Existing tax credit projects and rehabilitation projects

converting to the CUAC shall provide tenants at least 90 days prior to the effective date with

an informative summary about the current utility allowance and the proposed CUAC

allowances, including notice of any actual rent increase to the tenant. Except for existing

tax credit projects with active MASH program reservations dated prior to March 1, 2018,

any decrease in tenant’s utility allowance that results from conversion to the CUAC shall

not exceed $15 per month over any 12-month period. Such projects shall also provide

CTCAC with the actual rent increases in the first year’s CUAC update submittal. For existing

projects requesting CUAC utility allowances, cash flow is limited to 15.0% or less of

residential income and a debt service coverage ratio of 1.50 or less, as verified by audited

financial statements.

(22)

Certification of subsidies. The applicant must certify as to the full extent of all Federal,

State, and local subsidies which apply (or for which the taxpayer expects to apply) w

ith

respect

to the proposed project. (IRC Section 42(m)(2)(C)(ii)) If rental assistance, operating

subsidies or annuities are proposed, all related commitments that secure such funds must

be provided. Non-competitive Tax-Exempt Bond Projects may receive a reservation of ta

credits

with the condition to provide the applicable subsidy commitment within 180 days o

the

reservation. The source, monthly contract rent, annual amount (if applicable), te

rm,

number

of units receiving assistance, and expiration date of each subsidy must be included.

(23)

Cash flow projection. A 15-year projection of project cash flow. Separate cash f

low

projections

shall be provided for residential and commercial space. If a capitalized rent

reserve is proposed to meet the underwriting requirements of Section 10327, it must

included in the cash flow projections. Use of a capitalized rent

reserve is limited to S

pecial

Needs

projects, projects applying under the Non-profit Homeless Assistance set-aside,

HOPE VI projects, and Section 8 project based projects.

(24)

Self-scoring sheet as provided in the application.

(25)

Acquisition Tax Credits application. Applicants requesting acquisition Tax Credits s

hall

provide:

(A)

a chain of title report or, for tribal trust land, an attorney’s opinion regarding chain

title;

(B)

an applicant statement that the acquisition is exempt from, or a third party t

attorney’s

opinion stating that the acquisition meets the requirements of IRC Section

42(d)(2)(B)(ii) as to the 10-year placed-in-service rule; and,

Federal official that state

s that the proposed project qualifies

for a waiver under IRC

Section 42(

d)(6).

(26)

Rehabilitation application. Applicants proposing rehabilitation of an existing structure

shall

provide:

(A)

An independent, third party appraisal prepared and submitted with the p

reliminary

reservation application

consistent with the guidelines in Secti

on 10322(h)(9).

Regulations

Section 10322

Page 29 of 99

(B) A Capital Needs Assessment (“CNA”) performed within 180 days prior to the

application deadline (except as provided in Section 10322(h)(35)) that details the

condition and remaining useful life of the building’s major structural components, a

necessary

work to be undertaken and its associated costs, as well as the nature

the

work, distinguishing between immediate and long term repairs. The Capital

Needs

Assessment

shall also include a pre-rehabilitation 15-year reserve study,

indicating

anticipated

dates and costs of future replacements of all current major buildin

components.

The CNA must be prepared by the project architect, as long as the

project architect has no identity of interest with the developer, or by a qualified

independent 3rd party who has no identity of interest with any of the members of the

Development Team. An adaptive reuse application is not require

d to submit a CNA.

(27)

Acquisition of Occupied Housing application. Applicants proposing acquisition of occupied

rental residential housing shall provide all existing income, rent and family size information

for the current tenant population.

(28)

Tenant relocation plan. In addition to any other applicable relocation

requirements,

applicants p

roposing rehabilitation or demolition of occupied housing shall comply with

the

requirements

of the California Relocation Assistance Law, California Government C

ode

Section

7260 et seq, or, if the Uniform Relocation Assistance and Real Property Acquisition

Policies Act of 1970 already applies to the project, pursuant to this federal law. A

pplicants

shall

provide an explanation of the relocation requirements that they are complying w

ith,

and

a detailed relocation plan consistent with one of the above-listed relocation sta

ndards

including

an itemized relocation cost estimate that calculates the tenant relocation expenses

required pursuant to the applicable California or federal relocation law. The relocation plan

must also address the potential displacement of current tenants who do not meet the

CTCAC income eligibility requirements or who will receive a rent increase exceeding

five

percent

(5%). The relocation plan must include: a detailed description of proposed

temporary onsite or offsite relocation and any corresponding relocation payments

for

tenants

who meet CTCAC income eligibility requirements; an estimate of the number of

current tenants who do not meet CTCAC income eligibility requirements or will receive

rent

increase exceeding five percent (5%), how this estimate was determined, and the

estimated relocation cost; and a detailed description of how the current tenants will

provided

notice and information about the required relocation assistance, including copies

of such noticing docum

ent(s).

(29)

Owner-occupied Housing application. Applicants proposing owner-occupied ho

using

projects

of four units or less, involving acquisition or rehabilitation, shall provide ev

idence

from

an appropriate official substantiating that the building is part of a development plan of

action sponsored by a State or local government or a qualified nonprofit organization (

IRC

Section 42(i)(3)(E)).

(30)

Nonprofit Set-Aside application. Applicants requesting Tax Credits from the Nonprofit set-

aside, as defined by IRC Section 42(h)(5), shall provide the following documentation

with

respect to e

ach developer and general partner o

f the proposed owner:

(A)

IRS documentation of designation as a 501(c)(3) or 501(c)(4) corporation;

(B)

proof that one of the exempt purposes of the corporation is to provide low-income

housing;

(C)

a detailed description of the nonprofit participation in the development and ongoing

operations of the proposed project, as well as an agreement to provide CTCAC with

annual certifications verifying continu

ed involvement;

(D)

a third party legal opinion verifying that the nonprofit organization is not affiliated with

controlled

by, or party to interlocking directorates with any Related Party of a for-profit

organization, and the basis for said

determination; and,

Regulations

Section 10322

Page 30 of 99

(E)

a third party legal opinion certifying that the applicant is eligible for the Nonprofit Set-

Aside pursuant to IRC Section 42(h)

(5).

(31)

Rural Set-Aside application. Applicants requesting Tax Credits from the Rural

set-aside,

defined by H & S Code Section 50199.21 and Section 10315(c) of these

regulations,

shall

provide verification that the proposed project is located in an eligible rural a

rea.

Evidence

that project is located in an area eligible for Section 515 financing from RHS may

be in the form of a letter from RHS’s California state office.

(32)

RHS Section 514, 515 or HOME program applications. Rural housing applicants requesting

Tax Credits for projects financed by the RHS Section 514 or 515 program or from a HOM

Participating

Jurisdiction shall submit evidence from RHS or the HOME P

articipating

Jurisdiction

that such funding has been committed, and such evidence shall meet t

requirements of Section 10325(f)(8).

(33)

Community service facility. An applicant requesting basis for a community service facility

shall submit a third party tax attorney’s opinion stating that the community service f

acility

meets

the requirements of IRC Section 42(d)(4)(C). CTCAC may use its discretion in

determining whether the community service facility meets the qualifications

(34)

Mixed housing types. An applicant proposing a project to include senior housing in

combination with non-senior housing shall provide a third party legal opinion stating that the

project complies with fair housing la

(35)

Reapplication documents. Notwithstanding the time sensitive document requirements, t

Committee

may permit the site control title report and the capital needs assessment report

of an unsuccessful application to be submitted, only once, in the reapplication cycle

immediately following the unsuccessful applicatio

(i)

Placed-in-service application. Within one year of completing construction of the proposed project,

the project owner shall submit documentation including an executed regulatory agreement provided

CTCAC and the compliance monitoring fee required by Section 10335. CTCAC shall

determine

all conditions of the reservation have been met. Changes subsequent to the initial application,

particularly changes to the financing plan and costs or changes to the services amenities, must

explained

by the project owner in detail. If all conditions have been met, tax forms will be i

ssued,

reflecting

an amount of Tax Credits not to exceed the maximum amount permitted by these

regulations.

The following must be submitted:

(1)

certificates of occupancy for each building in the project (or a certificate of completion

for

rehabilitatio

n projects). If acquisition Tax Credits are requested, evidence of the placed-in-

service date for acquisition purposes, and evidence that all rehabilitation is completed

;

(2)

an audited certification, prepared and signed by an independent Certified Public Acco

untant

identified

by name, under generally accepted auditing standards, with all disclosures

and

notes.

The Certified Public Accountant (CPA) or accounting firm shall not have acted

manner

that would impair independence as established by the American Institute

Certified

Public Accountants (AICPA) Code of Professional Conduct Section 101 and

the

Securities

and Exchange Commission (SEC) regulations 17 CFR Parts 210 and

240.

Exa

mples of such impairing services, when performed for the final cost certification

client,

include

bookkeeping or other services relating to the accounting records, finan

cial

information

systems design and implementation, appraisal or evaluation services, act

uarial

services,

internal audit outsourcing services, management functions or human resources,

investment advisor, banking services, legal services, or expert services unrelated to the

audit. Both the referenced SEC and AICPA rules shall apply to all public and private

CPA

firms

providing the final audited cost certification. In order to perform audits of final c

ost

certificat

ions, the auditor must have a peer review of its accounting and auditing practice

once every three years consistent with the AICPA Peer Review Program as required by the

Regulations

Section 10322

Page 31 of 99

California Board of Accountancy for California licensed public accounting firms (including

proprietors); and make the peer review report publicly available and submit a copy to

CTCAC along with the final cost certification. If a peer review reflects systems deficiencies,

CTCAC may require another CPA provide the final cost certification. This certification shall:

(A)

as identified by the certified public accountant, reflect all costs, in conformance

with

CFR § 1.42-17, and expenditures for the project up to the funding of the

permanent

loan

as well as all sources and amounts of all permanent funding. Projects developed

with general contractors who are Related Parties to the developer must be audited to

the subcontractor level;

(B)

include a CTCAC provided Sources and Uses form reflecting actual total c

osts

incurred up t

o the funding of the per

manent loan; and

(C)

certify that the CPA has not performed any services, as defined by AICPA and

SEC

rules, that would impair independence.

The

project owner must request approval from CTCAC if the final cost certification includes

a prospective permanent loan or other source amount to be reduced at the time of the final

tax credit equity installment, occurring after the Form(s) 8609 are issued. The equity must

be used to pay principal balances and shall not be used to pay accrued interest. As a

condition of accepting the projected equity, CTCAC will require documentation of the final

equity payment and the reduction of the principal balance. A project owner must provide

this documentation to CTCAC within 20 days of the loan payment. If the documentation

does not support the equity amount or the projected loan or source reduction, the tax credits

will be recalculated, the Form(s) 8609 will be amended, and the fee of section 10335(g) will

be assessed.

(3)

an itemized breakdown of placed-in-service dates, shown separately for each building, on

a Committee-provided form. If the placed-in service date(s) denoted are different from the

date(s) on the certificate(s) of occupancy, a detailed explanation is requ

ired;

(4)

photographs of the completed buildin

g(s);

(5)

a request for issuance of IRS Form(s) 8609 and/or FTB Form(

s) 3521A;

(6)

a certification from the investor or syndicator of equity raised and syndication costs in a

Committee-provided format;

(7)

an updated application form;

(8)

an owner-signed certification documenting the services currently being provided to the

residents, including identifying service provider(s), describing services provided, stating

services dollar value, and stating services funding source(s) (cash or in-kind), with attached

copies of contracts and

MOUs for services;

(9)

a copy of the project owner limited partnership a

greement;

(10)

a list of all amenities provided at the project site including any housing type requirements

Section

10325(h) committed to in the Tax Credit application, and color photographs of

the

amenities.

If the list differs from that submitted at application, an explanation must

provided;

housing type requirements must be completed. In addition, the project

owner

must

provide a list of any project amenities not included in basis for which the property

owner intends to charge an optional fee to residents;

(11)

a description of any charges that may be paid by tenants in addition to rent, with an

explanation of how such charges affect eligible basis;

Regulations

Section 10322

Page 32 of 99

(12)

if applicable, a certification from a third party tax professional stating the percentage of

aggregate basis (including land) financed by tax exempt bonds for projects that received

Tax Credits under the provisions of Section 10326 of these regulations;

(13)

all documentation required pursuant to the Compliance and Verification requirements of

Sections 10

325(f)(7) and 10326(g)(6);

(14)

all documentation required pursuant to the Compliance and Verification requirements of

Section 103

27(c)(5)(B);

(15)

if seeking a reduction in the operating expenses used in the Committee’s final under

writing

pursuant

to Section 10327(g)(1) of these regulations, the final operating expenses used

the lender and equity investor;

(16)

a certification from the project architect or, in the case of rehabilitation projects, from an

architect retained for the purpose of this certification, that the physical buildings are in

compliance with all applicable fair housing laws;

(17) all documentation required pursuant to the Compliance and Verification requirements of

Section 10325(c)(5), if applicable;

(18)

evidence that the project is in compliance with any points received under Section

10325(c)(8);

(19)

a current utility allowance estimate as required by 26 CFR Section 1.42-

10(c) and Section

10322(h)(21) of these re

gulations. Measures that are used in the CUAC t

hat require field

verification shall be verified by a certified HERS rater, in acco

rdance with c

urrent HERS

regulations; and

(20)

for tribal trust land, the lease agreement between the Tribe and the projec

t owner.

(21)

Evidence that the subject property is within the control of the project owner in the form o

executed lease agreement, a current title report within 90 days of application except as

provided in section 10322(h)(35) (or preliminary title report, but not title insurance

commitment

to insure) showing the project owner holds fee title, a grant deed, or, for t

ribal

trust

land, a title status report or an attorney’s opinion regarding chain of title and cu

rrent

title statu

(22)

Evidence that the project is in compliance with the provis

ions of the CDLAC resolution, if

applicable.

(23)

If the application includes a legal separation or subdivision of a building that is not a

condominium plan:

(A)

a legal opinion of how the legal separation meets the IRS definition of a building. The

opinion must include a summary of the common area and building access o

wnership

structure an

d any shared use agree

ments; and

(B)

if the project owners are proposing any kind of proportionate cost where there is a

single common area owner, a tax attorney must provide an opinion on ho

proportionin

g a cost and corresponding eligible basis to an entity that does not o

the

space is permissible under IRS LIHTC and/or tax law. The opinion must include

an estimated cost breakdown and the methodology for how these shared area

costs

were proportioned and is subject to

review and approved by CTCAC.

Regulations

Section 10322-10323

Page 33 of 99

(24) For multiphase projects proposing to share use of common areas and community space, a

joint use agreement must be provided in the placed in service application. In addition, if

there is any kind of proportionate cost for common area and community space to a project

that does not own the area/space, a tax attorney must provide an opinion of how

apportioning a cost and corresponding eligible basis to an entity that does not own the

area/space is permissible under IRS LIHTC and/or tax law. The opinion must include an

estimated cost breakdown and the methodology for how these shared area costs were

apportioned and is subject to review and approval by CTCAC.

The Executive Director may waive any of the above submission requirements if not applicable to

the project.

(j) Revisions to 4% Reservations at Placed in Service. Proposals submitted under Section 10326 of

these regulations do not require new applications for changes in costs or Tax Credits alone.

Committee staff will adjust the Credit amount when the placed-in-service package is received and

reviewed. Approval of the Executive Director is required for any change in unit mix or income

targeting after reservation except for changes that decrease income targeting. It is the applicant’s

responsibility to notify CTCAC of any unit mix or income targeting change. Projects at placed-in-

service that are requesting additional Tax Credits will be required to submit a fee equal to one

percent (1%) of the increase from reservation in the annual federal tax credits allocated. This

section shall apply to all projects for which TCAC issues tax forms after December 31, 2017.

(k) Unless the proposed project is a Special Needs development, or within ten (10) years of an expiring

tax credit regulatory agreement, applicants for nine percent (9%) Low Income Housing Tax Credits

to acquire and/or rehabilitate existing tax credit properties still regulated by an extended use

agreement shall:

(1) certify that the property sales price is no more than the current debt balance secured by the

property, and

(2) be prohibited from receiving any tax credits derived from acquisition basis.

All applicants for Low Income Housing Tax Credits to acquire and/or rehabilitate existing tax credit

properties still regulated by an extended use agreement shall use all funds in the applicant project’s

replacement reserve accounts for rehabilitating the property to the benefit of its residents, except

that an applicant may use existing reserves to reasonably meet CTAC’s or another funder’s

minimum reserve account requirement.

Note: Authority cited: Section 50199.17, Health and Safety Code.

Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4,

50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14,

50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.

Section 10323. The American Recovery and Reinvestment Act of 2009

(a) General. The American Recovery and Reinvestment Act of 2009 was administered by CTCAC

under regulations adopted October 22, 2009. Awards made under those prior regulations remain

bound by the terms of related executed funding agreements, and regulatory agreements.

(b) Fees.

(1) No additional processing fees or performance deposits shall be collected from ARRA

funding recipients beyond tax credit fees collected pursuant to Section 10335. Such tax

credit fees must be paid by all ARRA fund recipients, including an allocation fee, even where

an allocation of credits is not ultimately made. CTCAC may charge an ARRA funds recipient

an asset management fee for such services. This fee may be in the form of an annual

charge during the project’s regulatory term, or may be charged at or about project

Regulations

Section 10323-10325

Page 34 of 99

completion. In the event CTCAC contracts out for asset management services, the

contracted entity may charge the sponsor an asset management fee directly.

(2)

Asset management fees shall be $5,000 annually for projects of 30 units or fewer, and up

to $7,500 annually for projects of 31 to 75 units. Projects containing more than 75 units,

will pay up to $7,500 as a basic asset management fee annually, as well $40 per unit of

every unit over 75 units. Project owners may pay a one-time asset management fee equal

to the total fee over the 15-year period, or a partial one-time upfront fee. If making a

partial

payment,

the remaining annual payments shall be discounted accordingly to assure

equal

total payment to a pure annual payment schedule. Where another State or fe

deral

housing entity is a project funding source, proje

ct sponsors may pr

opose a plan to CTCAC

wherein

that source shares asset management information with CTCAC. Sponsors ma

also

propose a plan to CTCAC where a syndicator or investor providing professional asset

management services to the project shares asset management information with CTCAC. If

CTCAC determines that those asset management functions meet federal r

equirements,

CTCAC

may agree to accept that information and discount or forgo a fee altogether

Note: Authority cited: Section 50199.17, Health and Safety Code.

Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4,

50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14,

50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.

Section 10325. Application Selection Criteria - Credit Ceiling Applications

(a)

General. All applications not requesting Federal Tax Credits under the requirements of IRC

Section

42(h)(4)(b)

and Section 10326 of these Regulations (for buildings financed by tax-exempt bonds

)

shall

compete for reservations of Credit Ceiling amounts during designated reservation

cycles.

Further,

no project that has a pending application for a private activity bond allocation or that h

previously

received a private activity bond allocation will be eligible to compete under the

Credit

Ceiling competition for Federal Tax Credits.

(b)

Authority. Selection criteria shall include those required by IRC Section 42(m), H & S Code Section

50199.14, and R & T Code Sections 12206, 17058, and 2361

0.5.

(c)

Credit Ceiling application competitions. Applications received in a reservation cycle, and competing

for Federal and/or State Tax Credits, shall be scored and ranked according to the below-described

criteria, except as modified by Section 10317(g) of these regulations. The Committee shall reserve

the right to determine, on a case by case basis, under the unique circumstances of each funding

round, and in consideration of the relative scores and ranking of the proposed projects, that a

project’s score is too low to warrant a reservation of Tax Credits. All point selection c

ategories

shall

be met in the application submission through a presentation of conclusive,

documented

evidence

to the Executive Director's satisfaction. Point scores shall be determined solely on th

application

as submitted, including any additional information submitted in compliance with t

hese

regulations.

Further, a project’s points will be based solely on the current year’s scoring criteria

and submissions, without respect to any prior year’s score for the same projects.

Scattered Site Projects shall be scored proportionately in the site and service amenities c

ategory

based

upon (i) each site’s score, and (ii) the percentage of units represented by each site,

except

that

for scattered site projects of less than 20 Low-Income Units, service amenities shall be score

in the aggregate across all sites.

The number of awards received by individuals, entities, affiliates, and related entities is limited to

no more than four (4) per competitive round. This limitation is

applicable to a project applicant,

developer, sponsor, owner, general partner, and to parent companies, principals of entities, and

family members. For the purposes of this section, related or non-arm’s length relationships are

further defined as those having control or joint-control over an entity, having significant i

nfluence

over

an entity, or participating as key management of an entity. Related entity disclosure is required

Regulations

Section 10325

Page 35 of 99

at the time of application. Furthermore, no application submitted by a sponsor may benefit

competitively by the withdrawal of another, higher-ranked application submitted by the same

sponsor or related parties as described above.

SCORING

(1)

General Partner/Management Company Characteristics.

No one general partner, party having any fiduciary responsibilities, or related parties will be

awarded more than 15% of the Federal Credit Ceiling, calculated as of February first during

any calendar year unless imposing this requirement would prevent allocation of all of the

available Credit Ceiling.

(A)

General partner experience. To receive points under this subsection for projects in

existence for over 3 years, a proposed general partner, or a key person within t

proposed ge

neral partner organization, must meet the following condition

(i)

For projects in operation for over three years, submit a certification from a

third party certified public accountant that the projects for which it

requesting

points have maintained a positive operating cash flow, from

typical residential income alone (e.g. rents, rental subsidies, late fees,

forfeited deposits, etc.) for the year in which each development’s l

ast

financial

statement has been prepared and have funded reserves in

accordance with the partnership agreement and any applicable loan

documents. To obtain points for projects previously owned by the proposed

general partner, a similar certification must be submitted with respect to the

last full year of ownership by the proposed general partner, along

with

verification

of the number of years that the project was owned by that gene

ral

partner.

To obtain points for projects previously owned, the ending date of

ownership or participation must be no more than 10 years from the

application deadline. This certification must list the specific projects f

which

the points are being requested. The certification of the third party

certified public accountant may be in the form of an agreed upon procedure

report that includes funded reserves as of the report date, which shall be

dated within 60 days of the application deadline, unless the general partner

or key person has no current projects which are eligible for points in which

case the report date shall be after the date from which the general par

tner

key person separated from the last eligible project. If the certification

prepared

for a first round application utilizing prepared financial statem

ents

the previous calendar year, the certification may be submitted in a seco

round

application, exceeding the 60 day requirement above. Where there

than 1 general partner, experience points may not be aggregated;

rather, points will be awarded based on the highest points for which 1 gen

eral

partner is eligible.

3-4

projects in service more than 3 years, of which 1 shall be in service more

than 5 years and 2 shall be California Low Income Housing Tax C

redit

rojects 5 points

5 or more projects in service more than 3 years, of which 1 shall be in service

more than 5 years and 2 shall be California Low Income Housing Tax Credit

projects 7 points

For special needs housing type projects only applying through the Nonprofit

set-aside or Special Needs set-aside only, points are available as described

above or as follows:

Regulations

Section 10325

Page 36 of 99

3 Special Needs projects in service more than 3 years and one California

Low Income Housing Tax Credit project which may or may not be one of the

3 special needs projects 5 points

4 or more Special Needs projects in service more than 3 years and one

California Low Income Housing Tax Credit project which may or may not be

one of the 4 special needs projects 7 points

(ii)

General partners with fewer than two (2) active California Low Income

Housing Tax Credit projects in service more than three years, and gene

ral

partners

for projects applying through the Nonprofit or Special Needs set-

aside with no active California Low Income Housing Tax Credit projects

service

more than three years, shall contract with a bona-fide

management

company

currently managing two (2) California Low Income Housing

Tax

Credit

projects in service more than three years and which itself earns a

minimum total of two (2) points at the time of application.

(iii)

Tribal applicants may contract with a developer who will not be a g

eneral

partner

and receive points commensurate with the developer’s experienc

pursuant

to clauses (i) and (ii). The contract shall be in effect at least un

til

the

issuance of 8609 tax forms. Tribal applicants exercising this

option,

including

the option in the next paragraph, shall also contract for asset

management for at least the term of the 15-year federal compliance per

iod

with

an entity that has asset managed at least two Low-Income Housing

Tax

Credit projects for at least three years.

For

purposes of this clause only, a developer may include an entity pre-

approved by CTCAC that has developed but not owned the requisite

number

projects described in (i) and that provides the certification from a third party

certified public accountant described above for the projects for

which

experience

points are requested. If the projects for which the entity requests

experience points do not include two (2) active California Low Income

Housing Tax Credit projects in service more than three years, the applicant

shall contract with a bona-fide management company pursuant to clause

(ii).

For

this purpose only, “develop” shall mean developing the project scop

and

timeline, securing financing, hiring or performing the services of

general

contractor, and overseeing completion of construction a

placement

in service as well as asset managing the project for at least three

years after placed in service. When seeking pre-approval the entity s

hall

provide

copies of contracts demonstrating that the standards have been met.

In applying for and receiving points in this category, applicants assure that the

property shall be operated by a general partner in conformance with Section

10320(b).

(B)

Management Company experience. To receive points under this subsection, the

property management company must meet the following conditions. To

obtain

points

for projects previously managed, the ending date of the property m

anagement

role

must be no more than 10 years from the application deadline. In addition, t

property

management experience with a project shall not pre-date the

project’s

placed-in-se

vice date.

(i)

6-10 projects managed over 3 years, of which 2 shall be California Low Income

Housing Tax Credit projects 2

points

11 or more projects managed over 3 years, of which 2 shall be

California Low

Income Housing Tax Credit projects 3

points

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For special needs housing type projects only applying through the Nonprofit set-

aside or Special Needs set-aside only, points are available as described above

or as follows:

2-3 Special Needs projects managed over 3 years and one California

Low

Income

Housing Tax Credit project which may or may not be one of the s

pecial

needs proje

cts 2

points

or more Special Needs projects managed over 3 years and one California Low

Income Housing Tax Credit project which may or may not be one of the special

needs projects 3 points

(ii)

Management companies managing less than two (2) active California Low-

Income Housing Tax Credit projects for more than three years, and management

companies for projects requesting points under the special needs categories o

subparagra

ph (i) above and managing no active California Low-Income H

ousing

Tax

Credit projects for more than three years, shall contract with a bona-fide

management company currently managing two (2) California Low Income

Housing Tax Credit projects for more than three years and which itself earns a

minimum combined total of two (2) points at the time of application.

When contracting with a California-experienced property management company under the

terms of paragraph (A)(ii) or (B)(ii) above, the general partner or property co-management

entity must obtain training in: project operations, on-site certification training in federal fair

housing law, and manager certification in IRS Section 42 program requirements from a

CTCAC-approved, nationally recognized entity. Additionally, the experienced property

management agent or an equally experienced substitute, must remain for a period of at

least 3 years from the placed-in-service date (or, for ownership transfers, 3 years from the

sale or transfer date) to allow for at least one (1) CTCAC monitoring visit to ensure the

project is in compliance with IRC Section 42. Thereafter, the experienced property manager

may transfer responsibilities to the remaining general partner or property management firm

following formal written approval from CTCAC. In applying for and receiving points in these

categories, applicants assure that the property shall be owned and managed by entities

with equivalent experience scores for the entire 15-year federal compliance and extended

use period, pursuant to Section 10320(b). The experience must include at least two (2)

Low Income Housing Tax Credit projects in California in service more than 3 years.

Points in subsections (A) and (B) above will be awarded in the highest applicable category

and are not cumulative. For points to be awarded in subsection (B), an enforceable

management agreement executed by both parties for the subject application must be

submitted at the time of application. “Projects” as used in subsections (A) and (B) means

multifamily rental affordable developments of over 10 affordable units that are subject to a

recorded regulatory agreement, or, in the case of housing on tribal lands, where federal

HUD funds have been utilized in affordable rental developments. General Partner and

Management Company experience points may be given based on the experience of the

principals involved, or on the experience of municipalities or other nonprofit entities that

have experience but have formed single-asset entities for each project in which they have

participated, notwithstanding that the entity itself would not otherwise be eligible for such

points. For qualifying experience, “principal” is defined as an individual overseeing the day-

to-day operations of affordable rental projects as senior management personnel of the

General Partner or property management company.

(2) Negative points. Negative points, up to a total of 10 for each project and/or each violation,

may be given at the Executive Director’s discretion for general partners, co-developers,

management agents, consultants, guarantors, or any member or agent of the Development

Team as described in Section 10322(h)(5). Notwithstanding the foregoing and (B) below,

failure to meet the requirements of Section 10325(c)(7) shall result in rescission of the

Tax

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Page 38 of 99

Credit Reservation or negative points. Negative points may be assessed for items

including, but not limited to:

(A)

failure to utilize committed public subsidies identified in an application, unless it can

be demonstrated to the satisfaction of the Executive Director that the circum

stances

were entirely outside of the applican

t’s control;

(B)

failure to utilize Tax Credits within program time guidelines, including failure t

provide

a subsidy commitment within 180 days as required by Section 10322(h)(22),

unless it can be demonstrated to the satisfaction of the Executive Director that t

circumstances were entirely outside

of the applicant’s control;

(C)

failure to request Forms 8609 for new construction projects within one year from

the

date

the last building in the project is placed-in-service, or fo

acquisit

ion/rehabilitation projects, one year from the date on which the

rehabilitation

was com

leted;

(D)

removal or withdrawal under threat of removal as general partner from a

housing

tax credit partnership;

(E)

failure to provide physical amenities or services or any other item for which point

were

obtained (unless funding for a specific services program promised is no

longer

available);

(F)

failure to correct serious noncompliance after notice and cure period within an

existing housing tax credit project in California;

(G)

serious, after a notice and cure period, or repeated failure to submit require

compliance

documentation for a housing Tax Credit project located anywhere;

(H)

failure to perform a tenant income recertification upon the first anniversary

following

the

initial move-in certification for all one-hundred percent (100%) tax

credit

properties,

or failure to conduct ongoing annual income certifications in

properties

with non-tax-credit units;

(I)

material misrepresentation of any fact or requirement in an application;

(J)

failure of a building to continuously meet the terms, conditions, and

requirements

received at

its certification as being suitable for occupancy in compliance

with state

local law, unless it is demonstrated to the satisfaction of the Executive

Director

that the circumstances

were entirely outside the control of the

owner;

(K)

failure to submit a copy of the owner’s completed 8609 showing the first year filing;

(L)

failure to promptly notify CTCAC of a property management change or changing to

a management company of lesser experience contrary to Section 1

0325(c)(1)(B);

(M)

failure to properly notify CTCAC and obtain prior approval of Transfer Events,

general partner changes, transfer of a Tax Credit project, or allocation of the

Federal

or State Credit;

(N)

certification of site amenities, distances or service amenities that were, in the

Executive Director’s sole discretion, inaccurate or misleading;

(O)

falsifying documentation of household income or any other materials to fr

audulently

represent co

pliance with IRC Section 42; or

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Page 39 of 99

(P) failure of American Recovery and Reinvestment Act (ARRA) funded projects to

comply with Section 42, CTCAC regulations, or other applicable program

requirements;

(Q)

failure to provide required documentation of third party verification of sustainable

and energy efficient feat

ures.

(R)

failure to correct serious noncompliance, including incorrect rents or i

ncome

qualificat

ion, incorrect utility allowance, or other overcharging of residents. I

assigning

negative points, CTCAC shall consider the most recent monitoring

results

for

each of the parties’ projects in the most recent three-year monitoring cycle.

CTCAC shall allow affected parties a reasonable period to correct s

erious

noncompliance

before assigning negative points. Negative points may be

warranted

when

more than ten percent (10%) of the party’s total portfolio has Level 3

deficiencies under the Uniform Physical Conditions Standards established by HUD.

In addition, negative points may be warranted when more than ten percent (10%)

the

tenant files most recently monitored resulted in findings of either household

income above regulated income limits upon initial occupancy, or findings of gross

rent exceeding the tax credit maximum

limits.

(S)

the project’s total eligible basis at placed in service exceeding the revised

total

adjusted thr

eshold basis limits for the year the project is pla

ced in service by 40%.

(T)

where CDLAC has determined that a person or entity is subject to negative

points

under

its regulations, CTCAC will deduct an equal amount of points for an equal

period of time from tax credit applications involving that person or entity or a Related

Party.

(U)

failure to comply with a requirement of the regulatory agreement or of a covenant

entered into

10320(b)(2)(B) or Section 10337(a)(3)(B).

(V)

Submitting a check which CTCAC, after reasonable efforts to correct, cannot

deposit.

Negative points given to general partners, co-developers, management agents,

consultants, or any other member or agent of the Development Team may remain in effect

for up to two calendar years, but in no event will they be in effect for less than one funding

round. Furthermore, they may be assigned to one or more Development Team members,

but do not necessarily apply to the entire Team. Negative points assigned by the Executive

Director may be appealed to the Committee under appeal procedures enumerated in

Section 10330.

(3)

Housing Needs. (Points will be awarded only in one category listed below except t

hat

acquisit

ion and/or rehabilitation Scattered Site Projects may, at the applicant’s election, be

scored either in the aggregate or proportionately based upon (i) each site’s score, and

(ii)

the

percentage of units represented by each site.) The category selected hereunder (

which

shall

be the category represented by the highest percentage of Low-Income Units in a

proportionally scored project) shall also be the project category for purposes of the tie-

breaker described in subsection 10

325(c)(9) below.

Large Family Projects 10 points

Special Needs Projects 10 points

Seniors Projects 10 points

At-Risk Projects 10 points

SRO Projects 10 points

(4)

Amenities beyond those required as additional th

resholds

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Page 40 of 99

(A) Site Amenities: Site amenities must be appropriate to the tenant population served.

To receive points the amenity must be in place at the time of application except as

specified in paragraphs 1, 5, and 8 below. In addition, an amenity to be

operated

a public entity that is (i) being constructed within the project as part of the ta

credit

development, (ii) is receiving development funding for the amenity from

the

public

entity, and (iii) has a proposed operations budget from the operating

public

entity, would be con

sidered “in place” at the time of application. Distances must be

measured using a standardized radius from the development site to the target

amenity, unless that line crosses a significant physical barrier or barriers. Such

barriers include highways, railroad tracks, regional parks, golf courses, or any o

ther

feature

that significantly disrupts the pedestrian walking pattern between the

development site and the amenity. The radius line may be struck from the corner o

developmen

t site nearest the target amenity, to the nearest corner of the target

amenity site. However, a radius line shall not be struck from the end of an

entry

drive

or on-site access road that extends from the central portion of the site itself

250

feet or more. Rather, the line shall be struck from the nearest corner of

the

site’s

central portion. Where an amenity such as a grocery store resides within a

larger shopping complex or commercial strip, the radius line must be measured to

the amenity exterior wall, rather than the site boundary. The resulting distance s

hall

be reduced in such in

stances by 250 feet to account for close-in parking.

No more than 15 points will be awarded in this category. For purposes of the Native

American apportionment only, no points will be awarded in this category. However,

projects that apply under the Native American apportionment that drop down to the

rural set-aside will be scored in this category. Applicants must certify to the accuracy

of their submissions and will be subject to negative points in the round in which

applicat

ion is considered, as well as subsequent rounds, if the information

submitted

found to be inaccurate. For each amenity, color photographs, a contact

person

and

a contact telephone must be included in the application. The Committee

may

employ

third parties to verify distances or may have staff verify them. Only one point

award will be available in each of the subcategories (1-9) listed below, with

exception of the transit pass option of subcategory 1. Ameniti

es may include:

Transit Amenities

The project is located where there is a bus rapid transit station

, light rail station,

commuter

rail station, ferry terminal, bus station, or public bus stop within 1

mile

from the site with service at least every 30 minutes (or at least

two

departures

during each peak period for a commuter rail station or ferry ter

minal)

during

the hours of 7-9 a.m. and 4-6 p.m., Monday through Friday, and the

project’s density will exceed 25 units per acre.

7 points

The

site is within 1/3 mile of a bus rapid transit station, light rail station,

commuter

rail

station, ferry terminal, bus station, or public bus stop with service at least

every 30 minutes (or at least two departures during each peak period for a

commuter rail station or ferry terminal) during the hours of 7-9 a.m. and 4-6 p.m.,

Monday through Friday.

6 points

The

site is within 1/2 mile of a bus rapid transit station, light rail station, c

ommuter

rail

station, ferry terminal, bus station, or public bus stop with service at least

every 30 minutes (or at least two departures during each peak period for a

commuter rail station or ferry terminal) during the hours of 7-9 a.m. and 4-6 p.m.,

Monday through Friday.

5 points

The

site is located within 1/3 mile of a bus rapid transit station, light rail station,

commuter rail station, ferry terminal, bus station, or public bus stop. (For

Rural

set-aside pr

ojects, full points may be awarded where van or dial-a-ride s

ervice

provided to tenants, if costs of obtaining and maintaining the van and

its

Regulations

Section 10325

Page 41 of 99

service are included in the budget and the operating schedule is either on

demand by tenants or a regular schedule is provided) 4 points

The site is located within 1/2 mile of a bus rapid transit station, light rail station,

commuter rail station, ferry terminal, bus station, or public bus stop. 3 points

In addition to meeting one of the point categories described above, the applicant

commits to provide to residents free transit passes or discounted passes priced

at no more than half of retail cost. Passes shall be made available to each Low-

Income Unit at the time a Low-Income Unit is leased to the tenant and shall be

made available for at least 15 years. These points are not available for projects

with van service. These points are only available to Rural set-aside projects with

dial-a-ride service for free or discounted dial-a-ride passes.

At least one pass per Low-Income Unit 3 points

At least one pass per each 2 Low-Income Units 2 points

“Light rail station” or “commuter rail station” or “ferry terminal” includes a planned

rail station or ferry terminal whose construction is programmed into a Regional

or State Transportation Improvement Program to be completed within one year

of the scheduled completion and occupancy of the proposed residential

development.

A private bus or transit system providing service to residents may be substituted

for a public system if it (a) meets the relevant headway and distance criteria, and

(b)

if service is provided free to the residents. Such private systems must receive

approval from the CTCAC Executive Director prior to the application deadline.

Multiple bus lines may be aggregated for the above points, only if multiple

lines

from

the designated stop travel to an employment center. Such aggregation

must be demonstrated to, and receive prior approval from, the CTCAC Execu

tive

Director in o

der to receive competitive points.

The site is within 1/2 mile of a public park or a community center accessible to

the general public (1 mile for Rural set-aside projects). A public park shall not

include 1) school grounds unless there is a bona fide, formal joint use agree

ment

between

the jurisdiction responsible for the parks/recreational facilities and

the

school

district or private school providing availability to the general public of

the

school

grounds and/or facilities, 2) greenbelts or pocket parks, or 3) open space

preserves or biking parkways unless there is a trailhead or designated a

ccess

point within t

he specified distance.

3 points

or within 3/4

mile (1.5 miles for Rural set-aside projects) 2

points

The site is within 1/2 mile of a book-lending public library that also allows f

inter-branch

lending (when in a multi-branch system) (1 mile fo

r Rural set-aside

projects)

3 point

or within 1 mile (2 miles for Rural set-aside projects) 2 poin

The site is within 1/2 mile of a full scale grocery store/supermarket of at least

25,000 gross interior square feet where staples, fresh meat, and fresh produce

are sold (1 mile for Rural set-aside projects). A large multi-purpose store

containing a grocery section may garner these points if the application cont

ains

the

requisite interior measurements of the grocery section of that multipurpose

store. The “grocery section” of a large multipurpose store is defined as the

portion of the store that sells fresh meat, produce, dairy, baked goods, pa

ckaged

food

products, delicatessen, canned goods, baby foods, frozen foods, sund

ries,

and beverages. 5 points

Regulations

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Page 42 of 99

or within 1

mile (2 miles for Rural set-aside projects) 4 points

or within 1.5 miles (3 miles for Rural set-aside projects) 3 points

The site is within 1/4 mile of a neighborhood market of 5,000 gross interior

square feet or more where staples, fresh meat, and fresh produce are sold (1/2

mile for Rural Set-aside projects). A large multi-purpose store containing a

grocery portion may garner these points if the application contains interior

measurements of the grocery section of that multi-purpose store. The “grocery

section” of a large multipurpose store is defined as the portion of the store

primarily devoted to food stuffs that sells fresh meat, produce, dairy, baked

goods, packaged food products, delicatessen, canned goods, baby foods,

frozen foods, sundries, and beverages. 4 points

or within 1/2 mile (1 mile for Rural Set-aside projects) 3 points

The site is within 1/2 mile of a weekly farmers’ market on the list of Certified

Farmers’ Markets maintained by the California Department of Food and

Agriculture and operating at least 5 months in a calendar year 2 points

or within 1 mile 1 point

For a development wherein at least 25 percent (25%) of the Low-Income

Units

(or,

for Special Needs housing type, at least 25% of the Large Family Low-

Income Units) shall be three-bedroom or larger units, the site is within 1/4

mile

a public elementary school; 1/2 mile of a public middle school; or one (1) mile

of a public high school, (an additional 1/2 mile for each public school type

for

Rural

set-aside projects) and that the site is within the attendance area of t

hat

school.

Public schools demonstrated, at the time of application, to be under

construction and to be completed and available to the residents prior to the

housing development completion are considered in place at the time of

application for purposes of this scoring factor.

3 points

within an additional 1/2 mile for each public school type (an additional 1 m

ile

for Rural set

-aside projects)

2 points

For a Senior Development, the site is within 1/2 mile of a daily operated

senior

center

or a facility offering daily services specifically designed for seniors (not

on the development site) (1 mile for Rural set-aside projects) 3 points

or within 3/4 mile (1.5 miles for Rural set-aside projects) 2 points

For a Special Needs development, the site is located within 1/2 mile of a

facility

that operate

s to serve the population living in the development 3 points

or within 1 mile 2 points

The site is within 1/2 mile (for Rural set-aside projects, 1 mile) of a qua

lifying

medical

clinic with a physician, physician’s assistant, or nurse practitioner

onsite

for a minimu

m of 40 hours each week, or hospital (not merely a

private doctor’s

office). A qualifying medical clinic must accept Medi-Cal payments, or Medicare

payments

for Senior Projects, or Health Care for the Homeless for p

rojects

housing

homeless populations, or have an equally comprehensive

subsidy

program for low-income patients.

3 points

The site is within 1 mile (for Rural set-aside projects, 1.5 miles) of a

qualifying

medical

clinic with a physician, physician’s assistant, or nurse practitioner

onsite

for a minimu

m of 40 hours each week, or hospital

2 points

Regulations

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Page 43 of 99

A hospital demonstrated at the time of application to be under construction and

to be completed and available to the residents prior to the housing development

completion is considered in place at the time of application for purposes of this

scoring factor.

The site is within 1/2 mile of a pharmacy (for Rural projects, 1 mile)

2 points

or within 1 mile (2 miles for Rural projects) 1 point

10.

High speed internet service, with a minimum average download speed of

megabits/se

cond must be made available to each Low-Income Unit for a

minimum of 15 years, free of charge to the tenants, and available within

months

of the project’s placed-in-service date. Documentation of int

ernet

availability

must be included in the application. If internet is selected as an

option

in the application it must

be provided even if it is not needed for points.

2 points (3 points for Rural projects)

11.

The project is a new construction Large Family housing type project, except f

inclusionary project as defined in Section 10325(c)(9)(C), and the site i

located

in a census tract, or census block group as applicable, designated on

the TCAC/HCD Opportunity Area Map as Highest or High Resource:

8 points

An application for a large family new construction project located in a High

Highest

Resource area shall disclose whether or not the project includes

any

Low-Income

Units which satisfy the obligations of an inclusionary h

ousing

ordinance

or development agreement and, if so, the number of such units and

whether the inclusionary obligations derive solely from the Low-Income

Units

themselves.

An applicant may choose to utilize the census tract, or census block group

applicable,

resource designation from the TCAC/HCD Opportunity Maps in

effect when the initial site control was obtained up to seven calendar years prior

to the application.

(B)

Projects that provide high-quality services designed to improve the quality of life for

tenants are eligible to receive points for service amenities. Services must

appropriate

to meet the needs of the tenant population served and designed to

generate positive changes in the lives of tenants, such as by increasing

tenant

knowledge

of and access to available services, helping tenants maintain stabi

lity

and

prevent eviction, building life skills, increasing household income and assets,

increasing health and well-being, or improving the educational success of children

and youth.

Except

as provided below, in order to receive points in this category, physical space

for service amenities must be available when the development is place

d-in-service.

Services

space must be located inside the project and provide sufficient square

footage, accessibility and privacy to accommodate the proposed services.

Evidence

that

adequate physical space for services will be provided must be documented

within the application.

The amenities must be available within 6 months of the project’s placed

-in-service

date.

Applicants must commit that services shall be provided for a period of

years.

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All services must be of a regular and ongoing nature and provided to tenants free of

charge (except for day care services or any charges required by law). Services

must be provided on-site except that projects may use off-site services within 1/2

mile of the development (1½ miles for Rural set-aside projects) provided that they

have a written agreement with the service provider enabling the development’s

tenants to use the services free of charge (except for day care and any charges

required by law) and that demonstrate that provision of on-site services would be

duplicative.

No more than 10 points will be awarded in this category. The number of hours per

year for a full time-equivalent (FTE) will be calculated as follows: 1) the number of

bedrooms X 0.0017 = FTE multiplier; 2) FTE Multiplier X 2,080 = number of hours

per year (up to a maximum of 2,080 hours).

For Large Family, Senior, and At-Risk Projects or for the non-Special Needs units

in a Special Needs Project with less than 75% Special Needs units, amenities may

include, but are not limited to:

Service Coordinator. Responsibilities must include, but are not limited to: (a)

providing tenants with information about available services in the community, (b)

assist

ing tenants to access services through referral and advocacy, and (c)

organizing community-building and/or other enrichment activities for tenants

(such as holiday events, tenant council, etc.).

Minimum ratio of 1 Full Time Equivalent (FTE) Service Coordinator to 600

bedrooms.

5 points

Other Services Specialist. Must provide individualized assistance, counseling

and/or advocacy to tenants, such as to assist them to access education, secure

employment, secure benefits, gain skills or improve health and wellness

Includes,

but is not limited to: Vocational/Employment Counselor, ADL or

Supported Living Specialist, Substance Abuse or Mental Health Counselor, Peer

Counselor, Domestic Violence Coun

selor.

Minimu

m ratio of 1 FTE Services Specialist to 600 bedrooms. 5 p

oints

Instructor-led adult educational, health and wellness, or skill building classes.

Includes, but is not limited to: Financial literacy, computer training,

home-buyer

education,

GED classes, and resume building classes, ESL, nutrition class,

exercise class, health information/awareness, art class, parenting class,

on-site

food

cultivation and preparation classes, and smoking cessation classes. Drop-

in computer labs, monitoring or technical assistance shall not

qualify.

84 hours of instruction per year (42 for small developments) 7 points

60 hours of instruction per year (30 for small developments) 5 points

Health and wellness services and programs. Such services and programs

shall

provide

individualized support to tenants (not group classes) and need not be

provided by licensed individuals or organizations. Includes, but is not limited to

visiting nurses programs, intergenerational visiting programs, or s

enior

companion

programs. The application must describe in detail the services to be

provided.

100 hours of

services per year for each 100 bedrooms

5 points

Regulations

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60 hours of

services per year for each 100 bedrooms 3 points

Licensed child care. Shall be available 20 hours or more per week, Monda

through

Friday, to residents of the development. (Only for large family projects

or other projects in which at least 25% of Low-Income Units are three

bedrooms

or larger).

5 points

After school program for school age children. Includes, but is not limited to

tutoring, mentoring, homework club, art and recreational activities. (Only for

large family projects or other projects in which at least 25% of Low-Income

Units

are three bedrooms or larger).

10 hours pe

r week, offered weekdays throughout school year 5 points

6 hours per week, offered weekdays throughout school year 3 points

For Special Needs Projects with 75% or more Special Needs units or for the Special

Needs units in a Special Needs Project with less than 75% Special Needs units,

amenities may include, but are not limited to:

Case Manager. Responsibilities must include (but are not limited to)

working

with

tenants to develop and implement an individualized service plan, goal plan

or independent living plan

Ratio of 1 FTE case manager to 100 bedrooms

5 points

Service Coordinator or Other Services Specialist. Service c

oordinator

responsibilities

shall include, but are not limited to: (a) providing tenants

with

information

about available services in the community, (b) assisting tenants to

access services through referral and advocacy, and (c) organizing community-

building and/or other enrichment activities for tenants (such as holiday events,

tenant

council, etc.). Other services specialist must provide individualized

assistance, counseling and/or advocacy to tenants, such as to assist them to

access education, secure employment, secure benefits, gain skills or improve

health and wellness. Includes, but is not limited to: Vocational/Employment

Counselor, ADL or Supported Living Specialist, Substance Abuse or Mental

Health Counselor, Peer Counselor, Domestic Violence Coun

selor.

Ratio of 1 FTE service coordinator o

r specialist to 360 bedrooms

5 points

Adult educational, health and wellness, or skill building classes. Includes, but i

not

limited to: Financial literacy, computer training, home-buyer education, G

classes, and resume building classes, ESL, nutrition class, exercise class,

health

information/awareness, art class, parenting class, on-site food cultivation

and preparation classes, and smoking cessation classe

84 hours of instruction p

er year (42 for small developments) 5

points

10.

Health or behavioral health services provided by appropriately-licensed

organization or individual. Includes but is not limited to: health clinic, adult

day

health

center, medication management services, mental health services and

treatment, substance abuse services and treatment.

5 points

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Page 46 of 99

11. Licensed child care. Shall be available 20 hours or more per week, Monday

through

Friday, to residents of the development. (Only for large family projects

or other projects in which at least 25% of Low-Income Units are three

bedrooms

or larger).

5 points

12.

After school program for school age children. Includes, but is not limited

tutoring,

mentoring, homework club, art and recreational activities. (Only for

large family projects or other projects in which at least 25% of Low-Income

Units

are three bedrooms or larger).

10 hours pe

r week, offered weekdays throughout school year 5 points

Special needs projects with less than 75% special needs units shall be scored

proportionately in the service amenity category based upon (i) the services provided

to special needs and non-special needs units, respectively; and (ii) the percentage

of units represented by special needs and non-special needs units, respectively.

Proportionate scoring means for a project to score the maximum 10 points,

nonspecial needs units and special needs units must independently score 10 points

for service amenities. For special needs projects with less than 75% special needs

units that provide the same service amenity for the special needs and non-special

needs tenants, the applicant must select the amenity from 1-6 and from 7-12 in the

application form. Special needs projects with 75% or more but less than 100%

special needs units shall demonstrate that all tenants will receive an appropriate

level of services.

Items 1 through 12 are mutually exclusive: one proposed service may not receive

points under two different categories, except in the case of proportionately-scored

scored services pursuant to the previous paragraph.

Documentation must be provided for each category of services for which the

applicant is claiming service amenities points and must state the name and address

of the organization or entity that will provide the services; describe the services to

be provided and the number of hours services will be provided; and name the project

to which the services are being committed.

Documentation shall take the form of a contract for services, Memorandum of

Understanding (MOU), or commitment letter on agency letterhead.

For projects claiming points for items 1, 2, 7, or 8, a position description must be

provided. Services delivered by the on-site Property Manager or other property

management staff will not be eligible for points under any category (items 1 through

12).

The application’s Service Amenity Sources and Uses Budget page must clearly

describe all anticipated income and expenses associated with the services

program(s) and must align with the services commitments provided (i.e. contracts,

MOUs, letters, etc.). Applications shall receive points for services only if the

proposed services budget adequately accounts for the level of service. The

budgeted amount must be reasonably expected to cover the costs of the proposed

level of service. If project operating income will fund service amenities, the

application’s Service Amenities Sources and Uses Budget must be consistent with

the application’s fifteen year pro forma. Services costs contained in the project’s

pro forma operating budget do not count towards meeting CTCAC’s minimum

operating expenses required by Section 10327(g)(1).

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Page 47 of 99

All organizations providing services for which the project is claiming points must

document that they have at least 24 months of experience providing services to the

project’s target population. Experience of individuals may not be substituted for

organizational experience.

(5) Reserved.

(6) Lowest Income in accordance with the table below Maximum 52 points

(A)

The “Percent of Area Median Income” category may be used only once.

For

instance,

50% of Low-Income Units at 50% of Area Median Income cannot be used

twice for 100% at 50% and receive 50 points, nor can 50% of Low-Income Units

50%

of Area Median Income for 25 points and 40% of Low-Income Units at 50% of

Area Median Income be used for an additional 20 points. However, the “Percent of

Low-Income Units” may be used multiple times. For example, 50% of Low-Income

Units at 50% of Area Median Income for 25 points may be combined with

another

50%

of Low-Income Units at 45% of Area Median Income to achieve the maximum

points. All projects must score at least 45 points in this category to be eligible for

9% Tax Credits.

Only projects competing in the Rural set aside may use the 55% of Area Median

Income column.

Projects electing the average income federal set-aside must choose targeting

10% increments of Area Median Income (i.e. 20% AMI, 30%

AMI, 40

% AMI, etc.).

Lowest Income Points Table (maximum 50 points):

*Available to Rural set-aside project

only

(B)

A project that agrees to have at least ten percent (10%) of its Low-Income Units

available for tenants with incomes no greater than thirty percent (30%) of area

median, and to restrict the rents on those units accordingly, will receive two

points

addition to other points received under this subsection. The 30% units must be

spread across the various bedroom-count units, starting with the largest bedroom-

count units (e.g. four bedroom units), and working down to the smaller bedroom-

count units, assuring that at least 10% of the larger units are proposed at 30% of

area

median income. So long as the applicant meets the 10% standard project-

wide, the 10% standard need not be met among all of the smaller units. The

CTCAC

Executive

director may correct applicant errors in carrying out this largest-to-

smallest unit protocol. (These points may be obtained by using the 30% section of

the matrix.)

All

projects, except those applying under section 10326 of these regulations, will be subject

to the minimum low income percentages chosen for a period of 55 years (50 years for

Percent of Area Median Income

55% 50% 45% 40% 35% 30%

20%

25.0* 37.5

22.5* 33.8

Percent of 40%

10.0* 20.0 30.0

Low-Income 35%

8.8* 17.5 26.3 35.0 50.0

Units 30%

7.5* 15.0 22.5 30.0 37.5 45.0

25%

6.3* 12.5 18.8 25.0 31.3 37.5 50.0

20%

5.0* 10.0 15.0 20.0 25.0 30.0 40.0

15%

3.8* 7.5 11.3 15.0 18.8 22.5 30.0

10%

2.5* 5.0 7.5 10.0 12.5 15.0 20.0

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projects located on tribal trust land), unless they receive Federal Tax Credits only and are

intended for eventual tenant homeownership, in which case they must submit, at

application, evidence of a financially feasible program, incorporating, among other items,

an exit strategy, home ownership counseling, funds to be set aside to assist tenants in the

purchase of units, and a plan for conversion of the facility to home ownership at the end of

the initial 15 year compliance period. In such a case, the regulatory agreement will contain

provisions for the enforcement of such covenants.

(7)

Readiness to Proceed. 10 points will be available to projects that document enforceable

financing commitment(s) as defined in Section 10325(f)(3) for all construction financing

and

commit

to begin construction within 180 days of the Credit Reservation as documented

the

requirements below (after preliminary reservation CTCAC will randomly assign a

180

day

deadline for half of the projects receiving a Credit Reservation within each round and

194 day deadline for remaining proje

ts).

No later than the 180/19

4 day deadline, CTCAC m

ust receive:

(A)

a completed updated application form along with a detailed explanation of any c

hanges

from the initial applicat

(B)

an executed construction contract,

(C)

recorded deeds of trust for all construction financing (unless a project’s location on

tribal trust land precludes this), binding commitments for permanent financing, b

inding

commitment

s for any other financing required to complete project construc

tion,

(D)

a limited partnership agreement executed by the general partner and the investor

providing the equity,

(E)

an updated CTCAC

Attachment 16,

(F)

issuance of building permits (a grading permit does not suffice to meet this

requirement

except

that in the event that the city or county as a rule does not issue building

permits

prior

to the completion of grading, a grading permit shall suffice; if the project is a

design-build project in which the city or county does not issue building permits

until

designs

are fully complete, the city or county shall have approved construction to begin)

or the applicable tribal d

ocuments, and

(G)

notice to proceed delivered to the contractor.

Failure to meet the 180-day or 194-day due date, if applicable, shall result in rescission of

the Tax Credit Reservation or negative points.

If no construction lender is involved, evidence must be submitted within 180 or 194 days,

as applicable, after the Reservation is made that the equity partner has been admitted to

the ownership entity, and that an initial disbursement of funds has occurred. CTCAC shall

conduct a financial feasibility and cost reasonableness analysis upon receiving submitted

Readiness documentation.

(8)

Miscellaneous Federal a

nd State Policies

Maximum 2 points

(A)

Credit Substitution. For applicants who agree to both 1) exchange Federal Tax

Credits for State Tax Credits pursuant to Section 10317(e) and 2) exchange

State

Tax Credits for Federal

Tax Credits pursuant to Section 10317(c).

2 points

Applicants receiving these points agree to make the exchange in a manner that

yields equal equity based solely on the tax credit factors stated in the application.

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(B) Enhanced Accessibility and Visitability. Project design incorporates California

Building

Code Chapter 11(B) and the principles of Universal Design in at least half

of the project's Low-Income Units by including:

• Accessible routes of travel to the dwelling units with accessible 34" minimum

clear-opening-width entry, and 34” clear width for all doors on an accessible path.

• Interior doors with lever hardware and 42" minimum width hallw

ays.

• Fully

accessible bathrooms complying with California Building Code (

CBC)

Chapter

11(A) and 11(B). In addition, a 30”x48” clearance parallel to and

centered on the bathroom vanity.

• Accessible kitchens with 30”x48” clearance parallel to and centered on the front

of all major appliances and fixtures (refrigerator, oven, dishw

asher and sink)

•

Accessible master bedroom size shall be at least 120 square feet (excluding the

closet), shall accommodate a queen size bed, shall provide 36” in clearance

around three sides of the bed, and shall provide required accessible clear

ances,

free of a

ll furnishings, at bedroom and closet doors. The master bedroom clo

set

shall be on

an accessible path.

•

Wiring for audio and visual doorbells required by UFAS shall be installed.

• Closets and balconies shall be located on an accessible route.

• These units shall, to the maximum extent feasible and subject to reasonable

health and safety requirements, be distributed throughout the project consistent

with 24 CFR Section 8.26

•

Applicant must commit to obtaining confirmation from a Certified

Accessibility

Specialist

that the above requirements have been met. 2

points

(C)

Smoke Free Residence. The proposed project commits to having at least

one

nonsmoking

building and incorporating the prohibition into the lease agreement f

the

affected units. If the proposed project contains only one building, the proposed

project shall commit to prohibiting smoking in designated contiguous units

and

incorporatin

g the prohibition into the lease agreement for the

affected units.

points

(D)

Historic Preservation. The project proposes to use Historic Tax Credits 1 point

(E)

Revitalization Area Project. The project is located within one of the following: a

Qualified Census Tract (QCT), a census tract in which at least 50% of t

households

have an income of less than 60% of the area median income, or a

federal Promise Zone. Additionally, the development must contribute to a concerted

community revitalization plan as demonstrated by a letter from a local government

official. The letter must delineate the various community revitalization efforts, fund

committed

or expended in the previous five years, and how the project w

ould

contribute to

the community’s revitalization.

2 points

(F)

Eventual Tenant Ownership. The project proposes to make Tax Credit

Units

available

for eventual tenant ownership and provides the information described in

Section 10325(c)(6) of these regulations. 1 point

(9)

Tie Breakers

If multiple applications receive the same score, the following tie breakers shall be employed:

For applications for projects within single-jurisdiction regional competitions only (the C

ity

and

County of San Francisco and the City of Los Angeles geographic apportionments), the

first tiebreaker shall be the presence within the submitted application of a formal letter of

support for the project from either the San Francisco Mayor’s Office of Housing or the

Los

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Angeles Housing + Community Investment Department respectively. Within those cities,

and for all other applications statewide, the subsequent tiebreakers shall be as follows:

First, if an application’s housing type goal has been met in the current funding round in the

percentages listed in section 10315, then the application will be skipped (unless the

application to be skipped is the highest ranked in the set-aside or geographic region) if there

is another application with the same score and with a housing type goal that has not been

met in the current funding round in the percentages listed in section 10315; and

Second, the highest of the sum of the following:

(A)

Leveraged soft resources, as described below, defraying residential costs to t

otal

residential project development costs. Except where a third-party funding

commitment

is explicitly defraying non-residential costs only, leveraged soft

resources

shall

be discounted by the proportion of the project that is non-residential. Leveraged

soft resources shall be demonstrated through documentation including but not

limited

funding award letters, committed land donations, or documented project-specif

local fee waivers.

Leveraged soft resources shall include all of the following:

(i) Public funds. “Public funds” include federal, tribal, state, or local government

funds, including the outstanding principal balances of prior existing public debt o

subsidi

zed debt that has been or will be assumed in the course of

acquisit

ion/rehabilitation transaction, except that outstanding principal

balances

for

projects subject to an existing CTCAC regulatory agreement shall not be

considered public funds if such loans were funded less than 30 years prior to the

application deadline. Outstanding principal balances shall not include any accrued

interest on assumed loans even where the original interest has been or is

being

recast

as principal under a new loan agreement. Public funds shall in

clude

assumed

principal balances only upon documented approval of the lo

assumption or other required procedure by the public agency holding the

promissory note.

addition, public funds include funds already awarded under the Af

fordable

Housing

Program of the Federal Home Loan Bank (AHP), waivers resulting in

quantifiable cost savings that are not required by federal or state law,

local

government

fee reductions established in ordinance and not required by f

ederal

state law that are available only to rental affordable housing for

lower-income

households

and affordable ownership housing for moderate income households,

or the value of land and improvements donated or leased by a public entity

donated

as part of an inclusionary housing ordinance or other dev

elopment

agreement

negotiated between a public entity and an unrelated private dev

eloper.

The value of land leased by a public entity shall be discounted by the sum of up-

front lease pre-payments and all mandatory lease payments in excess of $100 per

year over the term of the lease, exclusive of residual receipt payments. Private

loans that are guaranteed by a public entity (for example, RHS Section

538

guaranteed

financing) shall not be counted as public funds, unless the loans

have

designated repayment commitment from a public source other than rental o

operating

subsidies, such as the HUD Title VI Loan Guarantee Program involving

Native American Housing Assistance and Self Determination Act (NA

HASDA)

funds.

Land and building values, including for land donated or leased by a

public

entity

or donated as part of an inclusionary housing ordinance or o

ther

developmen

t agreement, must be supported by an independent, third party

appraisal consistent with the guidelines in Section 10322(h)(9). The appraised

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Page 51 of 99

value is not to include off-site improvements. For Tribal apportionment

applications, donated land value and land-purchase funding shall not be eligible.

However, unsuccessful Tribal apportionment applicants subsequently competing

within the rural set-aside or tribal applicants competing in a geographic region shall

have such donated land value and land-purchase funding counted competitively

as public funding if the land value is established in accordance with the

requirements of this paragraph.

Loans must be “soft” loans, having terms (or remaining terms) of at least 15 years,

and below market interest rates and interest accruals, and are either fully deferred

or require only residual receipts payments for at least the first fifteen years of their

terms. Qualified soft loans may have annual fees that reasonably defray

compliance monitoring and asset management costs associated with the project.

The maximum below-market interest rate allowed for tiebreaker purposes shall be

the greater of four percent (4%) simple, or the Applicable Federal Rate if

compounding. RHS Section 514 or 515 financing shall be considered soft debt in

spite of a debt service requirement. Further, there shall be conclusive evidence

presented that any new public funds have been firmly committed to the proposed

project and require no further approvals, and that there has been no consideration

other than the proposed housing given by anyone connected to the project, for the

funds or the donated or leased land. Seller carryback financing and any portion of

a loan from a public seller or related party that is less than or equal to sale

proceeds due the seller, except for a public land loan to a new construction project

that is not replacing affordable housing within the footprint of the original

development, shall be excluded for purposes of the tiebreaker. Projects that

include both new construction and rehabilitation or affordable housing

replacement shall have the land loan value prorated based on units.

Public contributions of off-site costs shall not be counted competitively, unless (1)

documented as a waived fee pursuant to a nexus study and relevant State

Government Code provisions regulating such fees or (2) the off-sites must be

developed by the sponsor as a condition of local approval and those off-sites

consist solely of utility connections, and curbs, gutters, and sidewalks immediately

bordering the property. Public funds shall be reduced for tie breaker scoring

purposes by an amount equal to the off-sites not meeting the requirements noted

in this paragraph.

The capitalized value of rent differentials attributable to public rent or public

operating subsidies shall be considered public funds based upon CTCAC

underwriting standards. Standards shall include a 15-year loan term; an interest

rate established annually by CTCAC based upon a spread over 10-year Treasury

Bill rates; a 1.15 to 1 debt service coverage ratio; and a five percent (5%) vacancy

rate. In addition, the rental income differential for subsidized units shall be

established by subtracting tax credit rental income at 40 percent (40%) AMI levels

(30% AMI for units subject to the 40% average AMI requirement of Section

10325(g)(3)(A)) from the committed contract rent income documented by the

subsidy source or, in the case of a USDA rental subsidy only, the higher of 60%

AMI rents or the committed contract USDA Basic rents. The committed contract

rent income for units with existing project-based Section 8 rental subsidy shall be

documented by the current monthly contract rent in place at the time of the

application or by contract rent committed to and approved by the subsidy source

(HUD); rent from a rent comparable study or post-rehabilitation rent shall not be

permitted. The rent differential for projects with public operating subsidies shall

equal the annual subsidy amount in year 1, provided the subsidy will be of a similar

amount in succeeding years, or the aggregate subsidy amount of

the contract

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divided by the number of years in the contract if the contract does not specify an

annual subsidy amount.

(ii)

soft loans that meet the criteria described in subparagraph (i) (except that terms

shall be of at least 55 years), or grants, from unrelated non-public parties that are

not covered by subparagraph (i) and that do not represent financing av

ailable

through

the National Mortgage Settlement Affordable Rental Housing Consumer

Relief programs. The party providing the soft loans or grants shall not be a partner

or proposed partner in the limited partnership (unless the partner has no

ownership interest and only the right to complete construction) and shall not

receive any benefit or funds from a related party to the project. The ap

plication

shall

include (1) a certification from an independent Certified Public Accountant

(CPA) or independent tax attorney that the leveraged soft resource(s) is from an

unrelated

non-public entity(ies), that the unrelated non-public entity(ies) shall not

receive any benefit or funds from a related party to the project, and that the

leveraged soft resource(s) is available and not committed to any other project o

use; and (2)

a narrative from the applicant regarding the nature and source of the

leveraged soft resource(s) and the conditions under which it was given. S

eller

carryback

financing and any portion of a loan from a non-public seller or r

elated

party that is less than or equal to sale proceeds due the seller shall be excluded

for purposes of the tiebrea

ker.

(iii)

the value of donated land and improvements that are not covered

subparagra

ph (i), that meet the criteria described in subparagraph (i), and that are

contributed by an unrelated entity (unless otherwise approved by the Executive

Director), so long as the contributed asset has been held by the entity for at l

east

years prior to the application due date, except for the value of donated land

and

improve

ments in the case of a rehabilitation project subject to an

existing

regulatory

agreement with CTCAC or a federal, state, or local public entity or w

ith

greater

than 25% of the units receiving project-based rental assistance unless the

land and improvements are wholly donated. For a case in which the donor is a

non-profit organization acting solely as a pass-through entity, the Executive

Director may in advance of the application date approve an exception to the 5-

year hold rule provided that the donor to the non-profit organization held the

contributed asset for at least 5 years and that both the original donor and non-

profit donor meet the requirements of, and are included in the certif

ications

required

by, this paragraph. The party providing the donation shall not be a

partner

proposed partner in the limited partnership (unless the partner has no

ownership interest and only the right to complete construction) and shall not

receive any benefit from a related party to the project. In addition, the land

shall

not

have been owned previously by a related party or a partner or p

roposed

partner

(unless the partner has no ownership interest and only the right t

complete

construction). The application shall include a certification from an

independent Certified Public Accountant (CPA) or independent tax attorney that

the donation is from an unrelated entity and that the unrelated entity shall not

receive any benefit from a related party to the project.

(iv)

For purposes of this section, a related party shall mean a member of the

development team or a Related Party, as defined in Section 10302(gg), to a

member of the development team.

(v)

For 4% credit applications, recycled private activity bonds (whether they be used

for construction or permanent financing or both) shall be considered leveraged

soft resources so long as the loan terms are consistent with ma

rket standards.

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Page 53 of 99

Permanent funding sources for this tiebreaker shall not include equity commitments

related to the Low Income Housing Tax Credits.

Land donations include land leased for a de minimis annual lease payment. CTCAC

may contract with an appraisal reviewer and, if it does so, shall commission an

appraisal review for donated land and improvements if a reduction of 15% to the

submitted appraisal value would change an award outcome. If the appraisal review

finds the submitted appraisal to be inappropriate, misleading, or inconsistent with the

data reported and with other generally known information, then the reviewer shall

develop his or her own opinion of value and CTCAC shall use the opinion of value

established by the appraisal reviewer for calculating the tiebreaker only.

The numerator of projects of 50 or more newly constructed or adaptive reuse Tax

Credit Units shall be multiplied by a size factor equal to seventy five percent plus the

total number of newly constructed or adaptively reused Tax Credit Units divided by

200 (75% + (total new construction/adaptive reuse units/200)). The size factor

calculation shall be limited to no more than 150 Tax Credit Units.

In the case of a new construction hybrid 9% and 4% tax credit development which

meets all of the following conditions, the calculation of the size factor for the 9%

application shall include all of the Tax Credit Units in the 4% application up to the limit

described above, the leveraged soft resources ratio calculated pursuant to this

subparagraph (A) shall utilize the combined amount of leveraged soft resources

defraying residential costs and the combined total residential project development

costs from both the 9% and 4% applications, and the ratio calculated pursuant to

subparagraph (B) shall also utilize the combined total residential project development

costs from both the 9% and 4% applications:

(i)

the 4% application shall have been submitted to CTCAC and CDLAC by t

9% application deadline;

(ii)

the 4% and 9% projects are simultaneous phases, as defined in Section

10327(c)(2)(C);

(iii)

the 4% application is eligible for maximum points under Sections

10325(c)(3),

(4)(B),

(5), and (6), except that 1) the 4% application may be eligible f

maxi

mum points in the lowest income category in combination with the 9%

project, and 2) the 4% application may be eligible for maximum housing type

points in combination with the 9% project. Under each exception, the

project

shall also be scored in the corresponding point category in c

ombination

with the 4% project; and

(iv)

developers shall defer or contribute as equity to the project any amount o

combined

4% and 9% developer fees in cost that are in excess of the limit

pursuant to Section 10327(c)(2)(A) plus $20,000 per unit for each Tax C

redit

Unit

in excess of 100, using (a) the combined Tax Credit Units of the 9% and

4% components, (b) the combined eligible basis of the 9% and 4%

components, and (c) the high-cost test factor calculated using the eligible b

asis

and threshold basis limits for the 9% component.

the event that the 4% component of a hybrid project that receives an increase to its

size factor pursuant to this paragraph is not placed in service within 6 months of the

9% component, both applicants shall be subject to negative points.

If the project’s paid purchase price exceeds appraised value, the leveraged soft

resources amount shall be discounted by the overage, unless the Executive Director

has granted a waiver pursuant to Section 10327(c)(6).

Regulations

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Page 54 of 99

(B) One (1) minus the ratio of requested unadjusted eligible basis to total residential

project development costs, with the r

esulting figure divided by two.

(C)

Except as provided below, a new construction Large Family housing type projec

(excluding

a Special Needs project with non-special needs Low-Income Units

meeting

Large

Family housing type requirements) shall receive a higher resource area

bonus

follows based on the designation of the project’s location on the TCAC

/HCD

Opportunity

Area Map:

The project is non-rural and the project’s census tract is a Highest Resource area

20 percentage points

The project is non-rural and the project’s census tract is a High Resource area

10 percentage points

The project is rural and project’s census tract or census block group as applicable is

a Highest Resource area 10 percentage points

The project is rural and the project’s census tract or census block group as applicable

is a High Resource area 5 percentage points

This bonus shall not apply to projects competing in the Native American

apportionment, unless such projects fall into the rural set-aside competition. In

addition, this bonus shall not apply to an inclusionary project, which for purposes of

this subparagraph shall mean a project in which any of the Low-Income Units satisfy

the obligations of an inclusionary housing ordinance or other development agreement

negotiated between a public entity and private developer, unless the obligations derive

solely from the Low-Income Units themselves or unless the project includes at least

40 Low-Income Units that are not counted towards the obligations of the inclusionary

housing ordinance or development agreement. An application for a large family new

construction project located in a High or Highest Resource area shall disclose whether

or not the project includes any Low-Income Units which satisfy the obligations of an

inclusionary housing ordinance or development agreement and, if so, the number of

such units and whether the inclusionary obligations derive solely from the Low-Income

Units themselves.

An applicant may choose to utilize the census tract, or census block group as

applicable, resource designation from the TCAC/HCD Opportunity Maps in effect

when the initial site control was obtained up to seven calendar years prior to the

application.

The resulting tiebreaker score must not have decreased following award or negative points

may be awarded.

(d)

Application selection for evaluation. Except where CTCAC staff determines a project to be

high

cost,

staff shall score and rank projects as described below. Staff shall identify high cost projec

comparing each scored project’s total eligible basis against its total adjusted threshold

basis

limits.

CTCAC shall calculate total eligible basis by using all project costs listed within the

application unless those costs are not includable in basis under federal law as demonstrated

the

shaded cells in the application sources and uses budget itself or by a letter from t

developmen

t team’s third party tax professional. A project will be designated “high cost” if a

project’s total eligible basis exceeds its total adjusted threshold basis limit by 30%. Staff shall

not

recommend such pro

ject for credits. Any project that receives a reservation on or after January 1,

2016 may be subject to negative points if the project’s total eligible basis at placed in s

ervice

exceeds

the revised total adjusted threshold basis limit by 40%. For purposes of calculating the

Regulations

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high cost test at placed in service, CTCAC shall use the higher of the unadjusted threshold basis

limit from application or the year the project places in services.

Following the scoring and ranking of project applications in accordance with the above criteria,

subject to conditions described in these regulations, reservations of Tax Credits shall be made for

those applications of highest rank in the following manner.

(1)

Set-aside application selection. Beginning with the top-ranked application from t

Nonprofit

set-aside, followed by the Rural set-aside (funding the RHS and HOME prog

ram

apportionment

first, and the Tribal pilot apportionment second), the At Risk set-aside, and

the Special Needs set-aside, the highest scoring applications will have Tax C

redits

reserved.

Credit amounts to be reserved in the set-asides will be established at the

exact

percentages

set forth in section 10315, with the exception of the Federal Credit amount

established by the Further Consolidated Appropriations Act, 2020 and the

Consolidated

Appropriations

Act, 2021. If the last project funded in a set-aside requires more than

the

credits

remaining in that set-aside, such overages in the first funding round will be

subtracted from that set-aside in determining the amount available in the set-aside for t

second

funding round. If Credits are not reserved in the first round they will be added

second round amounts in the same Set Aside. If more Tax Credits

are reserved to the last

project in a set-aside than are available in that set-aside during the second funding round,

the overage will be taken from the Supplemental Set-Aside if there are sufficient funds.

not,

the award will be counted against the amounts available from the geographic area in

which the project is located. Any unused credits from any Set-Asides will be transferred to

the Supplemental Set-Aside and used for Waiting List projects after the second round. Tax

Credits reserved in all set-asides shall be counted within the housing type goals.

(A)

For an application to receive a reservation within a set-aside, or within a rural set-

aside apportionment, there shall be at least one dollar of Credit not yet reserved

the set-aside or apportionment.

(B)

Set-aside applications requesting State tax credits shall be funded, even when State

credits for that year have been exhausted. The necessary State credits shall be

reserved from the subsequent year’s aggregate annual State credit allot

ment.

(C)

Except for projects competing in the rural set-aside, which shall not be eligible to

compete in geographic area, unless the projects are located within a

Geographic

Region

and no other projects have been funded within the Project’s region

during

the

year in question, after a set-aside is reserved all remaining applications

competing within the set-aside shall compete in the Geographic Region.

Federal Credit established by the FCAA application selection. Applications for projects

located in the counties designated as qualified 2017 and 2018 California disaster areas by

the FCAA, FCAA Federal Credit shall only be reserved for (1) new construction projects

also including projects that involve the demolition or rehabilitation of existing residential

units that increase the unit count by (i) 25 or (ii) 50% of the existing units, whichever is

greater, and adaptive re-use of non-residential structures, or (2) reconstruction or

rehabilitation of an existing project located within a FCAA disaster area fire perimeter, as

designated by CAL FIRE and available on the CTCAC website

https://www.treasurer.ca.gov/ctcac/, and directly damaged by the fire, and that apply for the

FCAA Federal Credit. Applications shall meet all program eligibility requirements unless

stated otherwise below, and located in the following counties: Butte, Lake, Los Angeles,

Mendocino, Napa, Nevada, Orange, San Diego, Santa Barbara, Shasta, Sonoma, Ventura,

and Yuba.

Applications for projects applying for FCAA Federal Credit shall be competitively scored

within the county apportionment under the system delineated in Sections 10325(c)(1)

through (3), (4)(B), and (6). In the cases where applications receive the same score, the

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following tiebreakers shall be employed: First, a formal letter of support for the specific

project from the Local Reviewing Agency (LRA) outlining how the project will contribute to

the community’s recovery efforts submitted in the application or received by CTCAC no later

than 14 days following the application filing deadline; Second, the application with the

greatest number of proposed Tax Credit Units per annual Federal Tax Credit amount

requested; and Third, the application with the greatest number of proposed bedrooms within

the proposed Tax Credit Units.

For projects located within a FCAA disaster area fire perimeter, as designated by CAL FIRE

and available on the CTCAC website https://www.treasurer.ca.gov/ctcac/, applying for

FCAA Federal Credit in the 2020 funding round, local approvals and zoning requirements

of Section 10325(f)(4) must be evidenced to CTCAC no later than June 1, 2021. Failure to

do so shall result in rescission of the Tax Credit Reservation on June 2, 2021. The deadline

in this paragraph may be extended if the Executive Director finds, in his or her sole

discretion, a project merits additional time due to delays directly caused by fire, war, or act

of God. In considering a request, the Executive Director may consider, among other things,

the length of the delay and the circumstances relating to the delay.

The deferred-payment financing commitment requirements of Section 10325(f)(8) are

modified for FCAA Federal Credit applications with 2017 and 2018 HCD Community

Development Block Grant – Disaster Recovery (CDBG-DR) Multifamily financing as follows:

a letter from an HCD identified jurisdiction stating the intent to commit a portion of that

jurisdiction’s HCD allocation. The letter must provide the dollar amount and the estimated

date which the jurisdiction will provide CTCAC a written commitment in compliance with the

requirements of Section 10325(f)(8). Projects must receive these CDBG-DR funds prior to

the CTCAC placed-in service application deadline.

FCAA Federal Credit shall be made available starting in the 2020 second funding round in

the amounts shown below:

ANNUAL FEDERAL

TAX CREDIT BASE

+ LOST UNIT

ALLOCATION

COUNTY

$40,087,453 Butte

$16,365,940 Sonoma

$5,630,499 Los Angeles

$5,421,263 Shasta

$4,975,965 Ventura

$4,109,511 Napa

$3,342,311 Mendocino

$3,259,153 Lake

$2,886,283 Yuba

$2,816,537 San Diego

$2,583,158 Santa Barbara

$2,580,476 Nevada

$2,561,698 Orange

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$2,000,000 Supplemental

$98,620,247 TOTAL

The

funding order shall be followed by funding the highest scoring application, if any, in

each of the 13 counties. After each county has had the opportunity to fund one project,

CTCAC shall award the second highest scoring project in each county, if any, and continue

cycling through the counties, filling each county’s apportionment.

For an application to receive a FCAA Federal Credit reservation, there shall be at least one

dollar of Credit not yet reserved in the county allocation so long as the county’s last award

does not cause the county’s aggregate award amount to exceed 105 percent (105%) of the

amount originally available for that county. FCAA Federal Credit allocated in excess of the

county’s allocation by the application of the 105% rule described above will be deducted

from the Supplemental allocation. If the last application requires credits in excess of 105%

of the county’s allocation, that application will not be funded. If all FCAA Federal Credit in a

funding round has been awarded, all remaining FCAA applications shall compete in the

applicable set-aside or geographic region, provided the application meets the requirements

of the set-aside or geographic region, and the requirements of Section 10325.

At the conclusion of the funding round, if less than 10% of the total FCAA Federal Credit

remains, all unallocated FCAA Federal Credit within the county allocations will be combined

and available to remaining projects requesting FCAA Federal Credits and which meet the

threshold and underwriting requirements through a waiting list. The award selection will be

made from the waiting list to the counties in the order listed above. Within each county, the

award selection will start with the highest ranking project located within a FCAA disaster

area fire perimeter, as designated by CAL FIRE and available on the CTCAC website

https://www.treasurer.ca.gov/ctcac/ first and continue within that county in rank order until

no eligible applications remain. Subsequent to the above selection ranking, any unused

FCAA Federal Credit shall be designated for projects where at least fifty percent (50%) of

the Low-Income Units within the project are designated for homeless households as

described in Sections 10315(b)(1) through (4) starting with the highest ranking project

pursuant to Section 10325(c) without regard to the set aside or geographic region for which

the application applied.

All projects awarded FCAA Federal Credit in 2020 may return their allocation to the

Committee without assessment of negative points if the formal written notification from the

applicant of the return is received by the Committee no later than September 1, 2021. Any

returned credits following September 1, 2021 will be made available to projects from the

FCAA Federal Credit waiting list as previously stated. Any new application received for a

project on the waiting list shall result in that project’s removal from the waiting list.

The FCAA Federal Credit amount shall not be counted towards the set asides of Section

10315, the housing type goals of Section 10315(h), or the geographic apportionments of

Section 10315(i). Applications for FCAA Federal Credit shall not be counted towards the

four (4) awards limit of Section 10325(c). Notwithstanding Section 10325(f)(9)(C), the

maximum annual Federal Tax Credits available for award to any one project in any funding

round applying for FCAA Federal Credit shall not exceed Five Million Dollars ($5,000,000).

Applications for FCAA Federal Credit are not eligible for State Tax Credits.

Federal Credit established by the CAA application selection. Applications for projects

located in the counties designated as qualified 2020 California disaster areas by the CAA,

CAA Federal Credit shall only be reserved for (1) new construction projects also including

projects that involve the demolition or rehabilitation of existing residential units that increase

the unit count by (i) 25 or (ii) 50% of the existing units, whichever is greater, and adaptive

re-use of nonresidential structures, or (2) reconstruction or rehabilitation of an existing

project located within a CAA or FCAA disaster area fire perimeter, as designated by CAL

FIRE and available on the CTCAC website https://www.treasurer.ca.gov/ctcac/, and directly

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damaged by the fire, and that apply for the CAA Federal Credit. Applications shall meet all

program eligibility requirements unless stated otherwise below, and located in the following

counties: Butte, Fresno, Lake, Lassen, Los Angeles, Madera, Mendocino, Monterey, Napa,

San Bernardino, San Diego, San Mateo, Santa Clara, Santa Cruz, Shasta, Siskiyou,

Solano, Sonoma, Stanislaus, Trinity, Tulare, and Yolo.

Applications for projects applying for CAA Federal Credit shall be competitively scored

within the county/regional apportionment under the system delineated in Sections

10325(c)(1) through (8). At the sole discretion of the Executive Director, an extension of up

to 90 days may be granted to the 180/194 day readiness deadline. In the cases where

applications receive the same score, the following tiebreakers shall be employed: First,

projects located within a CAA or FCAA disaster area fire perimeter, as designated by CAL

FIRE and available on the CTCAC website https://www.treasurer.ca.gov/ctcac/, and not

opposed or strongly opposed by the Local Reviewing Agency (LRA); Second, the presence

of an enforceable financing commitment to the specific project of at least $1,000,000 from

the State of California Department of Housing and Community Development (“HCD”) and

assuming a 4% tax credit financing structure such that the Federal Tax Credit request

divided by the total eligible basis does not exceed 7.5%; and Third, the application with the

greatest number of proposed bedroom-adjusted Tax Credit Units per annual Federal Tax

Credit amount requested. To calculate the bedroom-adjusted units, each Tax Credit Unit

will be multiplied by the adjustment factor for units of that bedroom count. A project’s

adjusted units shall be the sum of each of these products. The adjustment factors shall be:

 .9 for a studio unit.

 1

for a one-bedroom unit.



.25 for a two-bedroom unit.



1.5 for a three-bedroom unit up to no more than 30% of the total units, then such

additional units shall be counted as 2-bedroom units.

 1.75 for a four-bedroom or larger unit up to no more than 10% of the total units

then such a

dditional units shall be counted as 2-bedroom units.

The deferred-payment financing commitment requirements of Section 10325(f)(8) are

modified for CAA Federal Credit applications with HCD Community Development Block

Grant – Disaster Recovery (CDBG-DR) Multifamily financing as follows: a letter from an

HCD identified jurisdiction stating the intent to commit a portion of that jurisdiction’s HCD

allocation. The letter must provide the dollar amount and the estimated date which the

jurisdiction will provide CTCAC a written commitment in compliance with the requirements

of Section 10325(f)(8). Projects must receive these CDBG-DR funds prior to the CTCAC

placed-in service application deadline.

CAA Federal Credit shall be made available starting in the 2021 second funding round in

the amounts shown below:

ANNUAL FEDERAL

TAX CREDIT BASE +

LOST UNIT

ALLOCATION

COUNTY/ REGION

$17,261,698 Butte County

$12,058,293 Santa Cruz County

$9,395,477 Napa County

$8,714,494 North Region (San Mateo, Santa Clara, Shasta,

Solano, Stanislaus, and Yolo Counties)

$8,609,728 Fresno County

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$8,408,925 Sonoma County

$7,553,332 South Region (Madera, Monterey, Los Angeles,

San Bernardino, San Diego, and Tulare Counties)

$6,741,391 Rural (Lake, Lassen, Mendocino, Siskiyou, and

Trinity Counties)

$2,000,000 Supplemental

$80,743,338 TOTAL

The

funding order shall start with applications selected in rank order within each

county/region in the order above. For an application to receive a CAA Federal Credit

reservation, there shall be at least one dollar of Credit not yet reserved in the county/region

allocation so long as the county/region’s last award does not cause the county/region

aggregate award amount to exceed 105 percent (105%) of the amount originally available

for that county/region. CAA Federal Credit allocated in excess of the county/region’s

allocation by the application of the 105% rule described above will be deducted from the

Supplemental allocation. If the last application selected requires credits in excess of 105%

of the county/region’s allocation, that application will not be funded. Any CAA Federal Credit

remaining in a county/region apportionment at the end of a funding round will be available

in the subsequent round. For the final funding round of 2022 for CAA Federal Credits, if the

aggregate amount of Federal Credit requested does not exceed the amount available, the

105% county limit above shall not apply. If all CAA Federal Credit in a funding round has

been awarded, all remaining CAA applications shall compete in the applicable set-aside or

geographic region, provided the application meets the requirements of the set-aside or

geographic region, and the requirements of Section 10325.

At the conclusion of the funding round, if less than 10% of the total CAA Federal Credit

remains, all unallocated CAA Federal Credit within the county/region allocations will be

combined and available to remaining projects requesting CAA Federal Credits and which

meet the threshold and underwriting requirements through a waiting list. The award

selection will be made from the waiting list to the counties in order number of lost homes

highest to lowest. Within each county, the award selection will start with the highest ranking

project located within a CAA or FCAA disaster area fire perimeter, as designated by CAL

FIRE and available on the CTCAC website https://www.treasurer.ca.gov/ctcac/ first and

continue within that county in rank order until no eligible applications remain.

The CAA Federal Credit amount shall not be counted towards the set asides of Section

10315, the housing type goals of Section 10315(h), or the geographic apportionments of

Section 10315(i). Applications for CAA Federal Credit shall not be counted towards the four

(4)

awards limit of Section 10325(c). Notwithstanding Section 10325(f)(9)(C), the maximu

annual

Federal Tax Credits available for award to any one project in any funding round

applying for CAA Federal Credit shall not exceed Four Million Dollars ($4,000,000).

Applications for CAA Federal Credit are not eligible for State

Tax Credits.

(2)

Geographic Areas selection. Tax Credits remaining following reservations to all

set-asides

shall

be reserved to projects within the geographic areas, beginning with the

geographic

area

having the smallest apportionment, and proceeding upward according to size in the

first funding round and in reverse order in the second funding round. The funding order s

hall

followed by funding the highest scoring application, if any, in each of the eleven regions.

After each region has had the opportunity to fund one project, TCAC shall award the second

highest scoring project in each region, if any, and continue cycling through the re

gions,

filling

each geographic area’s apportionment. Projects will be funded in order of their rank

so long as the region’s last award does not cause the region’s aggregate award amount t

exceed

125 percent (125%) of the amount originally available for that region in that f

unding

round.

Credits allocated in excess of the Geographic Apportionments by the application

the

125% rule described above will be drawn from the second round apportionments during

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the first round, and from the Supplemental Set Aside during the second round. However, all

Credits drawn from the Supplemental Set Aside will be deducted from the Apportionment in

the subsequent round.

When the next highest-ranking project does not meet the 125% rule then the Committee

shall skip over the next highest-ranking project to fund a project requesting a smaller credit

award that does meet the 125% requirement. However, no project may be funded by this

skipping process unless it (a) has a point score equal to that of the first project skipped, and

(b)

has a final tiebreaker score equal to at least 75% of the first skipped project’s

final

tiebreaker score.

the extent that there is a positive balance remaining in a geographic area after a funding

round, such amount will be added to the amount available in that geographic area in the

subsequent funding round. Similarly, to the extent that there is a deficit in a geographic

area after a funding round, such amount will be subtracted from the funds available for

reservation in the next funding round. Any unused credit from the geographic areas in the

second funding round will be added back into the Supplemental Set-Aside. Tax credits

reserved in all geographic areas shall be counted within the housing type goals.

(e)

Application Evaluation. To receive a reservation of Tax Credits, applications selected pursuant t

subsection

(d) of this Section, shall be evaluated, pursuant to IRC Section 42, H & S Code Sections

50199.4 through 50199.22, R & T Code Sections 12206, 17058, and 23610.5, and these

regulations to determine if; eligible, by meeting all program eligibility requirements; complete, which

includes meeting all basic threshold and additional threshold requirements; and financially feasible.

In scoring and evaluating project applications, the Executive Director shall have the discretion

interpret

the intent of these regulations and to score and evaluate applications accord

ingly.

Applicants

understand that there is no “right” to receive Tax Credits under these regulations. The

Committee shall make available to the general public a written explanation for any allocation of

Tax

Credits

that is not made in accordance with the established priorities and selection criteria of thes

Regulations.

(f)

Basic Thresholds. An application shall be determined to be complete by demonstration of meeting

the following basic threshold requirements, among other tests. All basic thresholds shall be met

the

time the application is filed through a presentation of conclusive, documented evidence to t

Executive Di

rector’s satisfaction.

(1)

Housing need and demand. Applicants shall provide evidence that the type of

housing

proposed,

including proposed rent levels, is needed and affordable to the targeted

population within the community in which it is located, with evidence including a

market

study

that meets the current market study guidelines distributed by the Committee. Market

studies will be assessed thoroughly. Meeting the requirements of subsection (B) below is

essential, but because other elements of the market study will also be considered, meeting

those requirements in subsection (B) will not in itself show adequate need and demand

for

proposed project or ensure approval of a given project. Evidence shall be conclusive,

and include the most recent documentation available (prepared within one year of the

application date and updated, if necessary). Evidence of housing need and demand

shall

include, but

is not limited

to:

(A)

evidence of public housing waiting lists, by bedroom size and tenant type, if

available, from the local housing aut

hority; and

(B)

except as provided in Section 10322(h)(10), a market study as described in Section

10322(h)(10) of these regulations, which provides evidence that

(i)

The proposed tenant paid rents for each affordable unit type in the proposed

development will be at least ten percent (10%) below the weighted average rent

for the same unit types in comparable market rate rental properties;

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(ii) Except for special needs rehabilitation projects in which at least 90% of the total

units

are SRO units, the proposed unit value ratio stated as dollars per s

quare

foot

($/s.f.) will be no more than the weighted average unit value ratios f

comparable market rate units;

(iii)

In rural areas without sufficient three- and four-bedroom market rate r

ental

comparables,

the market study must show that in comparison to three- and four-

bedroom market rate single family homes, the affordable rents will be at least

20% below the rents for single family homes and the $/s.f. ratio will not e

xceed

that of the single family homes; and

(iv)

The demand for the proposed project’s units must appear strong enough to

reach stabilized occupancy – 90% occupancy for Special Needs projects and

95% for all other projects – within six months of being placed in service for

projects of 150 units or less, and within 12 months for projects of more than 150

units and se

nior projects.

(2)

Demonstrated site control. Applicants shall provide evidence that the subject property i

within the co

ntrol of the applicant.

(A)

Site control may be ev

idenced by:

(i)

a current title report (within 90 days of application except as provided in S

ection

10322(h)(35)

(or preliminary title report, but not title insurance or commitment

to insure) showing the applicant holds fee title or, for tribal trust land, a title

status report or an attorney’s opinion regarding chain of title and current t

itle

status;

(ii)

an executed lease agreement or lease option for the length of time the project

will be regulated under this program connecting the applicant and the owner of

the subject

property;

(iii)

an executed disposition and development agreement connecting the applicant

and a public agency; or,

(iv)

a valid, current, enforceable contingent purchase and sale agreement or

option

agreement

connecting the applicant and the owner of the subject property.

Evidence must be provided at the time of the application that all

extensions

and

other conditions necessary to keep the agreement current through the

application filing deadlin

e have been executed.

(B)

A current title report (within 90 days of application except as provided in Section

10322(h)(35) (or preliminary title report, but not title insurance or commitment t

insure)

or for tribal trust land a title status report or an attorney’s opinion r

egarding

chain

of title and current title status, shall be submitted with all applications for

purposes of this threshol

d requirement.

(C)

The Executive Director may determine, in her/his sole discretion, that site

control

has

been demonstrated where a local agency has demonstrated its intention to

acquire the site, or portion of the site, through eminent domai

n proceedings.

(3)

Enforceable financing commitment. Applicants shall provide evidence of

enforceable

financing

commitments for at least fifty percent (50%) of the acquisition and construction

financing, or at least fifty percent (50%) of the permanent financing, of the prop

osed

project’s

estimated total acquisition and construction or total permanent financing

requirements. An “enforceable financing commitment” must:

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(A) be in writing, stating rate and terms, and in the form of a loan, grant or an approval

of the assig

nment/assumption of existing debt by the mortgagee;

(B)

be subject only to conditions within the control of the applicant, but for obtaining

other financing sources including an

award of Tax Credits;

(C)

have a term of at least fifteen (15) years if it is permanent financing;

(D)

demonstrate feasibility for fifteen (15) years at the underwriting interest rate, if it is

variable or adjustable int

erest rate pe

rmanent loan; and,

(E)

be executed by a lender other than a mortgage broker, the applicant, or an

entity

with

an identity of interest with the applicant, unless the applicant is a lending

institution actively and regularly engaged in residential lending

; and

(F)

be accepted in writing by the proposed mortgagor or grantee, if private financing.

Substitution of such funds after a Reservation of Tax Credits may be permitted only when

the source of funding is similar to that of the original funding, for example, use of a bank

loan to substitute for another bank loan, or public funds for other public funds. General

Partner loans or developer loans must be accompanied by documented proof of funds being

available at the time of application. In addition, General Partner or developer loans to the

project are unique, and may not be substituted for or foregone if committed to within the

application. After a Reservation of Tax Credits an applicant may substitute Affordable

Housing Program (AHP) funds provided pursuant to a program of the Federal Home Loan

Bank for any other source.

Projects awarded under a Nonprofit set-aside homeless assistance priority or a Rural set-

aside RHS or HOME apportionment pursuant to a funding commitment may not substitute

other funds for this commitment after application to CTCAC. Failure to retain the funding

may result in an award of negative points.

For projects using FHA-insured debt, the submission of a letter from a Multifamily

Accelerated Processing (MAP) lender stating that they have underwritten the project and

that it meets the requirements for submittal of a multifamily accelerated processing firm

commitment application to HUD.

(4)

Local approvals and Zoning. Applicants shall provide evidence, at the time the application

is filed, that the project as proposed is zoned for the intended use, and has obtained

all

applicable

local land use approvals which allow the discretion of local elected officials to be

applied, except that an appeal period may run 30 days beyond that application due date.

Examples of such approvals include, but are not limited to, general plan

amendments,

rezonings,

and conditional use permits. Notwithstanding the first sentence of t

his

subsection,

local land use approvals not required to be obtained at the time of application

include, design review, initial environmental study assessments, variances,

and

developmen

t agreements. The evidence must describe the local approval process, the

applicable approvals, and whether each required approval is “by right,” ministerial,

discretionar

y. When the appeal period, if any, is concluded, the applicant must

provide

proof

that either no appeals were filed, or that any appeals filed during that time period

were

resolved within that 30-d

ay period and the project is ready to proceed.

The Committee may require, as evidence to meet this requirement, submission of

Committee-provided

form letter to be signed by an appropriate local government pl

anning

official

of the applicable local jurisdiction, including acknowledgment of any zoning or land

use approvals pursuant to a state streamlined approval requirem

ent.

(5)

Financial feasibility. Applicants shall provide the financing plan for the proposed pr

oject,

and

shall demonstrate the proposed project is financially feasible and viable as a qua

lified

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low income housing project throughout the extended use period. A fifteen-year pro forma

of all revenue and expense projections, starting as of the planned placed in service date for

new construction projects, and as of the rehabilitation completion date for

acquisition/rehabilitation projects, is required. The financial feasibility analysis shall use all

underwriting criteria specified in Section 10327 of these regulations.

(6)

Sponsor characteristics. Applicants shall provide evidence that proposed project

participants, as a Development Team, possess all of the knowledge, skills, experience

and

financial

capacity to successfully develop, own and operate the proposed project. The

Committee may conduct an investigation into an applicant’s background that it

deems

necessary,

in its sole discretion, and may determine if any of the evidence provided

shall

disqualify

the applicant from participating in the Credit programs, or if

additional

Developme

nt Team members need be added to appropriately perform all pr

ogram

requirements.

(7)

Minimum construction standards. For preliminary reservation applications, applicants

shall

provide

a statement that the following minimum specifications will be incorporated into the

project design for all new construction and rehabilitation projects. In addition, a state

ment

shall

commit the property owner to at least maintaining the installed energy efficiency

and

sustainabilit

y features’ quality when replacing each of the following listed systems

materials

(A)

Energy Efficiency. All rehabilitated buildings, both competitive and non-competitive,

shall have improved energy efficiency above the modeled energy consumption

the

building(s) based on existing conditions documented using the Sustainable

Building Method Workbook’s CTCAC Existing Multifamily Assessment

Protocols

and

reported using the CTCAC Existing Multifamily Assessment Report template.

Rehabilitated buildings shall document at least a 10% post-rehabilitation

improvement over existing conditions energy efficiency achieved for the project as

a whole, except that Scattered Site applications shall also document at least a 5%

post-rehabilitation improvement over existing conditions energy efficiency

achieved

for

each site. In the case of projects in which energy efficiency improvements have

been completed within five years prior to the application date pursuant to a public or

regulated utility program or other governmental program that established

existing

conditions of the systems being replaced using a HERS Rater, the applicant may

include

the existing conditions of those systems prior to the improvements.

Furthermore, rehabilitation applicants must submit a completed Sustainable

Building Method Workbook with their placed-in-service application unless they a

developing

a project in accordance with the minimum requirements of Leadership in

Energy & Environmental Design (LEED), Passive House Institute US (PHIUS

Passive

House, Living Building Challenge, National Green Building Standard ICC /

ASRAE – 700 silver or higher rating or GreenPoint Rated Program

(B)

Landscaping. If landscaping is to be provided or replaced, a variety of plant and

tree species that require low water use shall be provided in sufficient quantitie

based

on landscaping practices in the general market area and low maintenance

needs. Projects shall follow the requirements of the state Model Water E

fficient

Landscape Ordinance

(http://www.

water.ca.gov/wateruseefficiency/landscapeordinance/) unless a local

landscape ordinance has been determined to be at least as stringent as the

current

model ordinance.

(C)

Roofs. Newly installed roofing shall carry a three-year subcontractor guarantee

and

at least a 20

-year manufacturer’s warranty.

(D) Exterior doors. If exterior doors are to be provided or replaced, insulated or solid

core, flush, paint or stain grade exterior doors shall be made of metal clad, hardwood

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faces, or fiberglass faces, with a standard one-year guarantee and all six sides

primed.

(E)

Appliances. All Low-Income Units shall provide a refrigerator. All non-SRO Low-

Income Units shall provide a range (cooktop and oven), and all SRO Low-Income

Units shall include a cooking facility (at least a cooktop or microwave). The

Executive Director may waive the refrigerator and cooking facility requirement f

SRO

units if the project includes a common area kitchen facility for tenants.

Refrigerators, dishwashers, clothes washers and dryers provided or replaced

within

Low-Income

Units and/or in on-site community facilities shall be ENERGY STA

rated applia

nces, unless waived by t

he Executive Director.

(F)

Window coverings. Window coverings shall be provided and may include

fire

retardant drapes or blind.

(G)

Water heater. If water heaters are to be provided or replaced, for Low-Income

Units

with

individual tank-type water heaters, minimum capacities are to be 28 gallons for

one- and two-bedroom units and 38 gallons for three-bedroom units or la

rger.

(H)

Floor coverings. If floor coverings are to be provided or replaced, a hard, w

ater

resistant,

cleanable surface shall be required for all kitchen and bath areas. Any

carpet provided or replaced shall comply with U.S. Department of Housing and

Urban Development/Federal Housing Administration UM44D.

(I)

All fiberglass-based insulation provided or replaced shall meet the Greenguard Gold

Certification

(http://greenguard.org/en/Certificatio

nPrograms/CertificationPrograms_childrenSch

ools.aspx

(J)

Consistent with California State law, projects with 16 or more Low-Income and

Market-Rate Units must have an on-site manager’s unit. Projects with at least 161

Low-Income and Market-Rate Units shall provide a second on-site manager’s

unit

for either another on-site

manager or other maintenance personn

el, and there shall

one additional on-site manager’s unit for either another on-site manager or

other

maintenance

personnel for each 80 Low-Income and Market-Rate Units beyond 161

units, up to a maximum of four on-site manager’s units.

Scattered site projects totaling 16 or more Low-Income and Market-Rate Units must

have at least one on-site manager’s unit for the entire project, and at least

one

manager’s

unit at each site where that site’s building(s) consist of 16 or more Low-

Income and Market-Rate Units. Scattered sites within 100 yards of each other s

hall

be treated a

s a single site for purposes of the on-site manager

rule only.

an applicant or project owner proposes to utilize a low-income unit to m

eet

California

and CTCAC manager unit requirements, the following applies: (1) the unit

is considered a low-income restricted unit and must comply with all

requirements

associat

ed with low-income restricted units; (2) the unit is included in the applicable

fraction; and (3) the tenant cannot be evicted upon employment termination. If

employment is terminated, the project owner is responsible for continuing to m

eet

California

and CTCAC onsite manager unit requirements. Any application proposing

to utilize a low-income unit to meet California and CTCAC manager unit

requirements must include a description in the application of how the project

will

meet those requirements if employment is terminated.

lieu of on-site manager units, a project may commit to employ an

equivalent

number

of on-site full-time property management staff (at least one of whom is

property

manager) and provide an equivalent number of desk or security staff

who

Regulations

Section 10325

Page 65 of 99

are not tenants and are capable of responding to emergencies for the hours when

property management staff is not working. All staff or contractors performing desk

or security work shall be knowledgeable of how the property’s fire system operates

and be trained in, and have participated in, fire evacuation drills for tenants. CTCAC

reserves the right to require that one or more on-site managers’ units be provided

and occupied by property management staff if, in its sole discretion, it determines

as part of any on-site inspection that the project has not been adequately operated

and/or maintained.

(K)

All new construction projects shall adhere to the provisions of California Building

Code (CBC) Chapter 11(B) regarding accessibility to privately owned housing made

available for public use in all respects except as follows: instead of the minimu

requirements established in 11B 233.3.1.1 and 11B 233.3.1.3, all new construction

projects

must provide a minimum of fifteen percent (15%) of the Low-Income

Units

with

mobility features, as defined in CBC 11B 809.2 through 11B 809.4, and

minimu

m of ten percent (10%) of the Low-Income Units with commu

nications

features,

as defined in CBC 11B 809.5. These units shall, to the maximum extent

feasible and subject to reasonable health and safety requirements, be distributed

throughout the project consistent with 24 CFR Section 8.26.

Rehabilitation projects shall provide a minimum of ten percent (10%) of the Low-

Income Units with mobility features, as defined in CBC 11B 809.2 through

11B

809.4,

and four percent (4%) with communications features, as defined in CBC 11B

809.5. To the maximum extent feasible and subject to reasonable health and safety

requirements, these units shall be distributed throughout the project consistent with

24 CFR Section 8.26. At least one of each common area facility type and

amenity,

well as paths of travel between accessible units and such facilities and amenities,

the building entry and public right of way, and the leasing office or area shall also be

made accessible utilizing CBC Chapter 11(B) as a design standard. In all

other

respects,

applicable building code will apply. Projects with particular federal, state,

or local funding sources may be required to meet additional acc

essibility

requirements related to these other sources.

Except

for paragraph (J) and (K), if a rehabilitation applicant does not propose to meet the

requirements of this subsection, its Capital Needs Assessment must show that the

standards not proposed to be met are either unnecessary or excessively expensive. The

Executive Director may approve a waiver to paragraph (J) for a new construction or

rehabilitation project, provided that tenants will have equivalent access to management

services. The Executive Director may approve a waiver to paragraph (K) for a rehabilitation

project, provided that the applicant and architect demonstrate that full compliance would be

impractical or create an undue financial burden. All waivers must be approved in advance

by the Executive Director.

Compliance and Verification: For placed-in-service applications, applicants with

rehabilitation projects, with the exception of applicants developing a project in accordance

with the minimum requirements of LEED, PHIUS, Passive House, Living Building

Challenge, National Green Building Standard ICC / ASRAE – 700 silver or higher rating, or

GreenPoint Rated Program must submit a completed Sustainable Building Method

Workbook for subsection (A). For subsections (B) through (l) applicants shall submit LEED,

PHIUS, Passive House, Living Building Challenge, National Green Building Standard ICC /

ASRAE – 700 silver or higher rating, or GreenPoint Rated Program certification or third

party certification confirming compliance from one of the following: a certified HERS Rater,

a certified GreenPoint rater, a US Green Building Council certification, or the project

architect. For Subsection (K), the project architect shall provide third party documentation

confirming compliance. Failure to produce appropriate and acceptable third party

documentation may result in negative points.

Regulations

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Page 66 of 99

(8) Deferred-payment financing, residual receipts payment financing, grants and subsidies.

Applicants shall provide evidence that all deferred-payment financing, residual rec

eipts

payment

financing, grants and subsidies shown in the application are “committed” at the

time of application.

(A)

Evidence provided shall signify the form of the commitment, the loan, grant o

subsidy

amount, the length of the commitment, conditions of participation,

and

express

authorization from the governing body, or an official expressly authorized

to act on behalf of said governing body, committing the funds, as well as the

applicant’s acceptance in the case of privately committed loans

(B)

Commitments shall be final and not preliminary, and only subject to conditions within

the control of the applicant, with one exception, the attainment of other financing

sources including an award of Tax Credits.

(C)

Fund commitments shall be from funds within the control of the entity providing the

commitment at the time of applicatio

(D)

Substantiating evidence of the value of local fee waivers, exemptions or land write-

downs is re

quired.

(E)

Substitution or an increase of such funds after a Reservation of Tax Credits may be

permitted only when the source of funding is similar to the original funding, f

example,

private loan to substitute for private loan, public funds for public fund

AHP

funds may be substituted for any funding source after a Reservation of

Tax

Credits if an

AHP commitment is obtained after the TCAC application due

date.

(9)

Project size and credit amount limitations. Project size limitations shall apply to a

application

s filed, pursuant to this Section.

(A)

Rural set-aside applications shall be limited to a maximum of eighty (80) Low-

Income Units.

Rehabilitatio

n proposals are excepted from this limitation. The Executive

Director

may

grant a waiver if she or he determines that the rural community is unusual in

size or proximity to a nearby urban center, and that exceptional demand exists w

ithin

the market area.

(B)

The total “units” in one or more separate applications, filed by Related Parties,

proposing projects within one-fourth (1/4) mile of one another, filed at any time within

a twelve (12) month period, shall, for purposes of this subsection be subject to t

above

project size limitations, except when specifically waived by the Executive

Director in unusual circumstances such as HOPE VI or large neighborhood

redevelopment proposals pursuant to a specific neighborhood plan. HOPE VI and

other large projects will generally be directed towards the tax-exempt bond

program

(C)

The maximum annual Federal Tax Credits available for award to any one pr

oject in

any

funding round shall not exceed Two Million Five Hundred Thousand

($2,500,000) Dollars.

(10)

Projects applying for competitive Tax Credits and involving rehabilitation of existing

buildings shall be required to complete, at a minimum, the higher of $40,000 in

hard

construction

costs per unit or 20% of the adjusted basis of the building pursuant to

IRC

Section 42(e)(3)(A)(ii)(I).

(11)

(

Existing tax credit projects applying for a new reservation of tax credits for

acquisition and/or rehabilitation (i.e., resyndication) shall maintain the rents and

income targeting levels in the existing regulatory contract for the duration of the new

Regulations

Section 10325

Page 67 of 99

regulatory contract. If the project has exhibited negative cash flow for at least each

of the last three years or within the next five years will lose a rental or operating

subsidy that was factored into the project’s initial feasibility, the Executive Director

may alter this requirement, provided that the new rents and income targeting levels

shall be as low as possible to maintain project feasibility. In addition, the Executive

Director may approve a reduction in the number of units for purposes of unrestricting

a manager’s unit, adding or increasing service or community space, or for adding

bathrooms and kitchens to SRO units, provided that the existing rent and income

targeting remain proportional.

(B)

If the regulatory agreement for an existing tax credit project applying for a

new

reservation

of tax credits for acquisition and/or rehabilitation (i.e., resyndication)

contains a requirement to provide service amenities, even if that requirement has

expired, the project shall provide a similar or greater level of services for a period

least 15 years under the new regulatory agreement. A project obtaining maxim

CTCAC

points for services shall be deemed to have met this requirement. If

the

project

has exhibited cash flow of less than $20,000 for at least each of the last t

hree

years,

will have no hard debt and fail to break even in year 15 with services, or within

the next five years will lose a rental or operating subsidy that was factored into the

project’s initial feasibility, the Executive Director may alter this requirement,

provided

that the service expendit

ures shall be the maximum that project feasibilit

y allows.

(C)

For existing tax credit projects applying for a new reservation of tax credits f

acquisit

ion and/or rehabilitation (i.e., resyndication), the pre-rehabilitation

reserve

study

in the CNA shall demonstrate a rehabilitation need of at least $5,000 per unit

over the first three years. Projects for which the Executive Director has waived

the

requirements

of Section 10320(b)(4) and projects with ten years or less r

emaining

on the CTCAC regulatory agreeme

nt are exempt from this requirem

ent.

(D)

Existing tax credit projects applying for a new reservation of tax credits for

acquisition and/or rehabilitation (i.e., resyndication) shall not have any u

ncorrected

compliance

violations relating to over-income tenants or rent overcharges and

shall

not have any unpaid fines pursuant

to Section 1

0337(f).

(12)

CTCAC shall not accept an application from any party that is debarred from applying

CDLAC.

(13)

A project

that includes Low-Income Units targeted at greater than 60% AMI shall have

average targeting that d

oes not exceed 50% AMI.

project with a tax credit reservation dated prior to, or a submitted application pending

of,

March 26, 2018 may, with the discretionary approval of the Executive Director, revise its

targeting prior to the recordation of the regulatory agreement to include Low-Income Unit

targeted

at greater than 60% AMI only to accommodate existing over-income te

nants,

provided that the average targeting does not exceed 50% AMI.

project including Low-Income Units targeted at greater than 60% AMI shall make the

“Yes” election on line 8b

of the IRS Form 8609.

(g)

Additional Threshold Requirements. To qualify for Tax Credits as a Housing Type as described in

Section 10315(h), to receive points as a housing type, or to be considered a “complete” applicat

ion,

the

application shall meet the following additional threshold requirements. A scattered site m

ore

than

1 mile from the nearest other site shall meet the requirements related to common area

play/recreational facil

ities, and laundry facilities independently.

(1)

Large Family projects. To be considered large family housing, the application shall meet

the following additional threshold requ

irements.

Regulations

Section 10325

Page 68 of 99

(A) At least twenty-five percent (25%) of the Low-Income Units in the project shall be

three-bedroom or larger units, and for projects that receive land use entitlements

after January 1, 2016 at least an additional twenty-five percent (25%) of the Low-

Income Units in the project shall be two-bedroom or larger units, except that f

projects

qualifying for and applying under the At-risk set-aside, the Executive

Director may grant a waiver from this requirement if the applicant shows that it

would

be cost proh

ibitive to comply;

(B)

One-bedroom Low-Income Units must include at least 450 square feet and two-

bedroom Low-Income Units must include at least 700 square feet of living space.

Three-bedroom Low-Income Units shall include at least 900 square feet of living

space and four-bedroom Low-Income Units shall include at least 1,100 square

feet

living space, unless these restrictions conflict with the requirements of

another

government

al agency to which the project is subject to approval. These limits may

be waived for rehabilitation projects, at the discretion of the Executive Direc

tor prior

the application submission. Bedrooms shall be large enough to accommodate

two persons each and living areas shall be adequately sized to accommodate

families based on two persons per b

edroom;

(C)

Four-bedroom and larger Low-Income Units shall have a minimum of two

full

bathrooms;

(D)

The project shall provide play/recreational facilities suitable and available to a

tenants,

including children of all ages, except for small developments of 20 units or

fewer. Play/recreational area for children ages 2-12 years shall be outdoors, and the

minimum square footage is 600 square feet and must include an access

ible

entrance point. For projects with more than 100 total units this square footage shall

increased by 5 square feet for each additional unit. Outdoor p

lay/recreational

space

must be equipped with reasonable play equipment for the size of the project

and

the surface must be natural or synthetic protective material. The outdoor pla

area

of an onsite day care center may qualify as a play area for children 2-12 years

for purposes of this section if it is available to children when the day care center i

not

open. The application must demonstrate the availability of play or

recreational

facilit

ies suitable for children ages 13-17. Square footage of a community building

cannot be included for the play/recreational area for children ages 13-17 unless that

square footage is accessible to minors at all times between 6 a.m. and 10 p.m.

except when the area is reserved for service amenities or special events.

Rehabilitation projects with existing outdoor play/recreational facilities may

request

waiver of the minimum square footage requirement if outdoor p

lay/recreational

facilit

ies of a reasonable size and type currently exist onsite. An existing project

without outdoor play/recreational facilities may request a waiver from this

requirement if the site is classified as a non-conforming use under its r

espective

current

zoning designation and the addition of the new facilities would trigger

entitlement

process. The written waiver must be approved prior to the application

submission.

The Executive Director, in her/his sole discretion may waive this requirement upon

demonstration of nearby, readily accessible, recreational facilities;

(E)

The project shall provide an appropriately sized common areas. For purposes of

this part, common areas shall include all interior amenity space, such as the rental

office, community room, service space, computer labs, and gym, but shall not

include laundry rooms or manager living units. Common areas shall meet the

following size requirement: projects comprised of 30 or less total units, at least

600

square feet; projects from 31 to 60 total units, at least 1000 square feet; projects

from 61 to 100 total units, at least 1400 square feet; projects over 100 total units, at

least 1800 square feet. Small developments of 20 units or fewer are exempt f

rom

Regulations

Section 10325

Page 69 of 99

this requirement. At the discretion of the Executive Director, these limits may be

waived for rehabilitation projects with existing common area prior to the application

submission. An existing project without common area may request a waiver from

this requirement if the site is classified as a non-conforming use under its respective

current zoning designation and the addition of the new facilities would trigger an

entitlement process;

(F)

A public agency shall provide direct or indirect long-term financial support for at l

east

fifteen

percent (15%) of the total project development costs, or the owner’s

equity

(includes

syndication proceeds) shall constitute at least thirty percent (30%) of the

total project development costs;

(G) Adequate laundry facilities shall be available on the project premises, with no fewer

than

one washer/dryer per 10 units. This requirement shall be reduced by 25% for

projects where all units include hook-ups for washers and dryers. To the extent that

tenants will be charged for the use of central laundry facilities, washers and dryers

must be excluded from eligible basis. If no centralized laundry facilities are

provided,

washers an

d dryers shall be provided in each un

it;

(H)

Dishwashers shall be provided in all Low-Income Units except for studio and

SRO

units.

A waiver for one and two bedroom units in rehabilitation projects may

granted

at the sole discretion of the Executive Director due to planning or financia

impracticality;

(I)

Projects are subject to a minimum low-income use period of 55 years (50 years for

projects located on tribal trust land).

(2)

Senior projects. To be considered senior housing, the application shall meet the following

additional threshold requ

irements;

(A)

All units shall be restricted to households eligible under applicable provisions of

California Civil Code Section 51.3 and the federal Fair Housing Act, and further

subject to

state and federal fair housing laws with respect to senior housin

(B)

For new construction projects, one half of all Low-Income Units on an accessibl

path

(ground floor and elevator-serviced) shall be mobility accessible under t

provisions

of California Building Code (CBC) Chapter 11(B). For rehabilitation

projects, 25% of all Low-Income Units on an accessible path (ground floor

and

elevator-serviced) shall be mobility accessible under the provisions of CBC Chapter

11(B).

All projects with elevators must comply with CBC Chapter 11(B) accessibil

ity

requirements

for elevators. All project owners must provide adequate and

visible

notice

to tenants of their ability to request conversion of their adaptable unit to an

accessible unit. These units shall, to the maximum extent feasible and subject to

reasonable health and safety requirements, be distributed throughout the project

consistent with 24 CFR Section 8.26. The Executive Director may approve a

waiver

advance for a rehabilitation project, provided that the applicant and

architect

demonstrate

that full compliance would be impractical or create an undue financia

burden;

(C)

Buildings over two stories shall ha

ve an elevator;

(D)

No more than twenty percent (20%) of the Low-Income Units in the project shall be

larger than one-bedroom units, unless waived by the Executive Director, when

supported by

a full market study;

(E)

One-bedroom Low-Income Units must include at least 450 square feet and two-

bedroom Low-Income Units must include at least 700 square feet of living space.

Regulations

Section 10325

Page 70 of 99

These limits may be waived for rehabilitation projects, at the discretion of the

Executive Director, prior to application submission;

(F)

Emergency call systems shall only be required in units intended for occupancy

frail

elderly populations requiring assistance with activities of daily living, and/or

applying as special needs units. When required, they shall provide

24-hour

monitoring,

unless an alternative monitoring system is approved by the Executive

Director;

(G)

Common areas shall be provided on site, or within approximately one-half mile o

the

subject property. For purposes of this part, common areas shall include

all

interior

amenity space, such as the rental office, community room, service

space,

computer labs, and gym, but shall not include laundry rooms or manager living units.

Common areas shall meet the following size requirement: projects comprised of 30

or less total units, at least 600 square feet; projects from 31 to 60 total units, at least

1,000 square feet; projects from 61 to 100 total units, at least 1,400 square

feet;

projects

over 100 total units, at least 1,800 square feet. Small developments of 20

units or fewer are exempt from this requirement. These limits may be waived, at the

discretion of the Executive Director, for rehabilitation projects with existing common

area;

(H)

A public agency shall provide direct or indirect long-term financial support for at l

east

fifteen

percent (15%) of the total project development costs, or the owner’s

equity

(includes

syndication proceeds) shall constitute at least thirty percent (30%) of the

total project development costs;

(I)

Adequate laundry facilities shall be available on the project premises, with no

fewer

than

one washer/dryer per 15 units. This requirement shall be reduced by 25% for

projects where all units include hook-ups for washers and dryers. To the extent that

tenants will be charged for the use of central laundry facilities, washers and dryers

must be excluded from eligible basis. If no centralized laundry facilities are

provided,

washers an

d dryers shall be provided in each of the units;

(J)

Projects are subject to a minimum low-income use period of 55 years (50 years for

projects located on tribal trust land).

(3)

Special Needs projects. To be considered Special Needs housing, at least 45% of the Low-

Income Units in the project shall serve populations that meet one of the following: a

individuals

living with physical or sensory disabilities and transitioning from hospitals,

nursing homes, development centers, or other care facilities; individuals living with

developmental or mental health disabilities; individuals who are survivors of physical abu

se;

individuals

who are homeless as described in Section 10315(b); individuals with c

hronic

illness,

including HIV; homeless youth as defined in Government Code Section 12957(e)(2);

families in the child welfare system for whom the absence of housing is a barrier to fa

mily

reunification

, as certified by a county; or another specific group determined by the Exec

utive

Director

to meet the intent of this housing type. The Executive Director shall have sole

discretion in determining whether or not an application meets these requirements.

developmen

t that is less than 75% special needs shall meet one of the following criteria: (i)

the non-special needs Low-Income Units meet the large family or senior housing type

requirements; (ii) the non-special needs Low-Income Units consist of at least 20% one-

bedroom units and at least 10% larger than one-bedroom units; or (iii) at least 90% of a

Low-Income

Units (both special needs and non-special needs) are SRO units. The

application shall meet the following additional threshold requirements:

(A) Average targeted income for the special needs and non-special needs SRO units

is no more than forty percent (40%)

of the area median income

;

Regulations

Section 10325

Page 71 of 99

(B) The units/building configurations (including community space) shall meet the

specific

needs of the population, including kitchen needs for SRO units without f

ull

kitchens;

(C)

If the project does not have a public rental or operating subsidy committed for

all

special

needs and non-special needs SRO units, the applicant shall demonstrate f

these

unsubsidized units that the target population(s) will not experience rent

overburden, as supported by the market study. Rent overburden means the

targeted rent is more than 30% of the target population(s) inco

me;

(D)

A public agency shall provide direct or indirect long-term financial support for at l

east

fifteen

percent (15%) of the total project development costs, or the owner’s

equity

(includes

syndication proceeds) shall constitute at least thirty percent (30%) of the

total project development costs;

(E)

Adequate laundry facilities shall be available on the project premises, with no

fewer

than

one washer/dryer per 15 units. This requirement shall be reduced by 25% for

projects where all units include hook-ups for washers and dryer

(F)

Projects are subject to a minimum low-income use period of 55 years (50 years for

projects located on tribal trust land);

(G)

One-bedroom Low-Income Units must include at least 450 square feet, and two-

bedroom Low-Income Units must include at least 700 square feet of living space.

Three-bedroom Low-Income Units shall include at least 900 square feet of living

space. These bedroom and size requirements may be waived for rehabilitation

projects or for projects that received entitlements prior to January 1, 2016 at t

discretion

the Executive Director;

(H)

SRO units are efficiency units that may include a complete private bath and kitche

but

generally do not have a separate bedroom, unless the configuration of an

already existing building being proposed to be used for an SRO dictates otherwise.

The minimum size for SRO Low-Income Units shall be 200 square feet, and the size

shall not exceed 500 square feet. These bedroom and size requirements may be

waived for rehabilitation projects or for projects that received entitlements prior to

January 1, 2016 at the discretion of the Executive Director. A project that i

ncludes

SRO

units without complete private baths shall provide at least one bath for

every

eight SRO u

nits;

(I)

A signed contract or memorandum of understanding between the developer and the

service provider must accompany the Tax Credit application; and

(J)

A preliminary service plan that specifically identifies: the service needs of the

projects special needs population; the organization(s) that would be providing the

services to the residents; the services to be provided to the special

needs

population;

how the services would support resident stability and any other s

ervice

plan

objectives; a preliminary budget displaying anticipated income and e

xpenses

associat

ed with the services program. The Executive Director shall, in his/her sole

discretion, determine whether the plan is adequate to qualify the project as a s

pecial

needs project.

(K)

If the project will be operated as senior housing pursuant to fair housing laws,

then

the

project shall have an elevator for any building over two stories and shall meet

the accessibility requirements of Section 10325(

g)(2)(B).

(L)

With respect to Special Needs units designated for individuals who are homeless,

owners, property managers, and service providers shall comply with the core

Regulations

Section 10325

Page 72 of 99

components of Housing First, as defined in Welfare and Institutions Code Section

8255(b).

(4)

At-risk projects. To be considered At-risk housing, the application shall meet t

requirements

of R & T Code subsection 17058(c)(4), except as further defined in subsec

tion

(B)(i)

below, as well as the following additional threshold requirements, and

other

requirements as outline

d in this subsection:

(A)

Projects are subject to a minimum low-income use period of 55 years (50 years for

projects located on tribal trust land);

and

(B)

Project application eligibility criteria include:

(i)

before applying for Tax Credits, the project must meet the At-risk eligibilit

requirements

under the terms of applicable federal and state law as v

erified

a third party legal opinion, except that a project that has been

acquired

a qualified nonprofit organization within the past five years of the date

application

with interim financing in order to preserve its affordability and

that

meets

all other requirements of this section, shall be eligible to be considered

an “at-risk” project under these regulations. A project application will not

qualify in this category unless it is determined by the Committee that the

project is at-risk of losing affordability on at least 50% of the restricted uni

due

to market or other conditions. A project will not be deemed at-risk of

losing affordability if the project is subject to a rent restriction with a

remaining term of at least five years that restricts incomes and rents on the

restricted units to an average no greater than 60% of area medi

an income;

(ii)

the project, as verified by a third party legal opinion, m

ust currently possess

or have had within the p

ast five years from the date of application, either:

 federal mortgage insurance, a federal loan guarantee, federal project-

based rental assistance, or, have its mortgage held by a federal agency,

or be owned by a federal agency; or



loans or grants program administered by the Department of Housing

and Community Development (HCD); or

 be currently subject to, or have been subject to, within five

years

preceding

the application deadline, the later of Federal or State Housing

Tax Credit restrictions whose compliance period is expiring or

has

expired

within the last five years and at least 50% of whose units a

not

subject to any other rental restrictions beyond the term of the Tax

Credit restrictions; or

 be currently subject to, or have been subject to, within five

years

preceding

the application deadline, California Debt Limit Alloc

ation

Committee

(CDLAC) bond regulatory agreement restrictions whose

compliance period is expiring or has expired within the last five y

ears

and

at least 50% of whose units are not subject to any other rental

restrictions beyond the term of the CDLAC restrictions;

(iii) as of the date of application filing, the applicant shall have sought availa

ble

federal

incentives to continue the project as low-income housing, i

ncluding,

direct loans, loan forgiveness, grants, rental subsidies, renewal of existing

rental subsidy contracts, etc.;

(iv)

subsidy contract expiration, mortgage prepayment eligibility, or t

expiration

of Housing Tax Credit restrictions, as verified by a third party le

gal

opinion,

shall occur no later than five calendar years after the year in wh

ich

the

application is filed, except in cases where a qualified nonprof

organization

acquired the property within the terms of (i) above and wo

uld

Regulations

Section 10325

Page 73 of 99

otherwise meet this condition but for: 1) long-term use restrictions imposed

by public agencies as a condition of their acquisition financing; or 2) HAP

contract renewals secured by the qualified nonprofit organization for the

maximum term available subsequent to acquisition;

(v)

the applicant agrees to renew all project based rental subsidies (such as

Section 8 HAP or Section 521 rental assistance contracts) for the maximu

term

available and shall seek additional renewals throughout the

project's

useful lif

e, if applicable;

(vi)

at least seventy percent (70%) of project tenants shall, at the time of

application, have incomes at or below sixty percent (60%) of area median

income;

(vii)

the gap between total development costs (excluding developer fee), and

all

loans

and grants to the project (excluding Tax Credit proceeds) must

greater than fifteen percent (15%) of total development costs; and,

(viii)

a public agency shall provide direct or indirect long-term financial support of

at least fifteen percent (15%) of the total project development costs, or t

owner’s

equity (includes syndication proceeds) shall constitute at least thirty

percent (30%) of the total project development cost.

(5)

SRO projects. To be considered Single Room Occupancy (SRO) housing, the

application

shall meet t

he following additional threshold requ

irements:

(A)

Average targeted income is no more than forty percent (40%) of the area

median

income;

(B)

At least 90% of all units shall be SRO units. SRO units are efficiency or studio

units

that

may include a complete private bath and kitchen but generally do not have

separate

bedroom, unless the configuration of an already existing building being

proposed to be used for an SRO dictates otherwise. The minimum size for SRO

units shall be 200 square feet, and the size shall not exceed 500 square feet. These

bedroom size requirements may be waived for rehabilitation projects, at t

discretion

the Executive Director;

(C)

At least one bath shall be provided for every eight units;

(D)

If the project does not have a rental subsidy committed, the application

shall

demonstrate

that the target population can pay the propose rents. For instance, i

the

target population will rely on General Assistance, the applicant shall show t

hat

for those

receiving General Assistance are willing to pay rent at the level proposed;

(E)

The project configuration, including community space and kitchen facilities, sha

meet the needs of the p

opulation, and comply with Section 10325

(f)(7)(E);

(F)

A public agency shall provide direct or indirect long-term financial support for at l

east

fifteen

percent (15%) of the total project development costs, or the owner’s

equity

(includes

syndication proceeds) shall constitute at least thirty percent (30%) of the

total development cost;

(G) Adequate laundry facilities shall be available on the project premises, with no

fewer

than

one washer/dryer per 15 units. This requirement shall be reduced by 25% for

projects where all units include hook-ups for washers and dryer

(H)

Projects are subject to a minimum low-income use period of 55 years (50 years for

projects located on tribal trust land);

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(I) A ten percent (10%) vacancy rate shall be used unless otherwise approved by the

Executive Director. Justification of a lower rate shall be included;

(J) New construction projects for seniors shall not qualify as SRO housing.

(h) Waiting List. At the conclusion of the last reservation cycle of any calendar year, and at no other

time, the Committee may establish a Waiting List of pending applications in anticipation of utilizing

any Tax Credits that may be returned to the Committee, and/or that have not been allocated to

projects with the Set-Asides or Geographic Regions for which they were intended. The Waiting

List shall expire at midnight on December 31 of the year the list is established. During periods

without a waiting list, complete credit awards returned by successful geographic apportionment

competitors shall be returned to the apportionment of origin.

Staff shall score, rank and evaluate applications on the Waiting List and make selections from the

Waiting List as follows:

(1) If Credits are fully returned from projects originally funded under Set-Asides or Geographic

Apportionments, applications qualifying under the same Set-Aside or Geographic Region

will be selected in the order of their ranking. With respect to such a Set-Aside, one or more

projects shall receive a reservation until all Credits in a Set-Aside are reserved. With respect

to such Geographic Regions in which credits remain available, projects will be funded in

order of their rank so long as the region’s last award does not cause the region’s aggregate

award amount to exceed 125 percent (125%) of the amount originally available for that

region in that funding round. When the next highest-ranking project does not meet the 125%

rule, the Committee shall not fund a project requesting a smaller credit award.

(2) Next, Waiting List projects in Set Asides or Geographic Apportionments that are not yet fully

subscribed will be selected from the Waiting List for reservations. These will be selected

first from the Set Asides in order of their funding sequence, and then from the Geographic

Apportionments in the order of the highest to the lowest percentage by which each

Apportionment is undersubscribed. (This will be calculated by dividing the unreserved Tax

Credits in the apportionment by the total Apportionment.)

(3) Finally, after all Set-Asides and Geographic Apportionments for the current year have been

achieved, or if no further projects are available for such reservations, the unallocated Tax

Credits will be used for projects selected from the Waiting List, in the order of their score

and tie breaker performance ranking, without regard to Set-Aside or Geographic Region.

All Waiting List project reservations, except for Rural projects, will be counted toward the

projects’ Geographic Apportionments.

(4) If there are not sufficient federal Tax Credits to fully fund the next ranked application on the

Waiting List, a reservation of all remaining federal Tax Credits and a binding commitment

of the following year federal Tax Credits may be made to that application.

(i) Carry forward of Tax Credits. Pursuant to Federal and state statutes, the Committee may carry

forward any unused Tax Credits or Tax Credits returned to the Committee for allocation in the next

calendar year.

Note: Authority cited: Section 50199.17, Health and Safety Code.

Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4,

50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14,

50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.

Section 10326. Application Selection Criteria - Tax-exempt bond applications

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(a) General. All applications requesting Federal Tax Credits under the requirements of IRC Section

42(h)(4) for buildings and land, the aggregate basis (including land) of which is financed at least

fifty percent (50%) by tax-exempt bonds, shall be eligible to apply under this Section for a

reservation and allocation of Federal Tax Credits. Those projects requesting State Tax Credits

pursuant to subsection (g)(1)(A) of Sections 12206, 17058, and 23610.5 of the Revenue and

Taxation Code will also be subject to the applicable requirements of Section 10317. All applicants

requesting Tax Credits for projects financed with tax-exempt bonds shall apply simultaneously to

the California Debt Limit Allocation Committee (CDLAC) and CTCAC and shall use the CDLAC-

TCAC Joint Application. Applications will be eligible for a reservation of tax credits only if receiving

a bond allocation pursuant to a joint application.

(b) Applicable criteria. Selection criteria for applications reviewed under this Section shall include

those required by IRC Section 42(m), this Section 10326, and Sections 10300, 10302, 10305,

10320, 10322, 10327, 10328(e), 10330, 10335, and 10337 of these regulations. Other sections of

these regulations shall not apply. The first funding round shall be the first application review period

of a calendar year for tax-exempt bond financed projects.

(1) Subject to conditions described in these Regulations, reservations of Federal and State

Tax Credits shall be made for those applications that receive a bond allocation from

CDLAC until the established State Tax Credit allocation amount is exhausted. If the last

application requires more State Tax Credits than remain for the calendar year, that

application will not be funded and the remaining credits will be either funded through the

Waiting List or carried forward into the next calendar year.

(2) For State Tax Credits pursuant to Section 10317(j) of these Regulations, an amount up

to $200,000,000 in a calendar year may be allocated for housing financed by CalHFA’s

Mixed-Income Program (MIP) that also receives a bond allocation from CDLAC.

Applications with financing by CalHFA (MIP) will be accepted in any funding round. The

amount allocated for CalHFA MIP may be reduced upon agreement of the Executive

Directors of CalHFA and CTCAC.

At the conclusion of the final funding round of a calendar year, the Committee may

establish a Waiting List of pending applications in anticipation of utilizing any State Tax

Credits that may be returned to the Committee, and/or that have not been allocated to

projects for which they were intended. The Waiting List shall expire on December 31 of

the year the list is established.

(c)

Application review period. The Committee may require up to sixty (60) days to review an

application, and an additional thirty (30) days to consider the application for a reservation of Tax

Credits. Applicants must deliver applications no less than ninety (90) days prior to the CTCAC

Committee meeting in which they wish to obtain a decision. Applications not expected to receive

a bond allocation from CDLAC due to relatively low CDLAC scores may or may not be fully

evaluated by the CTCAC.

Applications requesting

State Tax Credits allocated pursuant to subsections (g)(1)(A) and (B) of

Sections 12206, 17058, and 23610.5 of the Revenue and Taxation Code and not in compliance

with the application completeness requirements of Sections 10322(d) and (e) of these Regulations

shall be considered incomplete, and shall be disqualified from receiving a reservation of Tax Credits

during the cycle in which the application was determined incomplete.

(d)

Issuer determination of Credit. The issuer of the bonds may determine the Federal Tax Credit

amount, with said determination verified by the Committee and submitted with the application. The

issuer may request the Committee determine the Credit amount by including such request in the

application.

(e) Additional application requirements. Applications submitted pursuant to this Section shall provide

the following additional information:

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(1) the name, phone number and contact person of the bond issuer; and,

(2) verification provided by the bond issuer of the availability of the bond financing, the actual

or estimated bond issuance date, and the actual or estimated percentage of aggregate

basis (including land) financed or to be financed by the bonds, and a certification provided

by a third party tax professional as to the expected or actual aggregate basis (including

land) financed by the proceeds of tax exempt bonds;

(3) the name, phone number and contact person of any entity providing credit enhancement

and the type of enhancement provided.

(f) Application evaluation. To receive a reservation of Tax Credits, applications submitted under this

Section shall be evaluated, pursuant to IRC Section 42, H & S Code Sections 50199.4 through

50199.22, R & T Code Sections 12206, 17058, and 23610.5, and these regulations to determine

if: eligible, by meeting all program eligibility requirements; complete, which includes meeting all

basic threshold requirements; and financially feasible.

(g) Basic thresholds. An application shall be determined to be complete by demonstration of meeting

the following basic threshold requirements. All basic thresholds shall be met at the time the

application is filed through a presentation of conclusive, documented evidence to the Executive

Director’s satisfaction. Further, in order to be eligible to be considered for Tax Credits under these

regulations, the general partner(s) and management companies must not have any significant

outstanding noncompliance matters relating to the tenant files or physical conditions at any Tax

Credit properties in California, and any application submitted by an applicant with significant

outstanding compliance matters will not be considered until the Committee has received evidence

satisfactory to it that those matters have been resolved.

(1) Housing need and demand. Applicants shall provide evidence that the type of housing

proposed, including proposed rent levels, is needed and affordable to the targeted

population within the community in which it is located. Evidence shall be conclusive, and

include the most recent documentation available (prepared within one year of the

application date). Evidence of housing need and demand shall include:

(A) evidence of public housing waiting lists by bedroom size and tenant type, if available,

from the local housing authority; and

(B) a market study as described in Section 10322(h)(10) of these regulations, which

provides evidence that the items set forth in Section 10325(f)(1)(B) have been met

for the proposed tax-exempt bond project.

Market studies will be assessed thoroughly. Meeting the requirements of Section

10325(f)(1)(B) is essential, but because other elements of the market study will also be

considered, meeting those requirements in Section 10325(f)(1)(B) will not in itself show

adequate need and demand for a proposed project or ensure approval of a given project.

(2) Demonstrated site control. Applicants shall provide evidence that the subject property is,

and will remain within the control of the applicant from the time of application submission

as set forth in Section 10325(f)(2).

(3) Local approvals and Zoning. Applicants shall provide evidence that the project, as

proposed, is zoned for the intended use, and has obtained all applicable local land use

approvals which allow the discretion of local elected officials to be applied. Applicants

requesting competitive state credits shall provide this evidence at the time the application

is filed, except that an appeal period may run 30 days beyond the application due date, in

which case the applicant must provide proof that either no appeals were filed, or that any

appeals filed during that time period were resolved within that 30-day period and the project

is ready to proceed. Examples of such approvals include, but are not limited to, general

plan amendments, rezonings, conditional use permits. Notwithstanding the first sentence

of this subsection, applicants need not have obtained design review approval at the time of

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application. The Committee may require, as evidence to meet this requirement, submission

of a Committee-provided form letter to be signed by an appropriate local government

planning official of the applicable local jurisdiction.

(4) Financial feasibility. Applicants shall provide the financing plan for the proposed project

consistent with Section 10325(f)(5).

(5) Sponsor characteristics. Applicants shall provide evidence that as a Development Team,

proposed project participants possess the knowledge, skills, experience and financial

capacity to successfully develop, own and operate the proposed project. The Committee

shall, in its sole discretion, determine if any of the evidence provided shall disqualify the

applicant from participating in the Tax Credit Programs, or if additional Development Team

members need be added to appropriately perform all program requirements. General

partners and management companies lacking documented experience with Section 42

requirements using the minimum scoring standards at Section 10325(c)(1)(A) and (B) shall

be required to complete training as prescribed by CTCAC prior to a project’s placing in

service. The minimum scoring standards referenced herein shall not be obtained through

the two (2) point category of “a housing tax credit certification examination of a nationally

recognized housing tax credit compliance entity on a list maintained by the Committee to

satisfy minimum management company experience requirements for an incoming

management agent” established at Section 10325(c)(1). Applicants need not submit the

third party public accountant certification that the projects have maintained a positive

operating cash flow.

The State Tax Credit allocation pursuant to subsection (g)(1)(B) of Sections 12206, 17058,

and 23610.5 of the Revenue and Taxation Code received by individuals, entities, affiliates,

and related entities is limited to no more than thirty-three percent (33%) of any amount

established per application review period as described in Section 10326(c) of these

Regulations. This limitation is applicable to a project applicant, developer, sponsor, owner,

general partner, and to parent companies, principals of entities, and family members. For

the purposes of this section, related or non-arm’s length relationships are further defined as

those having control or joint-control over an entity, having significant influence over an

entity, or participating as key management of an entity. Related entity disclosure is required

at the time of application. This 33% limit is not applicable for reservations of State Tax

Credits made after the month of May in each calendar year.

(6) Minimum construction standards. Applicants shall adhere to minimum construction

standards as set forth in Section 10325(f)(7).

(7) Minimum Rehabilitation Project Costs. Projects involving rehabilitation of existing buildings

shall be required to complete, at a minimum, the higher of:

(A) $15,000 in hard construction costs per unit; or

(B) 20% of the adjusted basis of the building pursuant to IRC Section 42(e)(3)(A)(ii)(I).

(8) (A) Existing tax credit projects applying for additional tax credits for acquisition and/or

rehabilitation (i.e., resyndication) shall maintain the rents and income targeting

levels in the existing regulatory contract for the duration of the new regulatory

contract. If the project has exhibited negative cash flow for at least each of the last

three years or within the next five years will lose a rental or operating subsidy that

was factored into the project’s initial feasibility, the Executive Director may alter this

requirement, provided that the new rents and income targeting levels shall be as low

as possible to maintain project feasibility. In addition, the Executive Director may

approve a reduction in the number of units for purposes of unrestricting a manager’s

unit, adding or increasing service or community space, or for adding bathrooms and

kitchens to SRO units, provided that the existing rent and income targeting remain

proportional.

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(B) If the regulatory agreement for an existing tax credit project applying for a new

reservation of tax credits for acquisition and/or rehabilitation (i.e., resyndication)

contains a requirement to provide service amenities, even if that requirement has

expired, the project shall provide a similar or greater level of services for a period of

at least 15 years under the new regulatory agreement. A project obtaining maximum

CDLAC points for services shall be deemed to have met this requirement. If the

project has exhibited cash flow of less than $20,000 for at least each of the last three

years, has no hard debt and fails to break even in year 15 with services, or within

the next five years will lose a rental or operation subsidy that was factored into the

project’s initial feasibility, the Executive Director may alter this requirement, provided

that the service expenditures shall be the maximum that project feasibility allows.

acquisition and/or rehabilitation (i.e., resyndication), the pre-rehabilitation reserve

study in the CNA shall demonstrate a rehabilitation need of at least $5,000 per unit

over the first three years. Projects for which the Executive Director has waived the

requirements of Section 10320(b)(4) and projects with ten years or less remaining

on the CTCAC regulatory agreement are exempt from this requirement.

(9) A non-competitive project that includes Low-Income Units targeted at greater than 60% AMI

shall have average targeting that does not exceed 60% AMI. A competitive project that

includes Low-Income Units targeted at greater than 60% AMI shall have average targeting

that does not exceed 50% AMI. Projects electing the average income federal set-aside

must choose targeting in 10% increments of Area Median Income (i.e. 20% AMI, 30% AMI,

40% AMI, etc.).

A project with a tax credit reservation dated prior to, or a submitted application pending as

of, March 26, 2018 may, with the discretionary approval of the Executive Director, revise its

targeting prior to the recordation of the regulatory agreement to include Low-Income Units

targeted at greater than 60% AMI only to increase the number of Low-Income Units or to

accommodate existing over-income tenants, provided that the average targeting does not

exceed 60% AMI for non-competitive projects or 50% AMI for competitive projects.

A project including Low-Income Units targeted at greater than 60% AMI shall make the

“Yes” election on line 8b of the IRS Form 8609.

(h) Reserved.

(i) Tax-exempt bond reservations. Reservations of Tax Credits shall be subject to conditions as

described in this Section and applicable statutes. Reservations of Tax Credits shall be conditioned

upon the Committee's receipt of the reservation fee described in Section 10335 and an executed

reservation letter bearing the applicant's signature accepting the reservation within twenty (20)

calendar days of the Committee's notice to the applicant of the reservation.

(j) Additional conditions on reservations. The following additional conditions shall apply to

reservations of Tax Credits pursuant to this Section:

(1) Bonds issued. Bonds shall be issued within the time limit specified by CDLAC, if applicable;

and,

(2) Projects shall maintain at least 10% of the total Low-Income Units at rents affordable to

tenants earning 50% or less of the Area Median Income, and shall maintain a minimum 30

year affordability period.

(3) Projects proposing the rehabilitation of existing structures shall provide CTCAC with an

updated development timetable by December 31 of the year following the year the project

received its reservation of Tax Credits.

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(i) The report shall include the actual placed-in-service date or the anticipated placed-

in-service date for the last building in the project and the date the project achieved

full occupancy. The report shall detail the causes for any change from the original

date.

(ii) Projects proposing new construction shall provide CTCAC with an updated

development timetable by December 31 of the second year following the year the

project received its reservation of Tax Credits. The update shall include the actual

placed-in-service date for the last building in the project and the date that the

project achieved full occupancy; or the date the project is anticipated to achieve full

occupancy.

Other conditions, including cancellation, disqualification and other sanctions imposed by

the Committee in furtherance of the purposes of the Credit programs.

(4) Projects intended for eventual tenant homeownership must submit, at application, evidence

of a financially feasible program, incorporating, among other items, an exit strategy, home

ownership counseling, funds to be set aside to assist tenants in the purchase of units, and

a plan for conversion of the facility to home ownership at the end of the initial 15 year

compliance period. In such a case, the regulatory agreement will contain provisions for the

enforcement of such covenants.

(k) Placed-in-service. Upon completion of construction of the proposed project, the applicant shall

submit documentation required by Section 10322(i).

Note: Authority cited: Section 50199.17, Health and Safety Code.

Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4,

50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14,

50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.

Section 10327. Financial Feasibility and Determination of Credit Amounts

(a) General. Applicants shall demonstrate that the proposed project is financially feasible as a qualified

low income housing project. Development and operational costs shall be reasonable and within

limits established by the Committee, and the Committee may adjust these costs and any

corresponding basis at any time prior to issuance of tax forms. Approved sources of funds shall

be sufficient to cover approved uses of funds, except that initial application errors resulting in a

shortage of sources up to the higher of $100,000 or 50% of the contingency line item shall be

deemed covered by the contingency line item. If it is determined that sources of funds are

insufficient, an application shall be deemed not to have met basic threshold requirements and shall

be considered incomplete. Following its initial and subsequent feasibility determinations, the

Committee may determine a lesser amount of Tax Credits for which the proposed project is eligible,

pursuant to the requirements herein, and may rescind a reservation or allocation of Tax Credits in

the event that the maximum amount of Tax Credits achievable is insufficient for financial feasibility.

(b) Limitation on determination. A Committee determination of financial feasibility in no way warrants

to any applicant, investor, lender or others that the proposed project is, in fact, feasible.

allocated to a project not exceed the amount the housing Credit agency determines is necessary

for the financial feasibility of the project. The following standards shall apply:

(1) Builder overhead, profit and general requirements. An overall cost limitation of fourteen

percent (14%) of the cost of construction shall apply to builder overhead, profit, and general

requirements, excluding builder’s general liability insurance. For purposes of builder

overhead and profit, the cost of construction includes offsite improvements, demolition and

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site work, structures, prevailing wages, and general requirements. For purposes of general

requirements, the cost of construction includes offsite improvements, demolition and site

work, structures, and prevailing wages. Project developers shall not enter into fixed-price

contracts that do not account for these restrictions, and shall disclose any payments for

services from the builder to the developer.

(2) Developer fee.

(A) The maximum developer fee that may be included in project costs and eligible basis

for 9% competitive credit new construction, rehabilitation only, or adaptive reuse

applications applying under Section 10325 of these regulations is the lesser of 15%

of the project’s unadjusted eligible basis and 15% of the basis for non-residential

costs included in the project allocated on a pro rata basis or two million two hundred

thousand ($2,200,000) dollars. The maximum developer fee that may be included

in project costs and eligible basis for a 9% competitive credit

acquisition/rehabilitation application is the lesser of 15% of the project’s unadjusted

eligible construction related basis plus 5% of the project’s unadjusted eligible

acquisition basis and 15% for the basis for non-residential costs included in the

project allocated on a pro rata basis or two million two hundred thousand

($2,200,000) dollars.

(B) For 4% credit applications applying under Section 10326 of these regulations, the

maximum developer fee that may be included in project costs and eligible basis shall

be as follows:

(i) for new construction, rehabilitation only, or adaptive reuse projects, the

maximum developer fee is the sum of 15% of the project’s unadjusted eligible

basis and 15% of the basis for non-residential costs included in the project

allocated on a pro rata basis. All developer fees in excess of two million five

hundred thousand ($2,500,000) dollars plus $20,000 per unit for each Tax

Credit unit in excess of 100 shall be deferred or contributed as equity to the

project.

(ii) For acquisition/rehabilitation projects, the maximum developer fee is 15% of

the unadjusted eligible construction related basis and 5% of the unadjusted

eligible acquisition basis and 15% of the basis for non-residential costs

included in the project allocated on a pro rata basis. All developer fees in

excess of two million five hundred thousand ($2,500,000) dollars plus $20,000

per unit for each Tax Credit Unit in excess of 100 shall be deferred or

contributed as equity to the project. A 15% developer fee on the acquisition

portion will be permitted for at-risk developments meeting the requirements of

section 10325(g)(4) or for other acquisition/rehabilitation projects, except for

existing tax credit projects applying for a new reservation of tax credits for

acquisition (i.e. resyndication), whose hard construction costs per unit in

rehabilitation expenditures are at least $50,000 or where the development will

restrict at least 30% of its Low Income Units for those with incomes no greater

than 50% of area median and restrict rents concomitantly.

consideration of the developer fee. With exception of 4% projects with a 2016 or

later reservation, the developer fee in cost and in basis shall not be increased once

established by a reservation of Tax Credits but may be decreased in the event of a

modification in basis. Once established by a reservation of Tax Credits, the

developer fee in cost and in basis for a 4% project with a 2016 or later reservation

may increase or decrease in the event of modification in basis, and in the cases it is

increased, the entire increase shall be additionally deferred or contributed as equity

to the project. The maximum developer fees above apply to projects developed as

multiple simultaneous phases using the same credit type: (2)(A) applies to all

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simultaneous phases using all 9% credits and (2)(B) above applies to all

simultaneous phases using all 4% credits. Only when the immediately preceding

phase of an all 9% credit phased project equals or exceeds 150 units or when any

other phased project is using both credit types shall the provision of (2)(A) and (2)(B)

apply to each phase independently. For purposes of this limitation, “simultaneous”

refers to projects consisting of a single building, or projects on the same parcel or

on parcels within ¼ mile of each other and with construction start dates within six

months of each other, or completion dates that are within six months of each other.

(D) Deferred fees and costs. Deferral of project development costs shall not exceed an

amount equal to seven-and-one-half percent (7.5%) of the unadjusted eligible basis

of the proposed project prior to addition of the developer fee. Unless expressly

required by a State or local public funding source, in no case may the applicant

propose deferring project development costs in excess of half (50%) of the proposed

developer fee. Tax-exempt bond projects shall not be subject to this limitation.

Deferred developer fee notes and/or agreements must be included in the placed-in-

service application and the interest rates of such notes shall not exceed eight

percent (8%).

(E) Black Indigenous People of Color (BIPOC) Projects. For projects which qualify for

general partner experience pursuant to Section 5230(f)(1)(B) of the CDLAC

Regulations, the 15% of project’s unadjusted eligible construction related basis

stated in Section 10327(c)(2)(B) shall be increased to 20% of the project’s

unadjusted eligible construction related basis and the two million five hundred

thousand ($2,500,000) dollars in subsection (c)(2)(B)(ii) above, is increased to three

million ($3,000,000) dollars.

(3) Syndication expenses. A cost limitation on syndication expenses, excluding bridge loan

costs, shall be twenty percent (20%) of the gross syndication proceeds, if the sale of Tax

Credits is through a public offering or private Securities and Commission Regulation D

offering, and ten percent (10%) of the gross syndication proceeds, if the sale is through a

private offering. The Executive Director may allow exceptions to the above limitation, in

amounts not to exceed twenty-four percent (24%) for public offerings and private Securities

and Exchange Commission Regulation D offerings, and fifteen percent (15%) for private

offerings, should the following circumstances be present: smaller than average project size;

complex financing structure due to multiple sources; complex land lease or ownership

structure; higher than average investor yield requirements, due to higher than average

investor risk; and, little or no anticipated project cash allowing lower-than-market investor

returns. Syndication costs cannot be included in eligible basis.

(4) Net syndication proceeds. The Executive Director shall evaluate the net syndication

proceeds to ensure that project sources do not exceed uses and that the sale of Tax Credits

generates proceeds equivalent to amounts paid in comparable syndication raises. The

Executive Director shall determine the minimum tax credit factor to be used in all

applications prior to the beginning of a funding cycle for projects applying under Section

10325 for both Federal and State Tax Credits. The minimum tax credit factor for

applications made under Section 10326 shall be adjusted annually based on current market

conditions.

(5) Threshold Basis Limits. At application, the Committee shall limit the unadjusted eligible

basis amount, used for calculating the maximum amount of Tax Credits to amounts

published on its website in effect at the time of application and in accordance with the

definition in Section 10302(rr) of these regulations. At placed in service, the Committee shall

limit the unadjusted eligible basis amount to the higher of the amount published on its

website in effect at the time of application or in effect for the year the project places in

service.

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Exceptions to limits.

(A) Increases in the threshold basis limits shall be permitted as follows for projects

applying under Section 10325 or 10326 of these regulations.

A twenty percent (20%) increase to limits for a development that is paid for in whole

or in part out of public funds and is subject to a legal requirement for the payment of

state or federal prevailing wages or financed in part by a labor-affiliated organization

that requires the employment of construction workers who are paid at least state or

federal prevailing wages. An additional five percent (5%) increase to the unadjusted

eligible basis shall be available for projects that certify that they are subject to a

project labor agreement within the meaning of Section 2500(b)(1) of the Public

Contract Code that requires the employment of construction workers who are paid

at least state or federal prevailing wages or that they will use a skilled and trained

workforce, as defined in Section 25536.7 of the Health and Safety Code, to perform

all onsite work within an apprenticeable occupation in the building and construction

trades. All applicants under this paragraph shall certify that contractors and

subcontractors will comply with Section 1725.5 of the Labor Code, if applicable;

A ten percent (10%) increase to the limits for a new construction development where

parking is required to be provided beneath the residential units (but not “tuck under”

parking) or through construction of an on-site parking structure of two or more levels;

A two percent (2%) increase to the limits where a day care center is part of the

development;

A two percent (2%) increase to the limits where 100% of the Low Income Units are

for special needs populations;

A ten percent (10%) increase to the limits for a development wherein at least 95%

of the project’s upper floor units are serviced by an elevator.

A fifteen percent (15%) increase to the limits for a development wherein at least

95% of the building(s) is constructed as Type I as defined in the California Building

Code, in which case, the Type III increase below (10%) shall not be allowed.

A ten percent (10%) increase to the limits for a development wherein at least 95%

of the building(s) is constructed as (1) a Type III as defined in the California Building

Code, or (2) a Type III/Type I combination, in which case, the Type I increase above

(15%) shall not be allowed.

With the exception of the prevailing wage increase, the Local Impact Fee increase,

and the special needs increase, in order to receive the basis limit increases by the

corresponding percentage(s) listed above, a certification signed by the project

architect shall be provided within the initial and placed-in-service application

confirming that item(s) listed above will be or have been incorporated into the project

design, respectively.

(B) A further increase of up to ten percent (10%) in the Threshold Basis Limits will be

permitted for projects applying under Section 10325 or Section 10326 of these

regulations that include one or more of the following energy efficiency/resource

conservation/indoor air quality items:

(1) Project shall have onsite renewable generation estimated to produce 50

percent (50%) or more of annual tenant electricity use. If the combined

available roof area of the project structures, including carports, is insufficient

for provision of 50% of annual electricity use, then the project shall have

onsite renewable generation based on at least 90 percent (90%) of the

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available solar accessible roof area. Available solar accessible area is

defined as roof area less north facing roof area for sloped roofs, equipment,

solar thermal hot water and required local or state fire department set-backs

and access routes. A project not availing itself of the 90% roof area

exception may also receive an increase under paragraph (2) only if the

renewable generation used to calculate each basis increase does not

overlap. Five percent (5%)

(2) Project shall have onsite renewable generation estimated to produce 75

percent (75%) or more of annual common area electricity use. If the

combined available roof area of the project structures, including carports, is

insufficient for provision of 75% of annual electricity use, then the project

shall have onsite renewable generation based on at least 90 percent (90%)

of the available solar accessible roof area. Available solar accessible area

is defined as roof area less north facing roof area for sloped roofs,

equipment, solar thermal hot water and required local or state fire

department set-backs and access routes. A project not availing itself of the

90% roof area exception may also receive an increase under paragraph (1)

only if the renewable generation used to calculate each basis increase does

not overlap. Two percent (2%)

(3) Newly constructed project buildings shall be more energy efficient than the

2019 Energy Efficiency Standards (California Code of Regulations, Part 6 of

Title 24) by at least 5, EDR points for energy efficiency alone (not counting

solar), except that if the local building department has determined that

building permit applications submitted on or before December 31, 2019 are

complete, then newly constructed project buildings shall be fifteen percent

(15%) or more energy efficient than the 2016 Energy Efficiency Standards

(California Code of Regulations, Part 6 of Title 24). Four percent (4%)

(4) Rehabilitated project buildings shall have eighty percent (80%) decrease in

estimated TDV energy use (or improvement in energy efficiency) post

rehabilitation as demonstrated using the appropriate performance module of

CEC approved software. Four percent (4%)

(5) Irrigate only with reclaimed water, greywater, or rainwater (excepting water

used for Community Gardens) or irrigate with reclaimed water, grey water,

or rainwater in an amount that annually equals or exceeds 20,000 gallons or

300 gallons per unit, whichever is less. One percent (1%)

(6) Community Gardens of at least 60 square feet per unit. Permanent site

improvements that provide a viable growing space within the project

including solar access, fencing, watering systems, secure storage space for

tools, and pedestrian access. One percent (1%)

(7) Install bamboo, stained concrete, cork, salvaged or FSC-Certified wood,

natural linoleum, natural rubber, or ceramic tile in all kitchens, living rooms,

and bathrooms (where no VOC adhesives or backing is also used). One

percent (1%)

(8) Install bamboo, stained concrete, cork, salvaged or FSC-Certified wood,

natural linoleum, natural rubber, or ceramic tile in all interior floor space other

than units (where no VOC adhesives or backing is also used). Two percent

(2%)

(9) For new construction projects, meet all requirements of the U.S.

Environmental Protection Agency Indoor Air Plus Program. Two percent

(2%)

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Compliance and Verification: For placed-in-service applications, in order to receive

the increase to the basis limit, the application shall contain a certification from a

HERS, GreenPoint, NGBS Green Verifier, PHIUS, Passive House, or Living Building

Challenge Rater, or from a LEED for Homes Green Rater verifying that item(s) listed

above have been incorporated into the project, except that items (5) through (8) may

be verified by the project architect. For item (1), the applicant must submit a

Sustainable Building Method Workbook, a Multifamily Affordable Solar Home

(MASH) Program field verification certification form signed by the project’s solar

contractor and a qualified HERS Rater, and a copy of the utility interconnection

approval letter. The applicant shall use the Expected Performance Based Buydown

(EPBB) calculator with monthly scalars to be determined by CTCAC, for purposes

of determining the solar values to be input into the CUAC calculator. For item (2),

the energy analyst shall provide documentation of the load serving the common area

and the output calculations or the photovoltaic generation. For items (3) and (4), the

applicant must submit a Sustainable Building Method Workbook with the original

application and the placed-in-service application. For item (5), the Rater, architect,

landscape architect, or water system engineer shall certify that reclaimed water,

greywater, or rainwater systems have been installed and are functioning to supply

sufficient irrigation to the property to meet the standards under normal conditions.

Failure to incorporate the features, or to submit the appropriate documentation may

result in a reduction in credits awarded and/or an award of negative points.

increase of one percent (1%) in the threshold basis limits shall be available for every

1% of the project’s Low-Income and Market Rate Units that will be income and rent

restricted at or below 50 percent (50%) but above thirty-five percent (35%) of Area

Median Income (AMI). An increase of two percent (2%) shall be available for every

1% of the project’s Low-Income and Market Rate Units that will be restricted at or

below 35% of AMI. In addition, the applicant must agree to maintain the affordability

period of the project for 55 years (50 years for projects located on tribal trust land).

(D) Projects requiring seismic upgrading of existing structures, and/or projects requiring

on-site toxic or other environmental mitigation may be permitted an increase in basis

limit equal to the lesser of the amount of costs associated with the seismic upgrading

or one-site environmental mitigation or 15% of the project’s unadjusted eligible basis

to the extent that the project architect or seismic engineer certifies in the application

to the costs associated with such work.

(E) An increase equal to any Local Development Impact Fees as defined in Section

10302 of these regulations if the fees are documented in the application submission

by the entities charging such fees.

(F) In a county that has an unadjusted 9% threshold basis limit for a 2-bedroom unit

equal to or less than $400,000, a ten percent (10%) increase to the project’s

threshold basis limit for a development located in a census tract, or census block

group as applicable, designated on the TCAC/HCD Opportunity Area Map as

Highest or High Resource.

An applicant may choose to utilize the census tract, or census block group as

applicable, resource designation from the TCAC/HCD Opportunity Maps in effect

when the initial site control was obtained up to seven calendar years prior to the

application.

(6) Acquisition costs. All applications must include the cost of land and improvements in the

Sources and Uses budget, except that (i) competitive projects with donated land and/or

improvements shall include the appraised value of the donated land and improvements that

is not nominal, and (ii) projects on tribal trust land need only provide an improvement cost

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or value. If the acquisition for a new construction project involves a Related Party, the

applicant shall disclose the relationship at the time of initial application.

Once established in the initial application, the acquisition cost of a new construction site

shall not increase except as provided below for land and improvements donated or leased.

Except as allowed pursuant to Section 10322(h)(9)(A) or by a waiver pursuant to this section

below for projects basing cost on assumed debt, neither the purchase price nor the basis

associated with existing improvements, if any, shall increase during all subsequent reviews

including the placed in service review, for the purpose of determining the final award of Tax

Credits.

If land or land and improvements (real property) are donated to the general partner or

member of the project owner and if approved by CTCAC in advance, the general partner or

member may sell the real property to the project for an amount equal to the donated value

established in the application provided that: there must be a seller carryback loan for the full

amount of the sale, the loan must be “soft,” having a term of at least 15 years, a below

market interest rate and interest accrual, and be either fully deferred or require only residual

receipts payments for the loan term. Alternatively, the value may be a capital contribution

of a general partner or member. Once established in the initial application, the donated

value of the real property shall not increase.

If land or land and improvements (real property) are donated or are leased for a mandatory

lease payment of $100 per year or less, and if approved by CTCAC in advance, the donation

value established in the application may be a capital contribution of a general partner or

member. Once established in the initial application, the donated value of the real

property/lease shall not increase.

(A) New Construction. The cost of land acquired through a third party transaction with

an unrelated party shall be evidenced by a sales agreement, purchase contract, or

escrow closing statement. The value of land acquired from a Related Party shall be

underwritten using the lesser of the current purchase price or appraised value

pursuant to Section 10322(h)(9). If the purchase price exceeds appraised value, the

applicant shall, within the shortfall calculation section of the basis and credits page

of the application only, reduce the project cost and the soft permanent financing by

the overage. For all other purposes, the project cost shall include the overage.

The value of donated land, including land donated as part of an inclusionary housing

ordinance, must be evidenced by an appraisal pursuant to Section 10322(h)(9).

(B) Rehabilitation. Except as noted below, the applicant shall provide a sales agreement

or purchase contract in additional to the appraisal. The value of land and

improvements shall be underwritten using the lesser amount of the purchase price

or the “as is” appraised value of the subject property (as defined in Section

10322(h)(9)) and its existing improvements without consideration of the future use

of the property as rent restricted housing except if the property has existing long

term rent restrictions that affect the as-is value of the property. The land value shall

be based upon an “as if vacant” value as determined by the appraisal methodology

described in Section 10322(h)(9) of these regulations. If the purchase price is less

than the appraised value, the savings shall be prorated between the land and

improvements based on the ratio in the appraisal. If the purchase price exceeds

appraised value, the applicant shall (i) limit improvements acquisition basis to the

amount supported by the appraisal and (ii) within the shortfall calculation section of

the basis and credits page of the application only, reduce the project cost and the

soft permanent financing, exclusive of any developer fee that must be deferred or

contributed pursuant to Section 10327(c)(2)(B), by the overage. For all other

purposes, the project cost shall include the overage.

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The Executive Director may approve a waiver to underwrite the project with a purchase

price in excess of the appraised value where (i) a local governmental entity is purchasing,

or providing funds for the purchase of land for more than its appraised value in designated

revitalization area when the local governmental entity has determined that the higher cost

is justified, or (ii) the purchase price does not exceed the sum of third party debt

encumbering the property that will be assumed or paid off.

For tax-exempt bond-funded properties receiving credits under Section 10326 only or in

combination with State Tax Credits, and exercising the option to forgo an appraisal pursuant

to Section 10322(h)(9)(A), no sales agreement or purchase contract is required, and TCAC

shall approve a reasonable proration of land and improvement value consistent with similar

projects in the market area.

(7) Reserve accounts. All reserve accounts shall be used to maintain the property (which does

not include repayment of loans) and/or benefit its residents, and shall remain with the project

except as provided in subparagraph (B) below and except when a public lender funds rent

subsidy and/or service reserves and requires repayment of unused rent subsidy and/or

service reserves. If ownership of a project is transferred, the reserve accounts may be

purchased by the purchaser(s) or transferee(s) for an amount equal to the reserve

account(s) balance(s).

(A) The minimum replacement reserve deposit for projects shall be three hundred

dollars ($300) per unit per year, or for new construction or senior projects, two

hundred fifty dollars ($250) per unit per year. The on-going funding of the

replacement reserve in this amount shall be a requirement of the regulatory

agreement during the term of the agreement, and the owner shall maintain these

reserves in a segregated account. Funds in the replacement reserve shall only be

used for capital improvements or repairs.

(B) An operating reserve shall be funded in an amount equal to three months of

estimated operating expenses and debt service under stabilized occupancy.

Additional funding will be required only if withdrawals result in a reduction of the

operating reserve account balance to 50% or less of the originally funded amount.

An equal, verified operating reserve requirement of any other debt or equity source

may be used as a substitute, and the reserve may be released following

achievement of a minimum annual debt service ratio of 1.15 for three consecutive

years following stabilized occupancy only to pay deferred developer fee. The

Committee shall allow operating reserve amounts in excess of industry norms to be

considered “reasonable costs,” for purposes of this subsection, only for homeless

assistance projects under the Non-Profit Set-Aside, as described in Section

10315(b), Special Needs projects, HOPE VI projects, or project based Section 8

projects. The original Sources and Uses budget and the final cost certification shall

demonstrate the initial and subsequent funding of the operating reserves.

(8) Applicant resources. If the applicant intends to finance part or all of the project from its own

resources (other than deferred fees), the applicant shall be required to prove, to the

Executive Director’s satisfaction, that such resources are available and committed solely

for this purpose, including an audited certification from a third party certified public

accountant that applicant has sufficient funds to successfully accomplish the financing.

(9) Self-syndication. If the applicant or a Related Party intends to be the sole or primary tax

credit investor in a project, the project shall be underwritten using a tax credit factor (i.e.,

price) of $1 for each dollar of federal tax credit and $.79 dollars for each dollar of State Tax

Credit, unless the applicant proposes a higher value.

(d) Determination of eligible and qualified basis. The Committee shall provide forms to assist

applicants in determining basis. The Committee shall rely on certification from an independent,

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qualified Certified Public Accountant for determination of basis; however, the Committee retains

the right to disallow any basis it determines ineligible or inappropriate.

(1) High Cost Area adjustment to eligible basis. Proposed projects located in a qualified census

tract or difficult development area, as defined in IRC Section 42(d)(5)(c)(iii), may qualify for

a thirty percent (30%) increase to eligible basis, subject to Section 42, applicable California

statutes and these regulations. Pursuant to Authority granted by IRC §42(d)(5)(B)(v),

CTCAC designates credit ceiling applications relating to sites that have lost their difficult

development area or qualified census tract status within the previous 12 months as a difficult

development area (DDA).

(2) Pursuant to Authority granted by IRC §42(d)(5)(B)(v), CTCAC designates credit ceiling

applications proposing a project meeting the Special Needs housing type threshold

requirements at Section 10325(g)(3) as a difficult development area (DDA).

(3) Pursuant to authority granted by IRC §42(d)(5)(B)(v), CTCAC designates credit ceiling

applications seeking state credits for which there are insufficient state credits as a difficult

development area (DDA).

(4) Pursuant to authority granted by IRC §42(d)(5)(B)(v), CTCAC designates credit ceiling

applications for Federal Credit established by the Further Consolidated Appropriations Act,

2020 or the Consolidated Appropriations Act, 2021 as a difficult development area (DDA).

(e) Determination of Credit amounts. The applicant shall determine, and the Committee shall verify,

the maximum allowable Tax Credits and the minimum Tax Credits necessary for financial feasibility,

subject to all conditions of this Section. For purposes of determining the amount of Tax Credits,

the project’s qualified basis shall be multiplied by an applicable Credit percentage established by

the Executive Director, prior to each funding cycle. The percentage shall be determined taking into

account recently published monthly Credit percentages.

(f) Determination of feasibility. To be considered feasible, a proposed project shall exhibit positive

cash flow after debt service for a 15-year minimum term beginning at stabilized occupancy, or in

the case of acquisition/rehabilitation projects, at the completion of rehabilitation. “Cash flow after

debt service” is defined as gross income (including (1) all rental income generated by proposed

initial rent levels contained within the project application and (2) committed federal, state, and local

rental subsidies; excluding income generated by tenant-based rental subsidies) minus vacancy,

operating expenses, property taxes, service and site amenity expenses, operating and replacement

reserves and must pay debt service (not including residual receipts debt payments). Expenses

that do not continue through all 15 years of the pro forma shall be excluded from the evaluation of

feasibility as well as from the minimum debt service coverage ratio and cash flow parameters

pursuant to Section 10327(g)(6). For applications that qualify for a reservation of Tax Credits: (1)

from the Nonprofit set-aside homeless assistance apportionment, (2) with special needs units

comprising at least 25% of the low-income units, or (3) with an average targeted affordability of

40% of Area Median Income or less, capitalized operating reserves in excess of the 3-month

minimum amount may be added to gross income for purposes of determining “cash flow after debt

service.” In addition, applications with a committed capitalized operating subsidy reserve from HCD,

CalHFA, or another public entity approved by the Executive Director may add withdrawals from this

reserve to gross income for purposes of determining “cash flow after debt service.”

(g) Underwriting criteria. The following underwriting criteria shall be employed by the Committee in a

pro forma analysis of proposed project cash flow to determine the minimum Tax Credits necessary

for financial feasibility and the maximum allowable Tax Credits. The Committee shall allow initial

applicants to correct cash flow shortages or overages up to the higher of $25,000 or 0.5% of gross

income at placed in service. In addition, if the operating expenses are below the published amount

pursuant to subparagraph (1), the CTCAC Executive Director may correct the error by increasing

the operating expenses to the published amount, provided the increase maintains compliance with

all other feasibility and underwriting criteria.

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(1) The fifteen year pro forma revenue and expense projection calculations shall utilize a two-

and-one-half percent (2.5%) increase in gross income, a three-and-one-half percent (3.5%)

increase in operating expenses (excluding operating and replacement reserves set at

prescribed amounts), and a two percent (2%) increase in property taxes.

(A) Where a private conventional lender and project equity partner use a 2% gross

income and 3% operating expense increase underwriting assumption, CTCAC shall

accept this methodology as well.

(B) For projects with a HUD rental subsidy that will receive a subsidy layering review

from CTCAC, CTCAC shall accept 2% gross income, 3% operating expense

increase, and 7% vacancy underwriting assumptions.

For purposes of the pro forma projections only, the application form Subsidy Contract

Calculation may utilize post-rehabilitation rental subsidy contract rent assumptions when

applicable.

Minimum operating expenses shall include expenses of all manager units and market rate

units, and must be at least equal to the minimum operating expense standards published

by the Committee staff annually. The published minimums shall be established based upon

periodic calculations of operating expense averages annually reported to CTCAC by

existing tax credit property operators. The minimums shall be displayed by region, and

project type (including large family, senior, and Special Needs), and shall be calculated at

the reported average or at some level discounted from the reported average. The Executive

Director may, in his/her sole discretion, utilize operating expenses up to 15% less than

required in this subsection for underwriting when the equity investor and the permanent

lender are in place and provide evidence that they have agreed to such lesser operating

expenses. These minimum operating expenses do not include property taxes, replacement

reserves, depreciation or amortization expense, compliance monitoring or lender fees, or

the costs of any site or service amenities.

Special needs projects that are less than 100% special needs shall prorate the operating

expense minimums, using the special needs operating expenses for the special needs

units, and the other applicable operating expense minimums for the remainder of the units.

(2) Property tax expense minimums shall be one percent (1%) of total replacement cost,

unless:

(A) the verified tax rate is higher or lower;

(B) the proposed sponsorship of the applicant includes an identified 501(c)(3) corporate

general partner which will pursue a property tax exemption; or

housing entity.

(3) Vacancy and collection loss rates shall be ten percent (10%) for special needs units and

non-special needs SRO units without a significant project-based public rental subsidy,

unless waived by the Executive Director based on vacancy data in the market area for the

population to be served. Vacancy and collection loss rates shall be between five and ten

percent (5-10%) for special needs units and non-special needs SRO units with a significant

project-based public rental subsidy. Vacancy and collection loss rates shall be five percent

(5%) for all other units.

(4) Loan terms, including interest rate, length of term, and debt service coverage, shall be

evidenced as achievable and supported in the application, or applicant shall be subject to

the prevailing loan terms of a lender selected by the Committee.

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(5) Variable interest rate permanent loans shall be considered at the underwriting interest rate,

or, alternatively, at the permanent lender’s underwriting rate upon submission of a letter

from the lender indicating the rate used by it to underwrite the loan. All permanent loan

commitments with variable interest rates must demonstrate that a “ceiling” rate is included

in the loan commitment or loan documentation. If not, the permanent loan will not be

accepted by CTCAC as a funding source.

(6) Minimum and Maximum Debt Service Coverage. An initial debt service coverage ratio

equal to at least 1.15 to 1 in at least one of the project’s first three years is required, except

for FHA/HUD projects, RHS projects or projects financed with hard debt by the California

Housing Finance Agency. Debt service does not include residual receipts debt payments.

Except for projects in which less than 50% of the units are Tax Credit Units or where a

higher first year ratio is necessary to meet the requirements of subsection 10327(f) (under

such an exception the year-15 cash flow shall be no more than the greater of 1) two percent

(2%) of the year-15 gross income or 2) the lesser of $500 per unit or $25,000 total), “cash

flow after debt service” shall be limited to the higher of twenty-five percent (25%) of the

anticipated annual must pay debt service payment or eight percent (8%) of gross income,

during each of the first three years of project operation. Gross income includes rental

income generated by proposed initial rent levels contained with the project application.

9% credit applications without a HUD subsidy layering review: A pro forma statement

utilizing CTCAC underwriting requirements and submitted to CTCAC at initial application;

application at 180 days or 194 days pursuant to Section 10328(c); and placed in service

application review must demonstrate that this limitation is not exceeded during the first

three years of the project’s operation.

All other applications: A pro forma statement utilizing CTCAC underwriting requirements

and submitted to CTCAC at initial application; application at 180 days or 194 days pursuant

to Section 10328(c); and if applicable, application at subsidy layering review must

demonstrate that this limitation is not exceeded during the first three years of the project’s

operation. For these applications, effective November 1, 2019 CTCAC underwriting

requirements for placed in service applications currently under review pursuant to Section

10322(i) are eliminated.

(7) The income from the residential portion of a project shall not be used to support any

negative cash flow of a commercial portion. Alternatively, the commercial income shall not

support the residential portion. Applicants must provide an analysis of the anticipated

commercial income and expenses. At placed in service, an applicant with commercial space

shall provide a written communication from the hard lender specifying the portion of the loan

that is underwritten with commercial income and, if greater than zero, the corresponding

annual commercial debt service payments.

(8) Existing tax credit projects applying for a new reservation of tax credits for acquisition and/or

rehabilitation (i.e., resyndication) that are subject to the hold harmless rent provisions of the

federal Housing and Economic Recovery Act of 2008 (HERA) at application may, at the

request of the applicant, be underwritten at the hold harmless rent limits to the extent that

they do not exceed the elected federal set-aside current tax credit rent limits, except that

the application of the rent adjuster shall be delayed for a number of years equal to the

percentage difference between the hold harmless rent limits and the current tax credit rent

limits, with the result divided by 2.5 and rounded to the nearest year. The new regulatory

agreement shall reflect the current tax credit rent limits, but the project may continue to

charge hold harmless HERA rents for units targeted below the elected federal set-aside

(i.e., 40% of units at 60% AMI or 20% of units at 50% AMI) provided that the hold harmless

rents do not exceed the rent level for the applicable elected federal set-aside and only until

such time as the current tax credit rent limits equal or exceed the hold harmless rents.

Note: Authority cited: Section 50199.17, Health and Safety Code.

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Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4,

50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14,

50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.

Section 10328. Conditions on Credit Reservations

(a) General. All reservations of Tax Credits shall be conditioned upon:

(1) timely project completion;

(2) receipt of amounts of Tax Credits no greater than necessary for financial feasibility and

viability as a qualified low-income housing project throughout the extended use period;

(3) income targets as proposed in the application; and,

(b) Preliminary reservations. Preliminary reservations of Tax Credits shall be subject to conditions as

described in this subsection and applicable statutes. Reservations of Tax Credits shall be

conditioned upon the Committee's receipt of the performance deposit described in Section 10335

and an executed reservation letter bearing the applicant's signature accepting the reservation

within twenty (20) calendar days of the Committee's notice to the applicant of the preliminary

reservation. However, should the 20-day period for returning the executed reservation letter

continue past December 15 of any year, an applicant may be required to execute and return the

reservation letter in less than twenty (20) days in order that the reservation be effective. Failure to

comply with any shortened period would invalidate the reservation offer and permit the Committee

to offer a reservation to the next eligible project.

reservation but who did not receive maximum points in the Readiness to Proceed point category

shall provide the Committee with a completed updated application form no later than 180 days or

194 days, as applicable, following Credit reservation.

Upon receipt of the updated application form, the Committee shall conduct a financial feasibility

and cost reasonableness analysis for the proposed project, and determine if all conditions of the

preliminary reservation have been satisfied. Substantive changes to the approved application, in

particular, changes to the financing plan or costs, need to be explained by the applicant in detail,

and may cause the project to be reconsidered by the Committee.

(d) Carryover Allocations. Except for those applying under section 10326 of these regulations,

applicants receiving a Credit reservation shall satisfy either the Placed-in-service requirements

pursuant to subsection 10322(i) or carryover allocation requirements in the year the reservation is

made, pursuant to IRC Section 42(h)(1)(E) and these regulations, as detailed below. An application

for a carryover allocation must be submitted by October 31 of the year of the reservation, together

with the applicable allocation fee, and all required documentation, except that the time for meeting

the “10% test” and submitting related documentation, and owning the land, will be no later than

twelve (12) months after the date of the carryover allocation.

(1) Additional documentation and analysis. The Executive Director may request, and the holder

of a Credit reservation shall provide, additional documentation required for processing a

carryover allocation.

(2) In addition to the requirements of the Internal Revenue Code, to receive a carryover

allocation an applicant shall provide evidence that applicant has maintained site control

from the time of the initial application and, if the land is not already owned, will continue to

maintain site control until the time for submitting evidence of the land’s purchase.

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(3) Certification. The Committee shall require a certification from an applicant that has received

a reservation, that the facts in the application continue to be true before a carryover

allocation is made.

(e) Placed-in-service. Within one year following the project’s completion of construction, the applicant

shall submit documentation required by Section 10322(i).

(f) Additional Conditions to Reservations and Allocations of Tax Credits. Additional conditions,

including cancellation, disqualification and other sanctions may be imposed by the Committee in

furtherance of the purposes of the Tax Credits programs.

(g) Reservation Exchange. A project with a reservation of Federal Credit pursuant to Section 10325

and a carryover allocation pursuant to Section 10328(d) and IRC Code § 42(h)(1)(E) that meets

either of the following criteria may elect to return all of the Federal Credit in exchange for a new

reservation and allocation of Federal Credits. The reservation and carryover allocation of the

Federal Credits returned pursuant to this subdivision shall be deemed cancelled by mutual consent

pursuant to a written agreement executed by the Committee and the applicant specifying the

returned credit amount and the effective date on which the credits are deemed returned. The

Committee shall concurrently issue a new reservation of Federal Credits to the project in the

amount of the Federal Credits returned by the project to the Committee.

(1) A High-Rise Project that returns all of the Federal Credit only during January of the year

immediately following the year in which the initial reservation and carryover allocation were

made.

(2) A project which prior to the placed in service deadline the Executive Director finds, in his or

her sole discretion, merits additional time to place in service because development was

significantly delayed due to damage directly cause by fire, war, or act of God. In considering

a request the Executive Director may consider, among other things, the extent of the

damage, the length of the delay, the time remaining until the project’s placed in service

deadline, and the circumstances causing the damage.

(3) A project reserved Federal credit established by the Further Consolidated Appropriations

Act, 2020 or the Consolidated Appropriations Act, 2021 that returns all of the Federal Credit

only during January of the year immediately following the year in which the initial reservation

and carryover allocation were made.

(h) CTCAC may contract with accountants and contractors or construction engineers to review the

accuracy and reasonableness of a subset of final cost certifications submitted each year. The

owner of a project selected for review and the accountant who prepared the final cost certification

for such a project shall provide all requested information and generally facilitate the review.

Note: Authority cited: Section 50199.17, Health and Safety Code.

Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4,

50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14,

50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.

Section 10330. Appeals

(a) Availability. No applicant may appeal the Committee staff evaluation of another applicant’s

application. An applicant may file an appeal of a Committee staff evaluation, limited to:

(1) determination of the application point score;

(2) disqualification from participation in the program pursuant to subsection 10325(c);

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Section 10330-10335

Page 92 of 99

(3) qualification for “additional threshold requirements,” pursuant to subsection 10325(g); and,

determination of the Credit amount, pursuant to Section 10327.

(b) (1) Procedure for application appeals. An appeal related to an application must be submitted

in writing and received by the Committee no later than seven (7) calendar days following

the transmittal date of the Committee staff’s point or disqualification letter. The appeal shall

identify specifically, based upon previously submitted application materials, the applicant's

grounds for the appeal.

Staff will respond in writing to the appeal letter within seven (7) days after receipt of the

appeal letter. If the applicant wishes to appeal the staff response, the applicant may appeal

in writing to the Executive Director within five (5) days after receipt of the staff response

letter. The Executive Director will respond in writing no more than five (5) days after receipt

of the appeal. If the applicant wishes to appeal the Executive Director’s decision, a final

appeal may be submitted to the Committee no more than five (5) days following the date of

receipt of the Executive Director’s letter. An appeal to the Committee must be accompanied

by a five hundred dollar ($500) non-refundable fee payment payable to CTCAC. No

Committee appeals will be addressed without this payment. The appeal review shall be

based upon the existing documentation submitted by the applicant when the application

was filed. Any appeal or response due on a weekend or holiday shall be deemed to be due

on the following business day.

(2) Procedure for negative point or fine appeals. An appeal related to negative points or a fine

must be submitted in writing and received by the Committee or no later than fourteen (14)

days following the transmittal of a negative point or fine letter, unless the Executive Director

grants an extension which shall not exceed fourteen (14) additional days. The appeal shall

identify specifically the appellant’s ground for the appeal.

The Executive Director will respond in writing no more than seven (7) days after receipt of

the appeal, unless the appellant requests an extension to accommodate a meeting with the

Executive Director. If the appellant wishes to appeal the Executive Director’s decision, a

final appeal may be submitted to the Committee no more than seven (7) days following the

date of receipt of the Executive Director’s letter. An appeal to the Committee must be

accompanied by a five hundred dollar ($500) non-refundable fee payment payable to

CTCAC. No Committee appeals will be addressed without this payment.

Note: Authority cited: Section 50199.17, Health and Safety Code.

Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4,

50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14,

50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.

Section 10335. Fees and Performance Deposit

(a) Application fee.

(1) Every applicant for non-competitive tax credits shall be required to pay an application filing

fee of $1,000. Scattered site applications and resyndication applications shall be required

to pay an application filing fee of $1,500. This fee shall be paid to the Committee and shall

be submitted with the application. This fee is not refundable.

(2) Every applicant for competitive tax credits shall be required to pay an application filing fee

of $2,000, except for projects with sites within the jurisdictions of multiple Local Reviewing

Agencies (LRA) for which applicants shall be required to pay an additional $1,000

application fee for each additional LRA. This fee shall be paid to the Committee and shall

be submitted with the application. This fee is not refundable. Applicants reapplying in the

same calendar year for an essentially similar project on the same project site shall be

required to pay an additional $1,000 filing fee to be considered in a subsequent funding

Regulations

Section 10335

Page 93 of 99

round, regardless of whether any amendments are made to the re-filed application. At the

request of the applicant and upon payment of the applicable fee by the application filing

deadline, applications remaining on file will be considered as is, or as amended, as of the

date of a reservation cycle deadline. It is the sole responsibility of the applicant to amend

its application prior to the reservation cycle deadline to meet all application requirements of

these regulations, and to submit a “complete” application in accordance with Section 10322.

$1,000 of the initial application filing fee shall be provided to each official LRA which

completes a project evaluation for the Committee. A LRA may waive its portion of the

application filing fee. Such waiver shall be evidenced by written confirmation from the LRA,

included with the application.

(b)

Allocation fee. Every applicant who receives a reservation of Tax Credits, except tax-exempt bon

project

applicants, shall be required to pay an allocation fee equal to four percent (4%) of the dollar

amount of the first year's Federal Credit amount reserved. Reservations of Tax Credits shall be

conditioned upon the Committee's receipt of the required fee paid to the Committee prior to

execution of a carryover allocation or issuance of tax forms, whichever comes first. This fee is n

refundable.

(c)

Appeal fee. Any applicant submitting an appeal to the Committee shall pay a fee of five hundred

dollars ($500) to CTCAC. The fee must accompany the appeal letter to the Committ

ee.

(d)

Reservation fee. Tax-exempt bond project applicants receiving Credit reservations shall be

required to pay a reservation fee equal to one percent (1%) of the annual Federal Tax Credit

reserved. Reservations of Tax Credits shall be conditioned upon the Committee's receipt of t

required

fee within twenty (20) days of issuance of a tax-exempt bond reservation or prior to the

issuance of t

ax forms, whichever is first.

(e)

Performance deposit. Each applicant receiving a preliminary reservation of Federal, or Feder

and

State (including State Farmworker), Tax Credits shall submit a performance deposit equal to

four percent (4%) of the first year's Federal Credit amount reserved, but not to exceed $100,00

including

applicants with a reservation of credit on or after October 14, 2020. Notwithstanding

the

other

provisions of this subsection, an applicant requesting Federal Tax Credits not subject to the

Federal housing Credit Ceiling and requesting State Tax Credits or State Farmworker Tax Credits,

shall be required to submit a performance deposit in an amount equal to two percent (2%) of the

first year's State Credit amount reserved for the project, but not to exceed

$100,000.

Notwithstanding

the other provisions of this Section, an applicant requesting only Federal

Tax

Credits

not subject to the Federal Credit Ceiling, shall not be required to submit a performance

deposit.

(1)

Timing and form of payment. The performance deposit shall be paid to the Committee

within twenty (20) calendar days of the Committee's notice to the applicant of a

preliminary

reservation.

(2)

Returned Tax Credits. If Tax Credits are returned after a reservation has been acce

pted,

the

performance deposit is not refundable, with the following exceptions. Projects

unable

proceed due to a natural disaster, a law suit, or similar extraordinary circumstance

that

prohibits

project development may be eligible for a refund. Requests to refund a de

posit

shall

be submitted in writing for Committee consideration. Amounts not refunded are

forfeited to the Committee. All forfeited funds shall be deposited in the occu

pancy

compliance

monitoring account to be used to help cover the costs of performing

the

responsibilities described in Section 10337.

(3) Refund or forfeiture. To receive a full refund of the performance deposit, the applicant

shall

all of the following: place the project in service under the time limits permitted

bylaw;

qualify

the project as a low-income housing project as described in Section 42; meet all the

conditions under which the reservation of Tax Credits was made; certify to the Committee

that the Tax Credits allocated will be claimed; and, execute a regulatory agreement for the

project.

Regulations

Section 10335-10337

Page 94 of 99

If the Committee cancels a Credit because of misrepresentation by the applicant either

before or after an allocation is made, the performance deposit is not refundable. If the

project is completed, but does not become a qualified low-income housing project, the

performance deposit is not refundable.

(4) Appeals. An applicant may appeal the forfeiture of a performance deposit, by submitting in

writing, a statement as to why the deposit should be refunded. The appeal shall be received

by the Committee not later than seven (7) calendar days after the date of mailing by the

Committee of the action from which the appeal is to be taken. The Executive Director shall

review the appeal, make a recommendation to the Committee, and submit the appeal to the

Committee for a decision.

(f) Compliance monitoring fee. The Committee shall charge a $410 per low-income unit fee to cover

the costs associated with compliance monitoring throughout the extended-use period. Generally,

payment of the fee shall be made prior to the issuance of Federal and/or State tax forms.

Assessment of a lesser fee, and any alternative timing for payment of the fee, may be approved at

the sole discretion of the Executive Director and shall only be considered where convincing proof

of financial hardship to the owner is provided. Nothing in this subsection shall preclude the

Committee from charging an additional fee to cover the costs of any compliance monitoring

required, but an additional fee shall not be required prior to the end of the initial 15 year compliance

period.

(g) Tax form revision fee. An owner who requests an amendment to 8609 or 3521A tax forms, including

a request that occurs after CTCAC completes the drafting of these forms, shall pay a fee of $1000

unless the Executive Director determines that the amendment is necessary due to a CTCAC error.

Note: Authority cited: Section 50199.17, Health and Safety Code.

Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4,

50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14,

50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.

Section 10337. Compliance

(a) Regulatory Agreement. All recipients of Tax Credits, whether Federal only, or both Federal and

State, are required to execute a regulatory agreement, as a condition to the Committee's making

an allocation, which will be recorded against the property for which the Tax Credits are allocated,

and, if applicable, will reflect all scoring criteria proposed by the applicant in the competition for

Federal and/or State housing Credit Ceiling.

(1) For all projects receiving a reservation of competitive 9% federal tax credits on or after

January 1, 2016 for which all general partners will be Qualified Nonprofit Organizations, the

partnership agreement shall include a Right of First Refusal (“ROFR”) for one or more of

the nonprofit general partners to purchase the project after the end of the 15-year federal

compliance period. The price to purchase the project under this ROFR shall be the minimum

price allowed under IRC Section 42(i) plus any amounts required to be paid to the tax credit

investors that remain unpaid for approved Asset Management Fees and required payments

under the limited partnership agreement for tax credit adjusters that remain outstanding at

the time of the sale. The applicant shall demonstrate compliance with this requirement prior

to the issuance of the 8609 forms.

(2) For all projects receiving a reservation of 4% and 9% federal tax credits on or after January

1, 2016, the regulatory agreement shall require written approval of the Executive Director

for any Transfer Event.

(3) Where a Project is receiving renewable project-based rental assistance or operating

subsidy:

Regulations

Section 10337

Page 95 of 99

(A)

the owner shall in good faith apply for and accept all renewals available;

(B)

if the project-based rental assistance or operating subsidy is terminated through no

fault of the owner, the property owner shall notify CTCAC in writing immediately and

shall make every effort to find alternative subsidies or financing structures that w

ould

maintain

the deeper income targeting contained in the recorded CTCAC

regulatory

agreement.

Upon documenting to CTCAC’s satisfaction unsuccessful efforts to

identify and obtain alternative resources, the owner may increase rents and income

targeting for Low-Income Units above the levels allowed by the recorded r

egulatory

agreement

up to the federally-permitted maximum. Rents shall be raised only to t

extent

required for Financial Feasibility, as determined by CTCAC. Where possible,

remedies shall include skewing rents higher on portions of the project in order to

preserve affordability for units regulated by TCAC at extremely low income targeting.

Any necessary rent increases shall be phased in as gradually as possible, c

onsistent

with

maintaining the project’s Financial Feasibility. If housing Special

Needs

populations,

the property owner shall attempt to minimize disruption to existing

households, and transition to non-Special Needs households only as necessary

and

upon vacancy wheneve

r possible.

(4)

All projects that receive a reservation of Tax Credits on or after January 1, 2017 and

that

involve

a leasehold interest shall, in addition to the regulatory agreement, execute a

lease

rider which

shall be recorded against the prope

rty.

(b)

Responsibility of owner.

(1)

Compliance. All compliance requirements monitored by the Committee shall be t

responsibility of the project owner. Project owners are required to annually certify tenant

incomes

in conformance with IRS regulation §1.42-5(c)(3) unless the project is a

100

percent

(100%) tax credit property exempted under IRC Section 142(d)(3)(A). Owners of

100%

tax credit property must perform a first annual income recertification in addition to the

required initial move-in certification. After initial move-in certification and first

annual

recertificat

ion, owners of 100% tax credit properties may discontinue obtaining income

verifications. Owners of 100% tax credit properties must continue to check for full-time

student status of all households during the entire tenancy of the households and throughout

the initial compliance period, and continue recordkeeping in accordance with paragraph

(1)

this subsection. These requirements continue if the tax credit property is sold

transferred,

or under new management. Any failure by the owner to respond to compliance

reports and certification requirements will be considered an act of noncompliance and

shall

reported to the IRS if reasonable attempts by the Committee to obtain the information

are unsuccessful.

(2)

Accessible Units: Reasonable Accommodations. All new and existing Tax Credit

projects

with fully accessible units for occupancy by persons with mobility impairments or hearing,

vision or other sensory impairments shall provide a preference for those units as follo

ws.

(A)

First, to a current occupant of another unit of the same project having handicaps

requiring the accessibility features of the vacant unit and occupying a unit not

having

such feature

s, or if no such occupant exists, then

(B)

Second, to an eligible qualified applicant on the waiting list having a handicap

requiring the accessibilit

y features of the vacant unit.

When

offering an accessible unit to an applicant not having handicaps requiring the

accessibility features of the unit, the owner or manager shall require the applicant to agree

(and may incorporate this agreement in the lease) to move to a non-accessible unit when

available.

Regulations

Section 10337

Page 96 of 99

Owners and managers shall adopt suitable means to assure that information regarding the

availability of accessible units reaches eligible individuals with handicaps, and shall take

reasonable nondiscriminatory steps to maximize the utilization of such units by eligible

individuals whose disability requires the accessibility features of the particular unit.

(3)

Homeless youth and federal student rule. After the 15-year federal compliance period has

lapsed, units in a special needs project designated at reservation for homeless youth

may

be occupied

entirely by full-time students who are not dependents of ano

ther individual.

(4)

Prohibition against requiring tenants to participate in services. All new and existing

Tax

Credit

projects are prohibited from requiring tenants to participate in services, unless

the

tenant

occupies a unit assisted with a federal source that requires tenant participation in

services.

(c)

Compliance monitoring procedure. As required by Section 42(m), allocating agencies are to f

ollow

compliance monitoring procedure to monitor all Credit projects for compliance with provisions of

Section 42. Compliance with Section 42 is the sole responsibility of the owner of the building fo

which

the Credit is allowable. The Committee’s obligation to monitor projects for compliance with

the requirements of Section 42 does not place liability on the Committee for any owner's

noncompliance, nor does it relieve the owner of its responsibility to comply with Section 42.

(1)

Record keeping. The owner of a Credit project is required to keep records for each q

ualified

low

income building in the project for each year in the compliance period showing: the t

otal

number

of residential rental units in the building (including the number of bedrooms,

and

unit

size in square feet); the percentage of Low-Income and Market Rate Units in

the

building

that are Low-Income Units; the rent charged for each Low-Income Unit; a cu

rrent

utility

allowance as specified in 26 CFR Section 142.10(c) and Section 10322(h)(21) o

these

regulations (for buildings using an energy consumption model utility allowance, t

hat

allowance

must be calculated using the most recent version of the CUAC); the number of

household members in each Low-Income Unit; notation of any vacant Low-Income

Units;

move-in

dates for all Low-Income Units; low-income tenants’ (i.e., household) inc

ome;

documentation

to support each low-income household's income certification; the eligible

basis and qualified basis of the building at the end of the first year of the Credit period;

and,

the

character and use of any nonresidential portion of the building included in the

building's

eligible ba

sis

Upon

request, scattered site projects shall make these records available for inspection

CTCAC staf

f at a single location.

(2)

Record Retention. For each qualified low-income building in the project, and for each y

ear

the compliance period, owners and the Committee are required to retain records of

the

information described a

bove in “record keeping

requirements.”

(A)

Owners shall retain documents according to the following schedule:

(i)

for at least six years following the due date (with extensions) for filing

the

Federal

income tax return for that year (for each year except the first year of

the Credit period); and,

(ii)

for the first year of the Credit period, at least six years following the due

date

(with extensions) for filing the Federal income tax return for the last year of the

compliance period of the building.

(iii) for local health, safety, or building code violation reports or notices issued by a

state or local governmental entity, until the Committee has inspected

the

reports

or notices and completes the tenant file and unit inspections and th

violation

has been corrected. This subsection shall take effect

beginning

January 1, 2001.

Regulations

Section 10337

Page 97 of 99

(B)

The Committee shall retain records of noncompliance, or failure to certify, for at

least

six

years beyond the Committee's filing of the respective IRS noncompliance

Form

8823.

Should the Committee require submission of copies of tenant certifications

and records, it shall retain them for three years from the end of the calendar year it

receives them. Should it instead review tenant files at the management office of the

subject project, it shall retain its review notes and any other pertinent information

for

the

same three-year period. The Committee shall retain all other p

roject

documentation for the sa

me three-year period.

(3)

Certification requirements. Under penalty of perjury, a Credit project owner is required

annually, during each year of the compliance period, meet the certificat

ion requirements of

U.S. Treasury Regulations 26 CFR 1.42-5(c), (including certifications that no finding o

discriminatio

n under the Fair Housing Act, 42 USC 3601 occurred for the project), that the

buildings and low income units in the project were suitable for occupancy taking into a

ccount

local

health, safety, and building codes, that no violation reports were issued for any building

or low income unit in the property by the responsible state or local government unit, that t

owner

did not refuse to lease a unit to an applicant because the applicant had a section 8

voucher or certificate, and that except for transitional or single room occupancy housing, a

low

income units in the project were used on a nontransient basis. The following must also

be certified to

by the owner:

(A)

the project met all terms and conditions recorded in its Regulatory Agreement,

applicable;

(B)

the applicable fraction (as defined in IRC Section 42(c)(1)(B)) met all requirements

of the Credit allocation as specified on IRS Form(s) 8609 (Low-Income Housing

Credit Allocation Certification.);

(C)

no change in ownership of the project has occurred during the reporting period;

(D)

the project has not been notified by the IRS that it is no longer a “qualified low-

income housing project” within the meaning of Section 42 of the

IRC;

(E)

no additional tax-exempt bond funds or other Federal grants or loans with interest

rates below the applicable Federal rate have been used in the Project since it

was

placed-in-se

vice; and,

(F)

report the number of units that were occupied by Credit eligibl

e households during

the reportin

g period.

(G)

the services specified in the Regulatory Agreement were pro

vided to the tenants

during the reporting period.

(H)

if the project is subject to a cash flow limitation in its Regulatory Agreem

ent, that

the limitatio

n has been met.

(4)

Status report, file and on site physical inspection. The Committee or its agent will con

duct

file

and on site physical inspections for all projects no later than the end of the

second

calendar

year following the year the last building in the project is placed-in-service, and

once every three years thereafter. These physical inspections will be conducted for all

buildings

and common areas in each project, and for at least 20% of the low-income

units

each project. The tenant file reviews will also be for at least 20% of the low-income

units

each project, but may be conducted on site or off site. Each year the Committee

shall

select

projects for which site inspections will be conducted. The projects shall be selected

using guidelines established by the Executive Director for such purpose, while the units

and

tenant

records to be inspected shall be randomly selected. Advance notice shall not be

given of the Committee's selection process, or of which tenant records will be inspected at

Regulations

Section 10337

Page 98 of 99

selected projects; however, an owner shall be given reasonable notice prior to a project

inspection.

(A)

A Notice of Intent to Conduct Compliance Inspection and a Project Status

Report

(PSR)

form will be delivered to the project owner within a reasonable period

before

inspection is scheduled to occur. The completed PSR form shall be

submitted

the Committee by the owner prior to the compliance inspection. The Committee

will review the information submitted on the PSR for compliance with income, rent

and other requirements prior to performing the tenant file inspection.

(B)

Each project undergoing a file inspection will be subject to a physical inspection

assure

compliance with local health, safety, and building codes or with HUD’s

uniform physical condition standards. Owners shall be notified of the inspection

results.

(C)

The Committee may perform its status report, file inspection procedures and

physical inspection on Credit projects even if other governmental agencies also

monitor those projects. The Committee’s reliance on other review findings may a

lter

the

extent of the review, solely at the Committee's discretion and as allowed by I

regulations.

The Committee may rely on reports of site visits prepared by l

enders

other governmental agencies, at its sole discretion. The Committee shall,

whenever possible, coordinate its procedures with those of other agencie

s, lenders

and investors.

(5)

Notification of noncompliance. The Committee shall notify

owners in writing if the owner is

required

to submit documents/information related to either the physical or tenant f

ile

inspection

. If the Committee does not receive the information requested, is not per

mitted

or otherwise is unable to

conduct the inspections or discovers

noncompliance with Section

as a result of its review, the owner shall be notified in writing before any notice is sent to

the IRS.

(6)

Correction period. It is the intention of the Committee that owners be given

every

reasonable

opportunity to correct any noncompliance. Owners shall be allowed an

opportunity to supply missing tenant file documents or to correct other noncompliance

within

correction period no longer than ninety (90) days from the date of written notice by t

Committee

to the owner, unless the violation constitutes an immediate health or

safety

issue,

in which case, the correction should be made immediately. With good cause, the

Committee may grant up to a six-month extension of the correction period upon receipt

a written justification

from

the owner.

(7)

IRS and FTB notification. All instances of noncompliance, whether corrected or not,

shall

reported by the Committee to the IRS. This shall be done within forty-five (45)

days

following

the termination of a correction period allowed by the Committee, pertaining to IRS

Form 8823.

(d)

Change in ownership and property management. It is the project owner's responsibility to c

omply

with

the requirements of Section 10320(b) and to inform the Committee of any change in the project

owner's mailing address.

(1)

Any property management change during the 15-year federal compliance and extended

use period must be to a party earning equal capacity points pursuant to Section

10325(c)(1)(A)

as the exiting property management company. At a minimum this must be

six (6) projects in service more than three years, or the demonstrated training required

under Section 10326(g)(5). Two of the six projects must be Low Income Housing Tax C

redit

projects

in California. If the new property management company does not meet these

experience requirements, then substitution of property management shall not be

permitted.

Regulations

Section 10337

Page 99 of 99

(e) First year’s 8609. Project owners shall be required to submit a copy of the executed first year’s

filing

of IRS Form 8609 (Low-Income Housing Credit Allocation Certification) for inclusion in the

Committee’s permanent project recor

ds.

(f) (1)

CTCAC may establish a schedule of fines for violations of the terms and conditions, the

regulatory agreement, other agreements, or program regulations. In developing the

schedule of fines, CTCAC shall establish the fines for violations in an amount up to five

hundred dollars ($500) per violation or double the amount of the financial gain because of

the violation, whichever is greater. Except for serious violations, a first-time property owner

violator shall be given at least 30 days to correct the violation before a fine is imposed. A

violation that has occurred for some time prior to discovery is one violation, but fines may

be a recurring amount if the violation is not corrected within a reasonable period of time

thereafter, as determined by the Committee.

(2)

CTCAC shall adopt and may revise the schedule of fines by resolution at a public gen

eral

Committee meeting.

(3)

A person or entity subject to a fine may appeal the fine to the Executive Director and,

thereafter, to the Committee pursuant to Section

10330(b)(2).

(4)

The Executive Director may approve a payment plan for any fines.

(5)

If a fine assessed against a property owner is not paid within six months from the date when

the fine was initially assessed and after reasonable notice has been provided to the property

owner, the Committee may record a lien against the property. If the violation(s) for w

hich

the fine(s) is assessed is not correcte

d within 90 days of the assessed fine, the Committee

may record a lien against the property.

Note: Authority cited: Section 50199.17, Health and Safety Code.

Reference: Sections 12206, 17058 and 23610.5, Revenue and Taxation Code; and Sections 50199.4,

50199.5, 50199.6, 50199.7, 50199.8, 50199.9, 50199.10, 50199.11, 50199.12, 50199.13, 50199.14,

50199.15, 50199.16, 50199.17, 50199.18, 50199.20, 50199.21 and 50199.22, Health and Safety Code.