California Debt Limit Allocation Committee: income taxes: low-income housing tax credits.

(1) Existing law establishes the California Debt Limit Allocation Committee for the purpose of implementing the volume limit for the state on private activity bonds established pursuant to federal law. The committee's duties include annually determining a state ceiling on the aggregate amount of private activity bonds that may be issued, and allocating that amount among state and local agencies. Existing law makes findings and declarations with regard to, and the purpose for, the provisions relating to the California Debt Limit Allocation Committee. This bill would revise the findings and declarations relating to the California Debt Limit Allocation Committee. (2) Existing law establishes a low-income housing tax credit program pursuant to which the California Tax Credit Allocation Committee (CTCAC) provides procedures and requirements for the allocation, in modified conformity with federal law, of state insurance, personal income, and corporation tax credit amounts to qualified low-income housing projects that have been allocated, or qualify for, a federal low-income housing tax credit, and farmworker housing. Existing law limits the total aggregate annual amount of the state low-income housing credit to specified amounts. Existing law, for purposes of determining the amount of low-income housing tax credit allocated to a qualified low-income housing project, defines the term "applicable percentage" depending on, among other things, whether the qualified low-income building is a new building that is not federally subsidized, a new building that is federally subsidized, or is an existing building that is at risk of conversion. Existing law defines "at risk of conversion," with respect to an existing property, to mean a property that satisfies certain criteria including, among others, that the property is a multifamily rental housing development in which at least 50% of the units receive governmental assistance pursuant to specified programs, and that the restrictions on rent and income levels will terminate or the federally insured mortgage or rent subsidy contract on the property is eligible for prepayment or termination any time within 5 years before or after the date of application to the California Tax Credit Allocation Committee. This bill would revise and expand, for purposes of the definition of "at risk of conversion," the types of programs that qualify as governmental assistance. The bill would also require, for purposes of that definition, 50% of the units in the multifamily rental housing development to be restricted to initial occupancy by lower income households, if the development is subject to restrictions on rent and income levels. The bill, for purposes of that definition, would exclude from the above-described criteria relating to restrictions on rent and income levels any restrictions recorded pursuant to a certain provision under which specified entities qualify as a purchaser of an assisted housing development, contained in a regulatory agreement entered into pursuant to certain provisions, or in connection with interim or acquisition financing. Existing law provides, for calendar years beginning in 2020, for an additional state credit amount that may be allocated, up to $500,000,000, to eligible projects, which include any new building, as defined, excluding rehabilitation expenditures under a federal provision relating to rehabilitation expenditures treated as separate new building, and is federally subsidized. Existing law provides that this additional credit amount is only available for allocation pursuant to an authorization in the annual Budget Act or related legislation and specified regulatory action by CTCAC aimed at increasing production and containing costs. This bill would make projects that include the retrofitting and repurposing of existing nonresidential structures, as specified, that were converted to residential use within the previous 5 years from the date of the application eligible for allocations from the additional state credit amounts allocable for calendar years beginning in 2020, as described above. (3) This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIIIA of the California Constitution, and thus would require for passage the approval of 23 of the membership of each house of the Legislature.