Microsoft Word - Approved Regulations 4-3-24 Strikeout and Underline Version REVISED

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

January 24, 2024April 3, 2024

§10300. Purpose and Scope.

§10302. Definitions.

§10305. General Provisions.

§10310. Reservations of Tax Credits.

§10315. Set-Asides and Apportionments.

§10317. State Tax Credit Eligibility Requirements.

§10320. Actions by the Committee.

§10322. Application Requirements.

§10323. The American Recovery and Reinvestment Act of 2009.

§10325. Application Selection Criteria—Credit Ceiling Applications.

§10325.5. 2016 Projects. [Repealed]

§10326. Application Selection Criteria—Tax-Exempt Bond Applications.

§10327. Financial Feasibility and Determination of Credit Amounts.

§10328. Conditions on Credit Reservations.

§10330. Appeals.

§10335. Fees and Performance Deposit.

§10337. Compliance.

Section 10300. Purpose and Scope.

These regulations e

stablish 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

Regulations

Section 10300 - 10302

Page 2 of 104

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.

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

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

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 for

the occupants, and/or sites that received a Project Homekey allocation.

(b) AHP. The Affordable Housing Program of the Federal Home Loan Bank.

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

California Franchise Tax Board (“FTB”).

(d) 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 Credit

amounts.

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

shower or bathtub, and a receptacle outlet.

(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

Regulations

Section 10302

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 non farmworkers 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.

(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) Homeless. As defined by Section 10315(b)(1) through (4).

(aa) 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).

(bb) IRS. United States Internal Revenue Service.

(cc) 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.

Regulations

Section 10302

Page 4 of 104

(dd) Local Reviewing Agency. An agency designated by the local government having jurisdiction that

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

Committee.

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

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

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

Development.

(hh) “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).

(ii) 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.

(jj) 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).

(kk) “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.

(ll) 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.

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

Service or RHCDS, formerly Farmers Home Administration or FmHA

(nn) 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

Regulations

Section 10302

Page 5 of 104

(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;

(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.

(oo) 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.

Regulations

Section 10302

Page 6 of 104

(pp) Resyndication: A project subject to an existing tax credit regulatory agreement that is awarded a

new allocation of tax credits to preserve and extend the affordability of the project.

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

(rr) 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.

(ss) Single Room Occupancy (SRO)/Studio: A unit that may or may not include a complete private bath

and kitchen but generally does not have a separate bedroom. A complete private bath consists of

a toilet and shower, with a vanity sink that may or may not be in the same room. SRO units in

projects with an existing regulatory agreement recorded with CTCAC or another government

agency shall be deemed having met the requirements of an SRO/Studio. Projects containing units

that do not have complete private baths shall provide at least one bath per eight units and at least

one complete bath per floor. Common kitchen facilities shall be provided for units without complete

kitchens. CTCAC uses SRO and Studio interchangeably but recognizes some jurisdictions may

not, and the project shall comply with all local regulations.

(tt) 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.

(uu) Tax Credit Units. Low-Income Units and manager units.

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

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

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

(xx) “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

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

Regulations

Section 10302 - 10305

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.

(yy) 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.

(zz) 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.

(aaa) 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.

(bbb) 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.

(ccc) CTCAC/HCD Opportunity Area Map. A map or series of maps approved annually by the

Committee as the CTCAC/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.

(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.

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

Regulations

Section 10305 - 10310

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 for

any calendar year, calculated as of February first of the calendar 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 project (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. The

Committee may establish a minimum point requirement for competitive rounds under either Section

10325 or 10326.

(h) Notwithstanding any other provision of these regulations, only projects receiving a tax-exempt bond

allocation from CDLAC shall be eligible for State Tax Credits allocated pursuant to subsection

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

applicant criteria shall be applied in accordance with Section 10326. Up to two hundred million

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

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 reservation

in a reservation cycle shall be equal to the sum of:

(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;

Regulations

Section 10310 - 10315

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

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 year,

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

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

developers, as defined by these regulations, and in accordance with IRC Section (42)(h)(5).

Regulations

Section 10315

Page 10 of 104

(b) Each funding round, credits available in the Nonprofit set-aside shall be made available as a priority

to projects that meet the requirements below and provide housing to Homeless households at

affordable rents, consistent with Section 10325(g)(3) in the following priority order:

 First priority will be given to qualified Homeless projects with 1) McKinney-Vento

Homeless Assistance Act, HCD Multifamily Housing Program (MHP), HCD Veterans

Housing and Homeless Prevention Program (VHHP), HCD Homekey, Mental Health

Services 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 governmental funding

sources. The rental assistance must be sponsor-based or project-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 governmental entity.

 Second priority will be given to other qualified Homeless 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)

through (4) immediately below:

(1) Individual or family who lacks a fixed, regular, and adequate nighttime residence, meaning:

(A) Has a primary nighttime residence that is a public or private place not meant for

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 local

government programs); or

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

assistance;

(B) No subsequent residence has been identified; and

other permanent housing.

(3) Unaccompanied youth under 25 years of age, or families with children and youth, who do

not otherwise qualify as homeless under this definition, but who:

(A) Are defined as homeless under the other listed federal statutes;

(B) Have not had a lease, ownership interest, or occupancy agreement in permanent

housing during the 60 days prior to the homeless assistance application;

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 barriers.

(4) Any individual or family who:

(A) Is fleeing, or is attempting to flee, domestic violence;

(B) Has no other residence; and

Regulations

Section 10315

Page 11 of 104

Individuals or families that are subject to a Continuum of Care emergency transfer plan, receiving

or have received supportive services or rental subsidies administered by a Continuum of Care or

other programs targeted to individuals experiencing homelessness, or through a public housing

authority’s shelter plus care program, or SRO Moderate Rehabilitation Program, or are otherwise

transferring to a homeless unit shall be considered homeless or retain their original homeless or

chronically homeless status for the purposes of the transfer. This subparagraph applies both to

existing and future developments.

For all projects rece

iving 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-aside.

(c)

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

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 applicat

ion material

prepared by

CTCAC. For purposes of implementing Section 5

0199.21(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 designat

ed in writing

by the USDA Multifamil

y Housing Program Director. All Projects located in eligible census tracts

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 f

r reservation within the current calendar year. In such cases

the rural project may receive a reser

vation in the last round for the year, from the geographic region

in which it is located, if an

Within the

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

10325(c)(9), except that the Seniors, Large Famil

y New Construction in Highest or High Resource

Tract, and Acquisition and/or Rehabilitation 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

each round.

(1)

RHS, HOME, and CDBG-DR program apportionment. In each reservation cycle, fo

urteen

percent (14

%) of the rural set-aside shall be available for new construction projects which

have a funding 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 Rent

al Housing Loan

Program, or a reservat

ion from a Participating Jurisdiction or the State

of California of at

least $1,000

,000 in HOME or CDBG-DR funding

All projects

meeting the RHS, HOME, and

CDBG-DR program apportionment eligibility

requirements shall co

mpete under the RHS, HOME, and CDBG-DR pr

ogram

apportionment. Projects

that are unsuccessful under the apportionment shall then com

pete

within the g

eneral rural set-aside described in subsection (c). Any amount reserved under

this subsection for which RHS, HOME, or CDBG-DR funding does not become availa

ble in

the calendar

year in which the reservation is made, or any amount of Credit apportione

d by

this subse

ction and not reserved during a reservation cycle shall be availa

ble for

application

s qualified under the Rural set-aside.

Regulations

Section 10315

Page 12 of 104

(2) Native American apportionment. In each reservation cycle starting in 2024 and each year

thereafter, ten percent (10%) of the rural set-aside shall be available for applications

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

CTCAC 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), five

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 considered

under this At-Risk set-aside if the project meets the housing type requirements in Section

10325(g)(4).

(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

of 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 is

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

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

requirements in Section 10325(g)(3).

(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 year,

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

in 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 from

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 threshold

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 are

not yet reached:

Housing Type 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 CTCAC/HCD Opportunity

Regulations

Section 10315

Page 13 of 104

Area Map as Highest or High Resource Areas

Special Needs 30%

Single Room Occupancy (SRO) 15%

At-Risk 15%

Seniors 15%

Rural Acquisition and/or Rehabilitation 30% of rural set-aside credits

For purposes of the Acquisition and/or Rehabilitation Housing Type goal within the Rural set aside,

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 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 this

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 to

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

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

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

Regulations

Section 10315 - 10317

Page 14 of 104

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. For purposes of calculating the final State Tax Credit amount

on the Form(s) 3521A, the project’s actual eligible basis may be used.

(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.

For projects applying for State Tax Credits in paragraph (j), the maximum request for any one

project in any funding round shall not exceed Two Hundred Thousand ($200,000) dollars per Tax

Credit Unit. Farmworker Housing projects are exempt from this requirement.

Regulations

Section 10317

Page 15 of 104

(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% of the Low-Income Units designated as special needs units and within a QCT or

DDA may request the federal 130% 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 Sections

12206(b)(2)(E)(iii),17058(b)(2)(E)(iii), and 23610.5(b)(2)(E)(iii), applications for 4% federal

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

130% basis boost and may also request State credits

(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, 17058,

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 any

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

applications 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 offer

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 17058(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 the 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

or 202 programs, and are subject to those programs’ use restrictions. Projects under those

circumstances may propose a lesser percentage of Tax Credit Units to accommodate

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

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

Regulations

Section 10317

Page 16 of 104

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

of 4% credit in the previous year; and

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

as 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 Credits

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 combination

with State Farmworker Credits during a competitive round, CTCAC shall award available

State Farmworker Credits to the highest scoring Farmworker Housing application that will

receive a reservation of federal credits.

If 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 authority

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 of

the Revenue and Tax Code. 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 Section

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 have received 9% Tax Credit reservations;

(4) The Committee may reserve an amount in excess of the 15% set-aside of State Tax Credits

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 Credits

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 in

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 targeting

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

Page 17 of 104

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, including retrofitting or repurposing of existing nonresidential structures that were

converted to residential use within the previous five years from the date of application subject to

the requirements of the California Debt Limit Allocation Committee regulations and the

requirements of Section 10326 of these regulations. For calendar years 2024 to 2034 where

any

additional credits are available pursuant to subsection (g)(1)(B) of Sections 12206, 17058, and

23610.5 of the Revenue and Taxation Code, the lesser of five percent (5%) or $25,000,000 shall

be available to Farmworker Housing. Any credits pursuant to this clause that remain unallocated

following the conclusion of a funding round shall roll over to the subsequent funding rounds in that

calendar year with the exception that any credits that remain unallocated prior to the final funding

round in that calendar year shall be added back to the aggregate amount of credits that may be

allocated pursuant to this subparagraph. The approximate amount of State Tax Credits available

in each reservation cycle shall be established by the Committee annually at a public meeting.

No later than the CDLAC bond issuance deadline, 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 submit said documents to CTCAC by the CDLAC bond issuance deadline 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.

Regulations

Section 10317 - 10320

Page 18 of 104

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.

(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 shall

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 be

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

requirementsSubparagraphs (A) through (C) apply to all ownership or Tax Credit transfers

requested after January 31, 2014. Subparagraphs (A) through (E) apply to all ownership or

Tax Credit transfers requested after April 3, 2024:

(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 by the transfe

ree 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 project

development and management experience is p

resent 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

financial

capacity of

said persons, shall be provided to th

e Committee. Any general partner

change during the 15-year federal co

mpliance and extended use period must be to

a party earning equal capacity points pursuan

t to Section 10325(c)(1)(A) as the

exiting gene

ral partner. At a minimum this must be three (3) projects in

service more

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 in

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

irements,

then substit

tion of general partner shall not be permitted. The 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 stated above.

(C)

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

ements,

and reserve

balances to the transferee prior to or concur

rent with the transfer.

Failure to deliver such

records may subject th

e transferor to negative points or a

fine.

(D)

The Executive Director shall not approve a transfer if, in any of the five calendar

years prior to the transfer date or in the year to date of the transfer but not earlier

than April 3, 2024, the owner has increased the rent for any low-income household

in excess of the amounts described in Section 10328(a)(4).

(E)

The transferee shall annually certif

y that they have not increased the rent for any

low-income household in excess of the amounts described in Section 10328(a)(4).

Regulations

Section 10320

Page 19 of 104

(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 third-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 Covenant”)

that the Post Transfer Owner (and any assignee thereof) shall:

(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 the

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 service

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 (b)

such amount approved by HUD or USDA, as applicable. Any property

management 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 complete the Long Term Work when

required, or prior thereto, pursuant to the Qualified 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 to

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 the

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.

Regulations

Section 10320

Page 20 of 104

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

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

the following provisions shall apply in lieu of paragraph (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 third-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 Short Term Work.

(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 partner equity.

(iv) developer fee contributed to the project (a deferred developer fee does not

qualify).

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 was

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 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 or a fine. With respect to

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

Regulations

Section 10320 - 10322

Page 21 of 104

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

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

resyndication application shall not include any costs to correct these Form(s) 8823.

(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, unless, for existing SRO projects, waived by the

Executive Director provided that the applicant demonstrates that full compliance would be

impractical.

(8)

A project owner seeking to sell a portion of vacant or unused land must request and re

ceive

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 e

xisting property by the aggregate amount of the proceeds. The pr

oject

owner must request and

receive prior written approval of the Executive Director.

(c)

CTCAC shall initially subordinate its regulatory contract to a permanent lender but ther

eafter shall

not subordin

ate 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 requeste

d on or after October 21, 2015 unless the conditions of Sectio

n 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, pursu

ant

to these reg

ulations, is false or no longer true, and the applicant has not notified CTCAC in writi

ng,

the Committ

ee 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 po

ints to any or all members of the development team as describ

ed 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.

Regulations

Section 10322

Page 22 of 104

(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) at the sole discretion of the Executive

Director, if determined 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. 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

Requirements; 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 shall

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

documents to complete the application. For application omissions, the Executive Director may

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 third-

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 deadline.

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

considered incomplete 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 those

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

reduce the application’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 completed and signed version of the CTCAC Applicant Statement

signifying the responsibility of the applicant to:

(A) provide application related documentation to the Committee upon request;

(B) be familiar with and comply with Credit program statutes and regulations;

Regulations

Section 10322

Page 23 of 104

(D) acknowledge the potential for program modifications resulting from statutory or

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 discrimination;

(G) acknowledge that the Committee has recommended the applicant seek tax advice;

(H) acknowledge that the application will be evaluated according to Committee

regulations, and that Credit is not an entitlement;

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

responsibility 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 allocated;

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 include, but not be limited to:

(A) General Application Information

(i) Credit amounts requested

(ii) minimum set-aside election

(iii) application stage selection

(iv) set-aside selection

(v) housing type

(B) Applicant Information

(i) applicant role in ownership

(ii) applicant legal status

(iii) developer type

(iv) contact person

(D) Subject Property Information

(E) Proposed Project Information

(i) project type

(ii) Credit type

(iii) building and unit types

(F) Land Use Approvals

(G) Development Timetable

Regulations

Section 10322

Page 24 of 104

(H) Identification and Commitment Status of Fund Sources

(I) Identification of Fund Uses

(J) Calculation of Eligible, Qualified and Requested Basis

(K) Syndication Cost Description

(L) Determination of Credit Need and Maximum Credit Allowable

(M) Project Income Determination

(N) Restricted Residential Rent and Income Proposal

(O) Subsidy Information

(P) Operating Expense Information

(Q) Projected Cash Flow Calculation

(R) Basic Threshold Compliance Summary

(S) Additional Threshold Selection

(T) Tax-exempt Financing Information

(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 directly.

(5) Identification of project participants. For purposes of this Section all of the following project

participants, 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 contractor;

(D) attorney

(E) tax professional;

(F) property management company;

Regulations

Section 10322

Page 25 of 104

(G) consultant;

(H) market analyst and/or appraiser; and

(I) CNA consultant.

If 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 more

than one capacity, and full disclosure of Related Parties, as defined.

(7) Legal description. A legal description of the subject property.

(8) Site Layout, Location, Unique Features and Surrounding Areas.

(A) A narrative description of the current use of the subject property;

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

neighborhood, and identification and proximity of services, including transportation

adjacent properties;

(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

subsection (A), below, 2) all adaptive reuse applications, 3) 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,

4) all applications seeking tiebreaker credit for donated or leased land, or land with a soft

loan and 5) all new construction applications involving a land sale from a related party. For

purposes of this paragraph only, a purchase contract or sale with a related 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 arms-length transaction,

plus any applicable and reasonable carrying costs. Appraisals shall not include the value of

favorable financing.

Appraisals must be prepared by a California certified general appraiser having no identity

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

acceptable to the Committee, and include, at a minimum, the following:

(i) the highest and best use of the proposed project as residential rental

property, considering any on-going recorded rent restrictions;

Regulations

Section 10322

Page 26 of 104

(ii) for rehabilitation applications, the Sales Comparison Approach and Income

Approach valuation methodologies shall be used; for new construction

applications, the Sales Comparison Approach shall be used; for adaptive

reuse applications, the Cost Approach valuation methodology shall be 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, in cases that require multiple

methodologies;

(iv) a value for the land of the subject property (“as if vacant”);

(v) an on-site inspection; and

(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

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

land, an executed development agreement negotiated between the landowner and

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

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

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

or 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 amount.

(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 landowner and

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

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, development

agreement, option agreement, or any other site control document pursuant to

Section 10325(f)(2) was executed within that year.

An amendment to an agreement does not constitute any of the agreements listed in

(i) or (ii) above.

appraisal using an “as-is” appraisal date of value as stated in (B) above. For

applications required to use the Cost Approach, the appraisal must consider the

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

Regulations

Section 10322

Page 27 of 104

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 or updated within 180 days of the filing

deadline by an independent third-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 the Committee, and establish both need and demand for the proposed project. CTCAC

shall publicly notice any changes to its market study guidelines and shall take public

comment 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 if the proposed project rents change by more than five

percent (5%), or the distribution of higher rents increases by more than 5%, or more than

12 months have passed since the most recent site inspection date of the subject property

and comparable properties. All market studies shall meet all of the requirements listed in

the CTCAC Market Study Guidelines as listed on the CTCAC website. If the market study

does not meet the guidelines, and support sufficient need and demand for the project, the

application may be considered ineligible to receive Tax Credits and may be disqualified.

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 CTCAC Regulatory Agreement, or an existing

regulatory agreement with a federal, state, or local public entity.

 The proposed tenant-paid rents and income targeting levels shall not increase by more

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 may

increase more and proposed rents and income targeting levels for resyndication

projects shall 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 special

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 population.

(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

Regulations

Section 10322

Page 28 of 104

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 or

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 in accordance with the High-Rise Project definition in

Section 10302.

(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 jurisdiction

within which the proposed project is located:

(A) jurisdiction or tribe (e.g., City of Sacramento)

(B) chief executive officer or tribal chairperson and title (e.g., Susan Smith, City

Manager)

(D) telephone number

(E) fax number

(15) Sources and uses of funds. The sources and uses of funds description shall separately

detail apportioned 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 all

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 tax

attorney that project costs included in applicant’s calculation of eligible basis are allowed by

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 financial

consultants 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 other

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.

Regulations

Section 10322

Page 29 of 104

(20) Tax Credit certification. If the Tax Credits are not to be syndicated, a letter from a third

party certified public accountant establishing the Tax Credit factor.

(21) Utility allowance estimates. Current utility allowance estimates consistent with 26 CFR

Section 1.42-10. The applicant must indicate which components of the utility allowance

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), and incorporated in the CEC’s compliance program (CBECC). The

CUAC estimate shall be signed by a California Association of Building Energy 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, in accordance with current

HERS regulations. Use of CUAC is limited to (i) new construction projects, (ii) rehabilitation

projects applying for tax credits for which the rehabilitation 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 a solar program administered by a municipal utility or

joint powers authority, which offsets tenants’ electrical load, and which includes site

installation verification by a qualified HERS Rater. Projects utilizing the CUAC are approved

for use upon the field verifications being completed. For projects using the CUAC where the

field verification has not been completed prior to occupancy, the project must use an

approved utility allowance source per 26 CFR Section 1.42-10 until the field verification is

completed. Owners shall provide the tenants with a 90 day notification prior to the effective

date with an informative summary about the current utility allowance and the proposed

CUAC allowances before the utility allowances can be used in determining the gross rent

of rent-restricted units. For projects applying for tax credits, the CUAC with supporting

documentation shall be submitted in the Placed-in-service application required in Section

10322(i). The CUAC and supporting documentation requires a quality control review and

CTCAC approval following submission in the Placed-in-service application. For existing tax

credit projects not applying for tax credits, the CUAC with supporting documentation shall

be submitted to CTCAC upon field verification completion for a quality control review and

CTCAC approval. CTCAC will submit modeled CUAC utility allowance estimates to a quality

control reviewer and shall establish a fee to cover the costs for this review.

(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) with

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. Tax-Exempt Bond Projects may receive a reservation of tax credits with the

condition to provide the applicable subsidy commitment no later than the CDLAC bond

issuance deadline. The source, monthly contract rent, annual amount (if applicable), term,

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 flow

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 be

included in the cash flow projections. Use of a capitalized rent reserve is limited to Special

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 shall

provide:

(A) a chain of title report or, for tribal trust land, an attorney’s opinion regarding chain of

title; and

Regulations

Section 10322

Page 30 of 104

(B) if applicable, an applicant statement that the acquisition is exempt from, or a third-

party tax 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; or,

Federal official that states 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 preliminary

reservation application consistent with the guidelines in Section 10322(h)(9).

(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, all

necessary work to be undertaken and its associated costs, as well as the nature of

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

building 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 required 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 proposing rehabilitation or demolition of occupied housing shall comply with the

requirements of the California Relocation Assistance Law, California Government Code

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. Applicants

shall provide an explanation of the relocation requirements that they are complying with,

and a detailed relocation plan consistent with one of the above-listed relocation standards

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 a

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 be

provided notice and information about the required relocation assistance, including copies

of such noticing document(s).

(29) Owner-occupied Housing application. Applicants proposing owner-occupied housing

projects of four units or less, involving acquisition or rehabilitation, shall provide evidence

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)).

Regulations

Section 10322

Page 31 of 104

(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 each developer and general partner of 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;

operations of the proposed project, as well as an agreement to provide CTCAC with

annual certifications verifying continued 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,

(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,

as 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 area.

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 national process branch.

(32) RHS Section 514, 515, or HOME or CDBG-DR program applications. Rural housing

applicants requesting Tax Credits for projects financed by the RHS Section 514 or 515

program or from a HOME or CDBG-DR Participating Jurisdiction shall submit evidence

from

RHS, or the HOME or CDBG-DR Participating Jurisdiction that such funding has been

committed, and such evidence shall meet the requirements of Section 10325(f)(8).

(33) Community service facility. An applicant requesting basis for a community service facilit

shall submit

a third-party tax attorney’s opinion stating that the community service facilit

meets the r

equirements 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, the

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 th

e unsuccessful applicatio

(i)

Placed-in-service application. Within one year of the last building placed-in-service date for ne

constructi

on projects and within one year of the rehabilitation completion date for rehabilitation

projects, the project owner shall submit the documents listed below. If conversion to

permanent

financing has not taken place, documents (2), (5), (6), (7), (12) and (15) below shall be submitted

within 60 days of the permanent financing conversion date. A regulatory agreement provided by

CTCAC sha

ll be executed and recorded in the County Recorder’s Office for which the project

located and

the compliance monitoring fee shall be submitted upon request from CTCAC

required by

Section 10335. For projects subject to a lease rider pursuant to Section 10337(a)(4), a

lease rider shall be executed and recorded in the County Recorder’s Office for which the project

located. CT

CAC shall determine if all conditions of the reservation have been met. Chang

subsequent

to the initial application, particularly changes to the financing plan and costs or change

to the ser

vices amenities, must be explained by the project owner in detail. If all conditions have

Regulations

Section 10322

Page 32 of 104

been met, tax forms will be issued, 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

rehabilitation 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 Accountant

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 a

manner that would impair independence as established by the American Institute of

Certified Public Accountants (AICPA) Code of Professional Conduct Section 101 and the

Securities and Exchange Commission (SEC) regulations 17 CFR Parts 210 and 240.

Examples of such impairing services, when performed for the final cost certification client,

include bookkeeping or other services relating to the accounting records, financial

information systems design and implementation, appraisal or evaluation services, actuarial

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 cost

certifications, 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

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

26 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 costs

incurred up to the funding of the permanent loan;

rules, that would impair independence; and

(D) certify permanent financing conversion date

(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 required;

(4) photographs of the completed building(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;

Regulations

Section 10322

Page 33 of 104

(9) a copy of the project owner limited partnership agreement;

(10) a list of all amenities provided at the project site including any housing type requirements of

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 be

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;

(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 10325(f)(7) and 10326(g)(6);

(14) all documentation required pursuant to the Compliance and Verification requirements of

Section 10327(c)(5)(B);

(15) if seeking a reduction in the operating expenses used in the Committee’s final underwriting

pursuant to Section 10327(g)(1) of these regulations, the final operating expenses used by

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 regulations. Measures that are used in the CUAC that require field

verification shall be verified by a certified HERS rater, in accordance with current HERS

regulations; and

(20) for tribal trust land, the lease agreement between the Tribe and the project owner.

(21) Evidence that the subject property is within the control of the project owner in the form of

an 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 or

commitment to insure) showing the project owner holds fee title, a grant deed, or, for tribal

trust land, a title status report or an attorney’s opinion regarding chain of title and current

title status.

(22) Evidence that the project is in compliance with the provisions 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:

Regulations

Section 10322 - 10323

Page 34 of 104

(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 ownership

structure and any shared use agreements; 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 how

proportioning a cost and corresponding eligible basis to an entity that does not own

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.

(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 result in deeper 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 CTCAC 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.

Regulations

Section 10323 - 10325

Page 35 of 104

(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

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 an

equal total payment to a pure annual payment schedule. Where another State or federal

housing entity is a project funding source, project sponsors may propose a plan to CTCAC

wherein that source shares asset management information with CTCAC. Sponsors may

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 requirements,

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 has

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 23610.5.

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 categories

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 the

application as submitted, including any additional information submitted in compliance with these

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.

Regulations

Section 10325

Page 36 of 104

Scattered Site Projects shall be scored proportionately in the site and service amenities category

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 scored

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 influence

over an entity, or participating as key management of an entity. Related entity disclosure is required

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 more than three years, a proposed general partner, or a key person

within the proposed general partner organization, must meet the following

conditions:

(i)

For projects in operation for more than three years, submit a certif

ication

from a third

party certified public accountant that the projects for which it

requesting

points have maintained a positive operating cash flow, fr

typical resid

ential income alone (e.g. rents, rental subsidies, late fees,

forfeited deposits, etc.) for the year in which each deve

lopment’s last

financial st

atement 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

verificat

ion of the number of years that the project was owned

by that general

partner. To obtain point

s 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

for

which the points are be

ing 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

or key person separate

d from the last eligible project. If the certif

ication is

prepared for a first-round application utilizing prepared financial statements

of the pre

vious calendar year, the certification may be submitted in a seco

round application, excee

ding the 60 day requirement above. Where ther

e is

more than one 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.

Regulations

Section 10325

Page 37 of 104

Three to four projects in service more than three years, of which one shall

be in service more than five years and two shall be California Low-Income

Housing Tax Credit projects 5 points

Five or more projects in service more than three years, of which one shall be

in service more than five years and two 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:

Three Special Needs projects in service more than three years and one

California Low-Income Housing Tax Credit project which may or may not be

one of the three special needs projects 5 points

Four or more Special Needs projects in service more than three years and

one California Low-Income Housing Tax Credit project which may or may

not be one of the four 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 general

partners for projects applying through the Nonprofit or Special Needs set-

aside with no active California Low Income Housing Tax Credit projects in

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 general

partner and receive points commensurate with the developer’s experience

pursuant to clauses (i) and (ii). The contract shall be in effect at least until

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 period

with an entity that has asset managed at least two Low-Income Housing Tax

Credit projects for more than 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

of 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 scope

and timeline, securing financing, hiring or performing the services of a

general contractor, and overseeing completion of construction and

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 shall

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).

Regulations

Section 10325

Page 38 of 104

(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 management

role must be no more than 10 years from the application deadline. In addition, the

property management experience with a project shall not pre-date the project’s

placed-in-service date.

(i) Six to 10 projects managed more than three years, of which two shall be

California Low-Income Housing Tax Credit projects 2 points

11 or more projects managed more than three years, of which two shall be

California Low-Income Housing Tax Credit projects 3 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:

Two to three Special Needs projects managed more than three years and one

California Low-Income Housing Tax Credit project which may or may not be one

of the special needs projects 2 points

Four or more Special Needs projects managed more than three 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 of

subparagraph (i) above and managing no active California Low-Income Housing

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: CTCAC ownership/management, 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 three years from the placed-in-service date (or, for ownership

transfers, three 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 three 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

Regulations

Section 10325

Page 39 of 104

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

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 circumstances

were entirely outside of the applicant’s control;

(B) failure to utilize Tax Credits within program time guidelines unless it can be

demonstrated to the satisfaction of the Executive Director that the circumstances

were entirely outside of the applicant’s control;

10322(i);

(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 points

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 required

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

or 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 10325(c)(1)(B);

Regulations

Section 10325

Page 40 of 104

(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 th

e 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 compliance with IRC Section 42; or

(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

income

qualificat

ion, incorrect utility allowance, or other overcharging of resi

dents. In

assigning n

egative points, CTCAC shall consider the most re

cent 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 seriou

noncompliance before assigning neg

ative 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 perce

nt (10%) of

the tenant files most recently monit

ored resulted in findings of either household

income above regulated income limits upon initial occupancy, or findings of gross

rent exceeding the tax cr

edit maximum limits.

(S)

the project’s total eligible basis at placed in service exceeding the revised to

tal

adjusted thr

eshold basis limits for the year the project is placed in service by 40%.

(T)

where CDLAC has determined that a person or entity is subject to neg

ative points

under its re

gulations, 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

that

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, an

d (ii)

the percenta

ge of units represented by each site.) The category selected

hereunder (which

shall be the category represented by the highest percent

age of Low-Income Units in a

Regulations

Section 10325

Page 41 of 104

proportionally scored project) shall also be the project category for purposes of the tie-

breaker described in subsection 10325(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 thresholds

(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

by a public entity that is (i) being constructed within the project as part of the tax

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 considered “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 other

feature that significantly disrupts the pedestrian walking pattern between the

development site and the amenity. The radius line may be struck from the corner of

development 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 by

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 shall

be reduced in such instances 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 an

application is considered, as well as subsequent rounds, if the information submitted

is 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. Amenities may include:

1. 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 1/3

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 terminal)

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

Regulations

Section 10325

Page 42 of 104

The site is within 1/2 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. 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 projects, full points may be awarded where van or dial-a-ride service

is provided to tenants, if costs of obtaining and maintaining the van and its

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 Executive

Director in order to receive competitive points.

2. 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 Fhigrounds unless there is a bona fide, formal joint use

agreement 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 access point within the specified distance. 3 points

or within 3/4 mile (1.5 miles for Rural set-aside projects) 2 points

3. The site is within 1/2 mile of a book-lending public library that also allows for

inter-branch lending (when in a multi-branch system) (1 mile for Rural set-aside

projects) 3 point

Regulations

Section 10325

Page 43 of 104

or within 1 mile (2 miles for Rural set-aside projects) 2 points

4. 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 contains

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, packaged

food products, delicatessen, canned goods, baby foods, frozen foods, sundries,

and beverages. 5 points

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

5. The site is within (1) mile of adult education campus of a school district, or

community college (an additional 1/2 mile for Rural set-aside projects) 3 points

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

of 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 that

school or campus. 3 points

or within an additional 1/2 mile for each public-school type (an additional 1 mile

for Rural set-aside projects) 2 points

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.

6. 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

Regulations

Section 10325

Page 44 of 104

7. For a Special Needs development, the site is located within 1/2 mile of a facility

that operates to serve the population living in the development 3 points

or within 1 mile 2 points

8. The site is within 1/2 mile (for Rural set-aside projects, 1 mile) of a qualifying

medical clinic with a physician, physician’s assistant, or nurse practitioner onsite

for a minimum 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 projects

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 minimum of 40 hours each week, or hospital 2 points

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.

9. 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 25

megabits/second must be made available to each Low-Income Unit for a

minimum of 15 years, free of charge to the tenants, and available within 6

months of the project’s placed-in-service date. Documentation of internet

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 for

an inclusionary project as defined in Section 10325(c)(9)(C), and the site is

located in a census tract, or census block group as applicable, designated on

the CTCAC/HCD Opportunity Area Map as Highest or High Resource:

8 points

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 that satisfy the obligations of an affordable housing ordinance

or development agreement with the jurisdiction in which the project will be built

and, if so, the number of such units and whether the contractual 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 CTCAC/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 be

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 stability

and prevent eviction, building life skills, increasing household income and assets,

Regulations

Section 10325

Page 45 of 104

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 placed-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 six months of the project’s placed-in-service

date. Applicants must commit that services shall be provided for a period of 15

years.

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 multiplied by 2080 = FTE numerator; 2) FTE numerator divided by base

number of bedrooms = number of required 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:

1. Service Coordinator. Responsibilities must 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.).

Minimum ratio of one Full Time Equivalent (FTE) Service Coordinator to 600

bedrooms. 5 points

2. 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 Counselor.

Minimum ratio of one FTE Services Specialist to 600 bedrooms. 5 points

3. 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

Regulations

Section 10325

Page 46 of 104

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

4. 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 senior

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

60 hours of services per year for each 100 bedrooms 3 points

5. Licensed childcare. 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

6. 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 per 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, for the Special

Needs units in a Special Needs Project with less than 75% Special Needs units, or

SRO Projects, amenities may include, but are not limited to:

7. 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 one FTE case manager to 100 bedrooms 5 points

8. Service Coordinator or Other Services Specialist. Service coordinator

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 Counselor.

Ratio of one FTE service coordinator or specialist to 360 bedrooms 5 points

Regulations

Section 10325

Page 47 of 104

9. 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.

84 hours of instruction per 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

11. Licensed childcare. 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 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 per 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

Regulations

Section 10325

Page 48 of 104

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).

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 at

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 in

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 projects only

Percent of Area Median Income

55% 50% 45% 40% 35% 30%

20%

50% 25.0* 37.5

45% 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

Regulations

Section 10325

Page 49 of 104

(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

in 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

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

demonstrate construction can commence within 180 days or 194 days of the Credit

Reservation as assigned by the Executive Director and documented by the requirements

below.

No later than the assigned deadline, CTCAC must receive:

(A) a completed updated application form along with a detailed explanation of any changes

from the initial application,

(B) an executed construction contract,

tribal trust land precludes this), binding commitments for permanent financing, binding

commitments for any other financing required to complete project construction,

(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 documents, and

(G) notice to proceed delivered to the contractor.

The Executive Director shall either rescind the Tax Credit Reservation, assess negative

points, or both for failure to meet the assigned due date.

Regulations

Section 10325

Page 50 of 104

If no construction lender is involved, evidence must be submitted no later than the assigned

due date, 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.

In the event of a federally declared emergency by the President of the United States, a state

declared emergency by the Governor of the State of California, or similar event determined

by the Committee, and at the sole discretion of the Executive Director, extensions may be

granted.

(8) Miscellaneous Federal and 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.

(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 hallways.

• 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, dishwasher 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 clearances,

free of all furnishings, at bedroom and closet doors. The master bedroom closet

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

nonsmoking building and incorporating the prohibition into the lease agreement for

the affected units. If the proposed project contains only one building, the proposed

project shall commit to prohibiting smoking in designated contiguous units and

incorporating the prohibition into the lease agreement for the affected units.

2 points

(D) Historic Preservation. The project proposes to use Historic Tax Credits 1 point

Regulations

Section 10325

Page 51 of 104

(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 the

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 go

vernment

official.

The letter must delineate the various community revitalization efforts, fund

committed

or expended in the previous five years, and

how the project would

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

(G)

Utilizing Excess State-Owned Land: Projects located on land designated as excess

state land pursuant to Executive Order N-06-19.

2 points

(9) Tie Breakers

If multiple application

s receive the same score, the following tie breakers shall be employed

For applicat

ions for projects within single-jurisdiction regional competitions only (the

City

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 th

e San Francisco Mayor’s Office of Housing or the Los

Angeles Housing Department respectively. With

in those cities, and for all

other applications

statewide, t

he subsequent tiebreakers shall be as follows:

First, if an application’s housing type goal has been met in the current funding roun

d in the

percentages listed

in section 10315, then the application will be ski

pped (unless the

application

to be skipped is the highest ranked in the set-aside, Native American

apportionment, 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

total

residential

project development costs. Except where a third-party funding

commitment is explicitly defraying non-residential costs only, leveraged so

ft resources

shall be discounted by th

e proportion of the project that is non-residential.

Leveraged

soft resources shall be

demonstrated through documentation including but

not limited

to funding award letters, committed

land donations, or documented project-specif

local fee waivers.

Leveraged soft resource

s shall include all of the

following:

(i)

Public funds. “Public funds” include federal, tribal, state,

or local government

funds, inclu

ding the outstanding principal balan

ces of prior existing public debt or

subsidi

ed debt that has been or will be assumed in the course of an

acquisit

ion/rehabilitation transaction, except that outstanding principal

balances

for project

s 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 p

rincipal under a new loan agreement. Public funds shall in

clude

assumed principal balances only upon documented a

pproval of the loan

Regulations

Section 10325

Page 52 of 104

assumption or other required procedure by the public agency holding the

promissory note.

In addition, public funds include funds already awarded under the Affordable

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 federal

or 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 or

donated as part of an affordable housing ordinance, development agreement or

legally enforceable mandate that is negotiated between a public entity and an

unrelated private developer. 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. For new construction applications, only the vacant land

value may be counted for tiebreaker credit. The value of improvements to be

demolished does not qualify as a leveraged soft resource. 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 a

designated repayment commitment from a public source other than rental or

operating subsidies, such as the HUD Title VI Loan Guarantee Program involving

Native American Housing Assistance and Self Determination Act (NAHASDA)

funds. Land and building values, including for land donated or leased by a public

entity or donated as part of an affordable housing ordinance, development

agreement or legally enforceable mandate, must be supported by an independent,

third-party appraisal consistent with the guidelines in Section 10322(h)(9). The

appraised 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.

Regulations

Section 10325

Page 53 of 104

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

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 available

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 in

clude (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 or

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.

Seller

carryback financing and

any portion of a loan from a non-public seller

or related

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 by

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 least

five years pr

ior to the application due date, except for the value of donat

ed land

and improvements in the case of

a rehabilitation project subject to an existing

Regulations

Section 10325

Page 54 of 104

regulatory agreement with CTCAC or a federal, state, or local public entity or with

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 five-

year hold rule provided that the donor to the non-profit organization held the

contributed asset for at least five years and that both the original donor and non-

profit donor meet the requirements of, and are included in the certifications

required by, this paragraph. The party providing the donation 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 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 proposed

partner (unless the partner has no ownership interest and only the right to

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. For new construction

applications, only the vacant land value may be counted for tiebreaker credit. The

value of improvements to be demolished does not qualify as a leveraged soft

resource.

(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, 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 market standards.

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

Regulations

Section 10325

Page 55 of 104

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 the

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 for

maximum 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 9%

project shall also be scored in the corresponding point category in combination

with the 4% project; and

(iv) developers shall defer or contribute as equity to the project any amount of

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 Credit

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 basis

and threshold basis limits for the 9% component.

In 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 six months of

the 9% component, both applicants may 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).

(B) One (1) minus the ratio of requested unadjusted eligible basis to total residential

project development costs, with the resulting figure divided by two.

(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

as follows based on the designation of the project’s location on the CTCAC/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 a project supported by affordable housing

ordinances, which for purposes of this subparagraph shall mean a project in which

any of the Low-Income Units satisfy the obligations of any affordable housing

Regulations

Section 10325

Page 56 of 104

ordinance, development agreement or legally enforceable mandate 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 affordable housing

ordinance, development agreement, or legally enforceable mandate. 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 affordable housing ordinance, development agreement or legally

enforceable mandate and, if so, the number of such units and whether the affordable

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 CTCAC/HCD Opportunity Maps in effect

when the initial site control was obtained up to seven calendar years prior to the

application.

(D) For Rural set aside projects applying in counties where no tax credit applications have

been received within five years of the application filing date, the tiebreaker shall be

increased by five percentage points.

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 projects

by 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 by

the shaded cells in the application sources and uses budget itself or by a letter from the

development 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 project 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 service

exceeds the revised total adjusted threshold basis limit by 40%. For purposes of calculating the

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 the

Nonprofit set-aside, followed by the Rural set-aside (funding the RHS, HOME, and CDBG-

DR program apportionment first, and the Native American apportionment second), the At-

Risk set-aside, and the Special Needs set-aside, the highest scoring applications will have

Tax Credits 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 the second funding round. If Credits are not reserved in the first round, they will be

added to 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. If not, the award will be counted against the amounts available from the

Regulations

Section 10325

Page 57 of 104

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 in

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 allotment.

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

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

Regulations

Section 10325

Page 58 of 104

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

$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

Regulations

Section 10325

Page 59 of 104

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

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:

Regulations

Section 10325

Page 60 of 104

 .9 for a studio unit.

 1 for a one-bedroom unit.

 1.25 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 additional 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

$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

Regulations

Section 10325

Page 61 of 104

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 maximum

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 shall

be followed by funding the highest scoring application, if any, in each of the regions. After

each region has had the opportunity to fund one project, CTCAC shall award the second

highest scoring project in each region, if any, and continue cycling through the regions,

filling each geographic area’s apportionment. Projects will be funded in order of their rank

so long as the region’s aggregate award amount does not exceed 125 percent (125%) of

the amount originally available for that region in that funding round. Credits allocated in

excess of the Geographic Apportionments by the application of the 125% rule described

above will be drawn from the second-round apportionments during 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 highest-ranking project or next highest-ranking project(s) do not meet the 125%

rule then the Committee shall skip over that project to fund a project requesting a smaller

credit award that does not exceed 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.

To 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 to

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 to

Regulations

Section 10325

Page 62 of 104

interpret the intent of these regulations and to score and evaluate applications accordingly.

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 these

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 at

the time the application is filed through a presentation of conclusive, documented evidence to the

Executive Director’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

a 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 authority; 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;

(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 square

foot ($/s.f.) will be no more than the weighted average unit value ratios for

comparable market rate units;

(iii) In rural areas without sufficient three- and four-bedroom market rate rental

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 exceed

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 senior projects.

(2) Demonstrated site control. Applicants shall provide evidence that the subject property is

within the control of the applicant.

(A) Site control may be evidenced by:

(i) 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

to insure) showing the applicant holds fee title or, for tribal trust land, a title

Regulations

Section 10325

Page 63 of 104

status report or an attorney’s opinion regarding chain of title and current title

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 deadline 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 to

insure) or for tribal trust land a title status report or an attorney’s opinion regarding

chain of title and current title status, shall be submitted with all applications for

purposes of this threshold requirement.

has been demonstrated where a local agency has demonstrated its intention to

acquire the site, or portion of the site, through eminent domain 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 proposed

project’s estimated total acquisition and construction or total permanent financing

requirements. An “enforceable financing commitment” must:

(A) be in writing, stating rate and terms, and in the form of a loan, grant or an approval

of the assignment/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;

(D) demonstrate feasibility for fifteen (15) years at the underwriting interest rate, if it is a

variable or adjustable interest rate permanent 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.

Regulations

Section 10325

Page 64 of 104

Projects awarded under a Nonprofit set-aside homeless assistance priority or a Rural set-

aside RHS, or HOME, or CDBG-DR 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 this

subsection, local land use approvals not required to be obtained at the time of application

include, design review, initial environmental study assessments, variances, and

development agreements. The evidence must describe the local approval process, the

applicable approvals, and whether each required approval is “by right,” ministerial, or

discretionary. 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-day period and the project is ready to proceed.

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, including acknowledgment of any zoning or land

use approvals pursuant to a state streamlined approval requirement.

(5) Financial feasibility. Applicants shall provide the financing plan for the proposed project

and shall demonstrate the proposed project is financially feasible and viable as a qualified

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

Development Team members need be added to appropriately perform all program

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 statement

shall commit the property owner to at least maintaining the applicable Building Energy

Efficiency Standards (Energy Code, California Code of Regulations, Title 24) adopted by

the California Energy Commission (CEC) as well as maintaining the installed energy

efficiency and sustainability features’ quality when replacing each of the following listed

systems or materials:

(A) Energy Efficiency. All rehabilitated buildings, both competitive and non-competitive,

shall have improved energy efficiency above the modeled energy consumption of

Regulations

Section 10325

Page 65 of 104

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 are

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 la

ndscaping practices in the general market area and low maintenance

needs. Projects shall follow the requirements of the state Model Wate

r Efficient

Landscape Ordinance

(http://www.

water.ca.gov/wateruseefficiency/landscapeordinance/) unless a local

landscape ordinance has been determined to be at least as stringent as t

he current

model ordinance.

(C)

Roofs. Newly installed roofing shall carry a three-year subcontractor gua

rantee and

at least a 20

-year manufacturer’s wa

rranty.

(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

faces, or fiberglass faces, with a standard one-year guarantee and all six side

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 require

ment for

SRO units

if the project includes a common area kitchen facility fo

r tenants.

Refrigerators, dishwash

ers, clothes washers and dryers prov

ided or replaced within

Low-Income

Units and/or in on-site community facilities shal

l be ENERGY STAR

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 individ

ual 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, water

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.

Regulations

Section 10325

Page 66 of 104

(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 man

ager’s unit

for either another on-site

manager or other maint

enance personnel, and there shall

be one addit

ional 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 th

e 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 ot

her shall

be treated a

s a single site for purposes of the on-site manager rule only.

If an applicant or project owner proposes to utilize a low-income un

it to meet

California a

nd CTCAC manager unit requirements, the following applies: (1) the unit

is considered a low-income restricted unit and must comply with all re

quirements

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 meet

California a

nd 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.

In lieu of on-site manager units, a project ma

y commit to employ an equivalent

number of on-site full-time property management staff (at least one of

whom is a

property ma

nager) and provide an equivalent number of des

k or security staff who

are not tenants and are capable of responding t

o emergencies for the hours when

property management staff is not working. All staff or contra

ctors performing desk

or security

work shall be knowledgeable of how the property’s fire syst

em operates

and be train

ed in, and have participated in, fire evacuation drills for ten

ants. CTCAC

reserves th

e 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 de

termines

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 establish

ed in 11B 23

3.3.1.1 and 11B 233.3.1.3, all new construction

projects mu

st provide a minimum of fifteen percent (15%) of t

he Low-Income Units

with mobility features, as defined in CBC 11B 809.2 through 11B 809.4, and a

minimu

m of ten percent (10%) of the Low-Income Units

with communications

features, a

s 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 f

our percent (4%) with communications features, as defined in CBC 11

Regulations

Section 10325

Page 67 of 104

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,

as 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 accessibility

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 and not in conflict with federal or state law.

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.

(8) Deferred-payment financing, residual receipts payment financing, grants and subsidies.

Applicants shall provide evidence that all deferred-payment financing, residual receipts

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 or

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.

commitment at the time of application.

(D) Substantiating evidence of the value of local fee waivers, exemptions or land write-

downs is required.

(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, for

example, private loan to substitute for private loan, public funds for public funds.

Regulations

Section 10325

Page 68 of 104

AHP funds may be substituted for any funding source after a Reservation of Tax

Credits if an AHP commitment is obtained after the CTCAC application due date.

(F) A project is exempt from the provisions of this subsection if it has funds anticipated

and publicly published with provisional awardee names but not yet officially awarded

in the capacity required above with the following entities that administer multifamily

financing programs: the Department of Housing and Community Development

(HCD); Strategic Growth Council (SGC); Affordable Housing Program (AHP)

provided pursuant to a program of the Federal Home Loan Bank; United States

Department of Agriculture (USDA) Rural Housing Service (RHS) Section 514, 515

or 538 programs; the Department of Housing and Urban Development (HUD); a

Reservation of HOME or CDBG-DR funds from the applicable participating

jurisdiction.

(9) Project size and credit amount limitations. Project size limitations shall apply to all

applications filed, pursuant to this Section.

(A) Rural set-aside applications shall be limited to a maximum of eighty (80) Low-

Income Units.

Rehabilitation 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 within

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 the

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

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) (A) 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

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

Regulations

Section 10325

Page 69 of 104

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

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 three

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 expenditures shall be the maximum that project feasibility allows.

(C)

For existing tax credit projects applying for a new reservation of tax credits

for

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 le

ss remaining

on the CTCAC regulatory agreement are exempt from this requirement.

(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 un

corrected

compliance violation

relating to over-income tenants or rent overcharges and shall

not have an

y unpaid fines pursuant to Section 1

0337(f).

(12)

CTCAC shall not accept an application from any party that is disqualified from applying to

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.

A project wit

h a tax credit reservation dated prior to, or a subm

itted application pending as

of, March 26, 2018 may, with the discretionary ap

proval of the Executive Director, revise it

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 tha

t the average targeting d

oes not exceed 50% AMI.

A project in

cluding 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 addition

al threshold requirement

s. A scattered site more

than 1 mile from the nearest other

site shall meet the requirements related to common area

play/recreational facilitie

s, and laundry facilities

independently.

(1)

Large Family projects. To be considered large family housing, the application shall meet

the following additional threshold requ

irements.

(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 t

hat receive land use entitlements on

or after Janu

ary 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 for

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 prohibitive to co

mply;

(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

of living

space, unless these restrictions conflict

with the requirements of another

Regulations

Section 10325

Page 70 of 104

governmental agency to which the project is subject to approval. These limits may

be waived for rehabilitation projects, at the discretion of the Executive Director prior

to 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 bedroom;

bathrooms;

(D) The project shall provide play/recreational facilities suitable and available to all

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 accessible

entrance point. For projects with more than 100 total units this square footage shall

be increased by 5 square feet for each additional unit. Outdoor play/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 play

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 is

not open. The application must demonstrate the availability of play or recreational

facilities 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

a waiver of the minimum square footage requirement if outdoor play/recreational

facilities 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 respective

current zoning designation and the addition of the new facilities would trigger an

entitlement process. The written waiver must be approved prior to the application

submission.

The Executive Director has the sole discretion to 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 from

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 least

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;

Regulations

Section 10325

Page 71 of 104

(G) Adequate laundry facilities shall be available on the project premises, with at least

one washer and one dryer for every 10 units in the project. This requirement shall

be reduced by 25% for projects where all units in the project 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 and dryers shall be provided in

each unit in the project;

(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 be

granted at the sole discretion of the Executive Director due to planning or financial

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 requirements;

(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 be

subject to state and federal fair housing laws with respect to senior housing;

(B) For new construction projects, one half of all Low-Income Units on an accessible

path (ground floor and elevator-serviced) shall be mobility accessible under the

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) accessibility

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

in advance for a rehabilitation project, provided that the applicant and architect

demonstrate that full compliance would be impractical or create an undue financial

burden;

(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.

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 by

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 of

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,

Regulations

Section 10325

Page 72 of 104

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 least

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 at least

one washer and one dryer for every 15 units in the project. This requirement shall

be reduced by 25% for projects where all units in the project 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 and dryers shall be provided in

each of the units in the project;

(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: are

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 abuse;

individuals who are homeless as described in Section 10315(b); individuals with chronic

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 family

reunification, as certified by a county; or another specific group determined by the Executive

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. A

development 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, senior, or SRO housing

type requirements; or (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. The application shall

meet the following additional threshold requirements:

(A) Average targeted income for the special needs units is no more than forty percent

(40%) of the area median income;

(B) The units/building configurations (including community space) shall meet the

specific needs of the population, including kitchen needs for SRO units without full

kitchens;

special needs units, the applicant shall demonstrate for 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) income;

(D) A public agency shall provide direct or indirect long-term financial support for at least

fifteen percent (15%) of the total project development costs, or the owner’s equity

Regulations

Section 10325

Page 73 of 104

(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 at least

one washer and one dryer for every 15 units in the project. This requirement shall

be reduced by 25% for projects where all units in the project include hook-ups for

washers and dryers;

(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 the

discretion of the Executive Director;

(H) SRO units (as defined in Section 10302) are efficiency units that may include a

complete private bath and kitchen 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 includes SRO units without complete private baths shall

provide at least one bath for every eight SRO units;

(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 service

plan objectives; a preliminary budget displaying anticipated income and expenses

associated 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 special

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

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 the

requirements of R & T Code subsection 17058(c)(4), except as further defined in subsection

(B)(i) below, as well as the following additional threshold requirements, and other

requirements as outlined 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:

Regulations

Section 10325

Page 74 of 104

(i)

before applying for Tax Credits, the project must meet the At-risk e

ligibility

requirements under

the terms of applicable federal and state law as

verified

by a third p

arty legal opinion, except

that a project that has been acquired

by a

qualified nonprofit organization within the past five years of the date

application

with interim financing in order to preserve its affordability and th

meets all oth

er 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 un

its

due to mark

et or other

conditions. A project will not be deemed at-risk of

losing affor

dability if the project is subject to a rent restriction with

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 median income;

(ii)

the project, as verified by a third-party legal opinion unless the exception in

B(i) above applies, must currently possess or have had within the past five

years from the date of application,

either:



federal mortgage insurance, a federal loan guarantee, federal project-

based rental assistance, or, have its mortgage he

ld 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 year

preceding th

e application deadline, the later of Federal or State Housing

Tax Credit restrictions whose compliance period is expiri

ng or has

expired with

in the last five years and at least 50% of

whose units are

not subje

ct to any other rental restrictions beyond the term of the Ta

Credit restrictions; or



be currently subject to, or have been subject to, within five year

preceding t

he application deadline, California

Debt Limit Allocation

Committee (CDLAC) bond regulat

ory agreement restrictions whose

compliance period is expiring or has expired within the last five years

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 ince

ntives to continue the project as lo

w-income housing, including,

direct loans,

loan forgiveness, grants, rental subsidies, rene

wal of existing

rental subsidy contract

s, etc.;

(iv) subsidy contract expiration, mortgage prepayment eligibility, or

the

expiration o

f 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 applicat

ion is filed, except in cases where a qualified nonprof

organization

acquired the property within the terms of (i) above and wo

uld

otherwise meet this condition but for: 1) long-term use restri

ctions imposed

by public agencies as a condition of

their acquisition financing; or 2) HAP

contract ren

ewals secured by the qualified nonprofit organization for t

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 maximum

term available and shall seek additional renewals througho

ut the project's

useful lif

e, if applicable;

Regulations

Section 10325

Page 75 of 104

(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 be

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 the

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 the following additional threshold requirements:

(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 (as defined Section 10302). SRO units

are efficiency or studio units that may include a complete private bath and kitchen

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 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 the discretion of the Executive Director;

(D) If the project does not have a public rental or operating subsidy committed for all

SRO units, the applicant shall demonstrate for 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) income;

(E) The project configuration, including community space and kitchen facilities, shall

meet the needs of the population, and comply with Section 10325(f)(7)(E);

(F) A public agency shall provide direct or indirect long-term financial support for at least

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 at least

one washer and one dryer for every 15 units in the project. This requirement shall

be reduced by 25% for projects where all units in the project include hook-ups for

washers and dryers;

(H) Projects are subject to a minimum low-income use period of 55 years (50 years for

projects located on tribal trust land);

(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

Regulations

Section 10325 - 10326

Page 76 of 104

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.

(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.

Regulations

Section 10326

Page 77 of 104

(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. If there is not sufficient State

Tax Credits to allocate to applications recommended for tax-exempt bonds by CDLAC,

the State Tax Credits will be allocated based on ranking within the CDLAC pools and set

asides in the following order:

(A) Black, Indigenous, or Other People of Color (BIPOC) Project Pool;

(B) Rural Project Pool;

(D) New Construction Pool, ELI/VLI Project Set Aside;

(E) New Construction Pool, Mixed-Income Project Set Aside; and

(F) All remaining New Construction Pool Projects

(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.

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:

Regulations

Section 10326

Page 78 of 104

(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

Regulations

Section 10326

Page 79 of 104

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 per Section 10325(c)(1) 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.

Regulations

Section 10326

Page 80 of 104

(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, except that Hybrid

projects and simultaneous phased projects as defined in Section 10327(c)(2)(C) shall submit the

acceptance of the reservation for the first application within five (5) business days of the

Committee's notice to the applicant of the reservation for the corresponding second application.

(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.

Regulations

Section 10326 - 10327

Page 81 of 104

(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.

(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

Regulations

Section 10327

Page 82 of 104

requirements, excluding builder’s general liability insurance. For purposes of builder

overhead and profit, the cost of construction includes offsite improvements, demolition and

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 five hundred

thousand dollars ($2,500,000) 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 u

nadjusted

eligible con

struction 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 five hundred thousand dollars

($2,500,000) dollars.

Notwithstanding the par

agraph above, for projects which restrict for per

sons with

Special Needs as described in Section 10325(g)(3) the greater of 1) 15 Low-Income

Units or 2) 25% of the Low-Income Units, 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 eight hundred thousand dollars

($2,800,000). 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

eight hundred thousand dollars ($2,800,000).

(B)

For 4% credit applications applying

under Section 10326 of these regulations, the

maximum d

eveloper fee that may be included in project costs and eligible

basis shall

be as follow

(i)

fFor new construction,

rehabilitation only, or adaptive r

euse 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 pr

oject

allocated on a pro rata basis.

All deve

loper fees in excess of the greater of the following shall be deferre

d or

contributed as equity to the project:



15% of the project’s unadjusted eligible basis, up to two

million five hundred

thousand dollars ($2,500,000) dollars; or

 one million dollars ($1,000,000) plus 5% of the project’s unadjusted eligible

basis in excess of six million six hundred sixty six thousand six hundred

sixty seven dollars ($6,666,667) plus $20,000 per unit for each Tax Credit

unit in excess of 100 shall be deferred or contributed as equity to the project.

Regulations

Section 10327

Page 83 of 104

Notwithstanding the paragraph above, for projects which restrict for persons

with Special Needs as described in Section 10325(g)(3) the greater of 1) 15

Low-Income Units or 2) 25% of the Low-Income Units, all developer fees in

excess of the greater of the following shall be deferred or contributed as equity

to the project:



15% of eligible basis, up to two million eight hundred thousand dollars

($2,800,000); or

 one million dollars ($1,000,000) plus 7% of eligible basis in excess of six

million six hundred sixty six thousand six hundred sixty seven dollars

($6,666,667).

(ii)

For acquisition/rehabilitation projects, the maximum developer fee is 15

% of

the unadju

sted 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. 15%

of the project’s

unadjusted eligible acquisition basis 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.

All develop

er fees in excess of the greater of the following shall be def

erred

or contributed as equity to the project:



15% of the project’s unadjusted eligible construction related basis plus 5%

of the project’s unadjusted eligible acquisition basis, up to two million five

hundred thousand dollars ($2,500,000) dollars; provided however, and

subject to the $2,500,000 limitation in the aggregate, 15% of the project’s

unadjusted eligible acquisition basis 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; or

 one million dollars ($1,000,000) plus 5% of the project’s unadjusted eligible

basis in excess of six million six hundred sixty-six thousand six hundred

sixty seven dollars ($6,666,667) plus $20,000 per unit for each Tax Credit

Unit in excess of 100 shall be deferred or contributed as equity to the

project.

Notwithstanding the paragraph above, for projects which restrict for persons

with Special Needs as described in Section 10325(g)(3) the greater of 1) 15

Low-Income Units or 2) 25% of the Low-Income Units, all developer fees in

excess of the greater of the following shall be deferred or contributed as equity

to the project:



15% of the project’s unadjusted eligible construction related basis plus 5%

of the project’s unadjusted eligible acquisition basis, up to two million eight

hundred thousand dollars ($2,800,000); provided however, and subject to

the $2,800,000 limitation in the aggregate, 15% of the project’s unadjusted

eligible acquisition basis will be permitted for at-risk developments meeting

the requirements of section 10325(g)(4) or for other

Regulations

Section 10327

Page 84 of 104

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; or

 one million dollars ($1,000,000) plus 7% of the project’s unadjusted eligible

basis in excess of six million six hundred sixty-six thousand six hundred

sixty seven dollars ($6,666,667). 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.

(iii)

Notwithstanding (i) and (ii), effective through December

31, 2028, any

developer fee in excess of $6,000,000 shall be deferred or contributed as

equity to the project. Prior to December 31, 2028, the Committee shall meet to

discuss the application of any developer fee in excess of $6,000,000.

(C)

For purposes of this subsection, the unadjusted eligible basis is determined without

consideratio

n of the developer fee. With exception of 4% projects with a 2016 or

later reser

vation, 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 re

servation

may increase or decrease in the event of modification in basis, and in the cases it is

increased,

any increase above the maximum developer fee established at

reservation 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 simu

ltaneous

phases usin

g all 9% credits and (2)(

B) above applies to all simultaneous phases

using all 4% credits. Only when the i

mmediately 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

independent

ly. For purposes of this limitation, unless waived by the Executive

Director, “simultaneous” refers to projects consisting of a single building, or projects

on the same parcel or on parcels within ¼ mile of each othe

r and with construction

start dates

within six months of each other, or completion dates that ar

e 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 prop

osed project prior to addition of the developer f

ee. 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 fe

e. 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, or Other People of Color (BIPOC). For projects that qualify for

general partner experience pursuant to Section 5230(f)(1)(B) of th

e CDLAC

Regulations,

the 15% of project’s unadjusted eligible construction relat

ed basis

stated in Section 1032

7(c)(2)(B) shall be incr

eased to 20% of the project’s

Regulations

Section 10327

Page 85 of 104

unadjusted eligible construction related basis and the two million five hundred

thousand ($2,500,000) dollars in subsection (c)(2)(B) 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 as a cost or 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 initial

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 initial

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

Threshold Basis Limit definition in Section 10302 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.

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;

Regulations

Section 10327

Page 86 of 104

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

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 15% more energy efficient than

the applicable Building Energy Efficiency Standards (Energy Code,

Regulations

Section 10327

Page 87 of 104

California Code of Regulations, Title 24) 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, 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%)

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. The applicant shall use CBECC/CUAC

software approved by the California Energy Commission to determine the solar

output and the tenants’ estimated usage. For item (2), the energy analyst shall

provide documentation of the load serving the common area and the output

calculations of 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

Regulations

Section 10327

Page 88 of 104

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 $500,000, 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 CTCAC/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 CTCAC/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

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.

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.

Regulations

Section 10327

Page 89 of 104

(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.

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

CTCAC 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.

Regulations

Section 10327

Page 90 of 104

(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 or a Related Party’s 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. Public entities are exempt from this requirement.

(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,

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

Regulations

Section 10327

Page 91 of 104

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.

(1) The 15-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

Regulations

Section 10327

Page 92 of 104

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.

(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

Regulations

Section 10327 - 10328

Page 93 of 104

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.

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,

(4) rents for a low-income household shall not increase in any 12-month period more than the

lesser of five percent plus the percentage increase in the cost of living as defined in

paragraph (3) of subdivision (g) of Section 1947.12 of the Civil Code or ten percent of the

lowest rental rate charged for that household at any time during the 12 months prior to the

effective date of the increase, except as follows:

(A)

The Executive Director may grant a waiver to exceed this limit provided that the

owner shows that the proposed rent increase is necessary to ensure financial

stability or fiscal integrity of the property.

(B)

An owner may exceed this limit without a waiver in the following circumstances:

(i) to incr

ease the rent up to 30 percent of the

monthly income of the household

occupying the unit.

Regulations

Section 10328

Page 94 of 104

(ii) for projects with terminated project-based rental assistance or operating

subsidy as described in Section 10337(a)(3)(B); or

(iii) a transfer of a household to another unit in the same property that has a

different bedroom count or transfer to a higher AMI designation, as required

by a public regulatory agreement or deed restriction, due to a change in the

household’s income or occupancy from initial qualification.

(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 1033

and an exe

cuted reservation letter bearing the applicant's signature accepting the reservatio

within twenty (20) calen

dar days of the Committee's notice to the applicant of the

preliminary

reservation,

except that Hybrid projects and simultaneous phased projects as defined in Section

10327(c)(2)(C) shall submit the acceptance of the reservation for the first application within five (5

)

business d

ays of the Committee's notice to the applicant of the reservation for the corresponding

second application. However, should the 20-day period for returning the executed reservation lett

continue pa

st 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 reservatio

n be effective. Failure to

comply with any shorten

ed period would invalidate the reservation offer and permit the Committee

to offer a reservation to the next eligible project.

(c)

Except for those applying under section 10326 of these regulations, applicants receiving a Cred

reservation

but who did not receive maximum points in the Readiness to Proceed point categor

shall

provide the Committee with a completed updated application form no later than 180 days

194 days,

as applicable, following Credit reservation and start construction no later than 12 months

following Credit reservation. Failure to start construction within 12 months following Credit

reservation may result in rescission of Credit reservation.

Upon receipt of the updated application form, the Committee shall conduct a financial feasibilit

and cost re

asonableness 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 r

eceiving 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

made, pursu

ant to IRC Section 42(h)(1)(E) and these regulations, as detailed below. An application

for a carryover allocation must be submitted no later than 20 days following the Credit reservation

date, 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

no later tha

n twelve (12) months after the date of the carryover allocation. An application for a

carryover allocation and allocation fee for the first application of a Hybrid

project or a simultaneous

phased project as defin

ed in Section 10327(c)(2)(C) shall be submitted within five (5) business

days of the Committee's notice to the applicant of the reservation for the corresponding se

cond

application

(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 carr

yover

allocation a

n applicant shall provide evidence that applicant has maintained site

control

from the time of the initi

al application and, if the land is not already owned, will contin

ue to

maintain sit

e control until the time for submitting evidence of the land’s purchase.

Regulations

Section 10328

Page 95 of 104

(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. 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

any 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 calendar

year immediately following the calendar year in which the initial reservation and carryover

allocation were made.

(2) A project that prior to the placed-in-service deadline merits additional time to place in service

when development was significantly delayed during construction due to physical damage

to the development directly caused by a disaster, including but not limited to, fires, floods,

or earthquakes. In considering a request the Executive Director may consider at his or her

sole discretion, 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 physical 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 calendar year immediately following the calendar year in which

the initial reservation and carryover allocation were made.

(4) A Waiting List project that returns all of the Federal Credit only during the calendar year

immediately following the calendar year in which the initial reservation and carryover

allocation were made.

(5) Notwithstanding paragraph (4), a Waiting List project that returns all of the Federal Credit

prior to December 31, 2023, immediately following when the initial reservation and carryover

allocation were made.

(6) A project reserved and allocated Federal Credit that returns all of the Federal Credit due to

circumstances beyond the applicant’s control and subject to the prior written approval of the

Executive Director at his or her sole discretion.

(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.

Regulations

Section 10330 - 10335

Page 96 of 104

Section 10330. Appeals.

(a) Availability. An applicant shall not appeal the Committee staff evaluation of another applicant’s

application. An appeal may only be filed under the following circumstances:

(1) determination of the application point score;

(2) disqualification from participation in the program pursuant to subsection 10325(c);

(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 CTCAC staff no later than five (5) calendar days following the

transmittal date of the 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 five (5) 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 no later than five (5) days following the transmittal date of

the staff response letter. The Executive Director will respond in writing within five (5) days

after receipt of the appeal letter. 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 transmittal date 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 Executive Director 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 $1,500. Scattered site applications and resyndication applications shall be required

to pay an application filing fee of $1,700. This fee shall be paid to the Committee and shall

be submitted with the application. This fee is not refundable.

Regulations

Section 10335

Page 97 of 104

(2) Every applicant for competitive tax credits shall be required to pay an application filing fee

of $2,500, 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 $1,500 filing fee to be considered in a subsequent funding

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 bond

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 not

refundable.

dollars ($500) to CTCAC. The fee must accompany the appeal letter to the Committee.

(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 the

required fee within twenty (20) days of issuance of a tax-exempt bond reservation, except that

Hybrid projects and simultaneous phased projects as defined in Section 10327(c)(2)(C) shall

submit the reservation fee for the first application within five (5) business days of the Committee's

notice to the applicant of the reservation for the corresponding second application, or prior to the

issuance of tax forms, whichever is first.

(e) Performance deposit. Each applicant receiving a preliminary reservation of Federal, or Federal

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 $100,000,

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, except that Hybrid projects and simultaneous phased projects as defined in

Section 10327(c)(2)(C) shall submit the performance deposit for the first application within

five (5) business days of the Committee's notice to the applicant of the reservation for the

corresponding second application.

Regulations

Section 10335 - 10337

Page 98 of 104

(2) Returned Tax Credits. If Tax Credits are returned after a reservation has been accepted,

the performance deposit is not refundable, with the following exceptions. Projects unable

to proceed due to a natural disaster, a lawsuit, or similar extraordinary circumstance that

prohibits project development may be eligible for a refund. Requests to refund a deposit

shall be submitted in writing for Committee consideration. Amounts not refunded are

forfeited to the Committee. All forfeited funds shall be deposited in the occupancy

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

do all of the following: place the project in service under the time limits permitted by law;

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. 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 $700 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

Regulations

Section 10337

Page 99 of 104

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 assist

ance or operating

subsidy:

(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 subsid

ies or financing structures

that would

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

regulatory

agreement

up to the federally-permitted maximum. Rents shall be raised only to the

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 CTCAC at extremely lo

w income

targeting. Any necessar

y rent increases shall be

phased in as gradually as possible,

consiste

nt with maintaining the project’s Financial Feasibility. If hou

sing Special

Needs populations, th

e property owner shall attempt to minimize disruption to

existing households, and transition to non-Special Needs househo

lds only as

necessary a

nd upon vacancy whenever possible.

(4)

All projects that receive a reservation of Tax Credits on or after January 1, 2017 a

nd that

involve a

leasehold interest shall, in addition to t

he regulatory agreement, execute a lease

rider which shall be recor

ded in the County Recorder’s Office for which the project is located.

(b) Responsibility of owner.

(1)

Compliance. All compliance requirements monitored by the Committee shall be

the

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). Owne

rs of a

100% tax credit property must perform a first ann

ual 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 paragra

ph (1)

of this sub

section. These requirements continue if the tax credit property is sold

transferred, or under new manage

ment. Any failure by the owner to respond to compliance

reports and certification requirements will be considered an act of noncompliance and shall

be 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 Ta

x 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.

Regulations

Section 10337

Page 100 of 104

(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 features, or if no such occupant exists, then

(B)

Second, to an eligible qualified applicant on the waiting list having a handicap

requiring the accessibility features of the vacant

unit.

When offering an acce

ssible 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.

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 yout

h may

be occupied

entirely by full-time students who are not dependents of another individu

al.

(4)

Prohibition against requiring tenants to participate in services. All ne

w and existing Tax

Credit proje

cts are prohibited from requiring tenants to participate in services,

unless the

tenant occu

pies a unit assisted with a federal source that requires tenant participation in

services.

a compliance monitoring procedure t

o 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 C

redit 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: th

e total

number of residential re

ntal 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 allowa

nce as specified in 26 CFR Section 142.10(c) and Section 10322(h)(

21) of

these regula

tions (for buildings using an energy consumption model utility allowance,

that

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 L

ow-Income Units; low-income tenants’ (i.e., household) in

come;

documentation to support each low-income household's income certification; the eligible

basis and q

ualified basis of the building at the end of the first year of the Credit period; and,

the characte

r and use of any nonresidential portion of the building include

d in the building's

eligible ba

Upon request, scattered

site projects shall make these records available for inspecti

on by

CTCAC staf

f at a single location.

(2)

Record Retention. For each qualified low-income building in the project, and for each year

of 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:

Regulations

Section 10337

Page 101 of 104

(i) for at least six years following the due date (with extensions) for filing the

Federal inco

me 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 du

e date

(with extensi

ons) 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 inspecte

d the

reports or n

otices and completes the tenant file and unit inspections, an

d the

violation

has been corrected. This subsection shall take

effect beginning

January 1, 2001.

(B)

The Commit

tee 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. Shou

ld the Committee require submission of copies of tenant certifications

and records, it shall retain them for three years from the end of the calen

dar year it

receives the

m. Should it instead review tenant files at the management office of the

subject project, it shall retain its review notes and any other pertinent info

rmation for

the same three-year period. The Committee shall ret

ain all othe

r project

documentation for the sa

me three-year period.

(3)

Certification requirements. Under penalty of perjury, a Credit project owner is requ

ired to

annually, du

ring each year of the compliance period, meet the certification requirements of

U.S. Treasury Regulations 26 CFR 1.42-5(c), (including certifications that no finding

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, th

at the

owner did n

ot 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

, all

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 Agr

eement, if

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 t

he Project since it was

placed-in-se

rvice; and,

(F)

report the number of units that were occupied by Credit eligib

le households during

the reportin

g period.

(G)

the services specified in the Regulatory Agreement were provided to the

tenants

during the reporting period.

Regulations

Section 10337

Page 102 of 104

(H) if the project is subject to a cash flow limitation in its Regulatory Agreement, 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 ye

ar 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 fo

r all

buildings

and common areas in each project, and for at least

20% of the low-income units

in each pro

ject. The tenant file reviews will also be for at least 20% of th

e low-income units

in 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 Dire

ctor for such purpose, while the units and

tenant recor

ds 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

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 deli

vered to the project owner within a reasonable pe

riod before

an inspectio

n is scheduled to occur. The completed PSR form shall be

submitted

to the Committee by th

e 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 finding

s may alter

the extent of

the review, solely at the Committee's discretion and as allowed by IRS

regulations. The Committee may rely on reports of site visits prepared

by lenders

or other go

vernmental 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 notif

y owners in writing if the owner is

required to submit documents/inf

rmation related to either the physical or tenant file

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

42 as a result of its revie

w, 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

a correction

period no longer than ninety (90) days from the date of written notice by the

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 co

rrection period upon receipt of

a written justification

from

the owner.

(7)

IRS and FTB notificatio

n. All instances of noncompliance, whether corrected or not, shall

be 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.

Regulations

Section 10337

Page 103 of 104

(d) Change in ownership and property management. It is the project owner's responsibility to comply

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 Credit

projects in California. If the new property management company does not meet these

experience requirements, then substitution of property management shall not be permitted.

(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 records.

(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 general

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 which

the fine(s) is assessed is not corrected within 90 days of the assessed fine, the Committee

may record a lien against the property.

(6) Reoccurring or repeated noncompliance – CTCAC shall issue fines of up to $500 per

instance of repeated or reoccurring noncompliance violations noted in separate monitoring

cycles. CTCAC defines repeated or reoccurring violations as 25% or more instances of the

current monitoring inspection having the same noncompliance issues as found in the

previous monitoring cycle.

Areas of repeated or reoccurring noncompliance include (but are not limited to):

(A) Repeated Uniform Physical Conditions Standards (UPCS) Health and Safety

Violations and Common Area Violations

(B) Reoccurring patterns of units no turn-key ready and advertised within 60 days of unit

vacancy date

(D) Reoccurring misuse of Utility Allowance methods

(E) Reoccurring patterns of over-income households

(F) Reoccurring patterns of over-charged rents

Regulations

Section 10337

Page 104 of 104

(G) Reoccurring patterns of incomplete or missing re-certifications

(H) Service Amenities not pr

ovided within Federal Compliance periods

(g)

Housing Supplier Diversity Reporting. A housing sponsor that receives a tax credit reservation on

or after January 1, 2024, shall annually submit a report to CTCAC, in a form that CTCAC sha

require, and

at the time that CTCAC shall annually designate. The reporting period shall cover all

contract activities directly related to the development and construction of a housing project from

the first day following the credit reservation date with an option for the housing sponsor to include

prior contracting activities. The final report shall cover the year that the project is placed in service.

The report shall include information, as required in Section 50199.23 of the Health and Safety Code

and as outlined in the CTCAC Housing Supplier Diversity Reporting Guidelines: Completing the

Housing Supplier Diversity Annual R

eport.

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, 50199.22 and 50199.23 Health and Safety

Code.