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AGENDA
CITIES ASSOCIATION OF SANTA CLARA COUNTY
LEGISLATIVE ACTION COMMITTEE
6:20 to 6:50 pm
Thursday, April 9, 2015
West Conference Room, Sunnyvale City Hall
456 West Olive Avenue, Sunnyvale, CA
This agenda and packet are available at www.citiesassociation.org
If you are unable to attend this meeting, please pass your packet to your alternate.
1.
Welcome and Introductions and Roll Call
2.
Consent Calendar
A. October 9, 2014 Meeting Minutes
3.
New Business
A. Review of SB 3 (Leno) Minimum Wage
1. Fact Sheet
2. Bill Text
3. City of San Jose Staff & Council Reports
4. 10 Big City Letter of Support
B. Review of Assembly Speaker Atkins’ Affordable Housing
Initiative
1. AB 1335 (Atkins) Building Homes and Job Act
a. Fact Sheet
b. Bill Text
c. League Support Letter
2. AB 35 (Chiu & Atkins) Low Income Housing Tax Credit
a. Fact Sheet
b. Bill Text Amended
c. League Support Letter
3. AB 1056 (Atkins) Second Chance Program for Community
Re-entry
a. Fact Sheet
b. Bill Text
C. Review of AB 313 (Atkins) Enhanced Infrastructure Finance
Districts
a. Fact Sheet
b. Bill Text
D. Review of SB 9 (Beall) Transit and Intercity Rail Capital Program
a. Fact Sheet
b. Senate Bill Analysis
4.
Member Comments
Each Legislative Action Committee member may speak to any
issue not on the agenda; time limit of 5 minutes unless LAC
members authorize further discussion.
5.
Oral Communications
This time is reserved for public comments, not to exceed 5
minutes, on topics that are not on the agenda.
6.
Future Agenda Items
7.
Adjournment
Draft Minutes
Cities Association Legislative Action Committee
Sunnyvale City Hall
October 9, 2014
The regular meeting of the Cities Association Legislative Action
Committee was called to order at 6:38 p.m. with 2nd Vice President Jim
Griffith presiding. President Steve Tate participated via teleconference
from 1596 East Avenue, Napa, CA 94559.
1. Call to Order/Roll Call
Present:
Rich Waterman, Campbell
Barry Chang, Cupertino
Jarrett Fishpaw, Los Altos (arrived 6:43)
Gary Waldeck, Los Altos Hills
Joe Pirzynski, Los Gatos
Burton Craig, Monte Sereno
Steve Tate, Morgan Hill (exited 6:42 pm)
Marc Berman, Palo Alto
Jerry Marsalli, Santa Clara
Emily Lo, Saratoga
Jim Griffith, Sunnyvale
Also Present:
Betsy Shotwell, San Jose
Raania Mohsen, CASCC
Jessica Stanfill Mullin, LCC
2. Consent Calendar: July 10, 2014 Minutes were approved. Motion (Pirzynski)/
Second (Craig). Motion Carried Unanimously (9:0).
Ayes: Berman, Chang, Craig, Griffith, Lo, Marsalli, Pirzynski, Waldeck, Waterman
No:
Absent: Abe-Koga, Esteves, Fishpaw, Leroe-Munoz, Liccardo, Tate
3. New Business
A. Review of the November 4, 2014 State Ballot Initiatives
Upon review, the LAC voted to make the following recommendations.
1. Support Proposition 1: Water Quality, Supply, and Infrastructure
Improvement Act of 2014 – If approved, Prop. 1 would provide a total of
$7.545 billion in bond funding for water related projects such as water
conservation, groundwater recharge, storm water capture and
reuse/Clean Water Act Compliance, watershed restoration, water storage
and conveyance and water recycling and reuse. The $7.545 billion in
funding would come from the issuance of $7.12 billion in new general
obligation (GO) bonds and the reallocation of $425 million in existing bond
funds previously approved by voters.
Motion (Craig)/ Second (Waldeck). Motion carried unanimously (10:0)
Ayes: Berman, Chang, Craig, Griffith, Lo, Marsalli, Pirzynski, Tate, Waldeck,
Waterman
No:
Absent: Abe-Koga, Esteves, Fishpaw, Kalra, Leroe-Munoz
2. Support Proposition 2: State Budget Stabilization Act - The measure,
upon voter approval, would alter the state’s existing requirements for the
Budget Stabilization Account (BSA), as established by Proposition 58. The
BSA is a rainy day fund. ACA 1 would also establish a Public School
System Stabilization Account (PSSSA).
Motion (Chang)/ Second (Pirzynski). Motion carried unanimously (9:0).
Ayes: Berman, Chang, Craig, Griffith, Lo, Marsalli, Pirzynski, Waldeck, Waterman
No:
Absent: Abe-Koga, Esteves, Fishpaw, Kalra, Leroe-Munoz, Tate
3. No Position on Proposition 45: Public Notice Required for Insurance
Rate Changes Initiative.
Motion (Miller)/ Second (Fishpaw). Motion carried unanimously (10:0).
Ayes: Berman, Chang, Craig, Fishpaw, Griffith, Lo, Marsalli, Pirzynski, Waldeck,
Waterman
No:
Absent: Abe-Koga, Esteves, Kalra, Leroe-Munoz, Tate
4. Oppose Proposition 46: Medical Malpractice Lawsuits Cap and Drug
Testing of Doctors - If approved by voters, the initiative will:
• Increase the state's cap on non-economic damages that can be
assessed in medical negligence lawsuits to over $1 million from the
current cap of $250,000.
• Require drug and alcohol testing of doctors and reporting of
positive tests to the California Medical Board.
• Require the California Medical Board to suspend doctors pending
investigation of positive tests and take disciplinary action if the
doctor was found impaired while on duty.
• Require health care practitioners to report any doctor suspected of
drug or alcohol impairment or medical negligence.
• Require health care practitioners to consult the state prescription
drug history database before prescribing certain controlled
substances.
Members expressed concern for the proposed increase of the lawsuit cap and
the overall increase on healthcare costs if this proposition is passed;
members unanimously voted to oppose proposition 46.
Motion (Pirzynski)/ Second (Waldeck). Motion carried unanimously (10:0).
Ayes: Berman, Chang, Craig, Fishpaw, Griffith, Lo, Marsalli, Pirzynski, Waldeck,
Waterman
No:
Absent: Abe-Koga, Esteves, Leroe-Munoz, Liccardo, Tate
5. Oppose Proposition 47: Reduced Penalties for some Crimes Initiative
- The initiative, if approved by the state's voters, would reduce the
classification of most "nonserious” and nonviolent property and drug
crimes" from a felony to a misdemeanor.
• Though members support rehabilitation over incarceration for those
who commit nonviolent crimes, members expressed concern for the
proposed changes to criminal justice policies; members voted to
oppose proposition 47.
Motion (Fishpaw)/ Second (Pirzynski). Motion carried 8:2.
Ayes: Craig, Fishpaw, Griffith, Lo, Marsalli, Pirzynski, Waldeck, Waterman
No: Berman, Chang
Absent: Abe-Koga, Esteves, Kalra, Leroe-Munoz, Tate
6. No position on Proposition 48: Referendum to Overturn Indian
Gaming Compacts
Motion (Chang)/ Second (Craig). Motion carried unanimously (10:0).
Ayes: Berman, Chang, Craig, Fishpaw, Griffith, Lo, Marsalli, Pirzynski, Waldeck,
Waterman
No:
Absent: Abe-Koga, Esteves, Kalra, Leroe-Munoz, Tate
2. Oral Communications - none
4. Adjournment: The meeting was adjourned at 7:00 p.m.
Respectfully submitted:
Raania Mohsen, Executive Director
SB 3 (Leno)
Joint Author: Senator Leyva
Principal Co-Author: Senator De León
Co-Authors: Senators McGuire & Hancock; Assemblymembers McCarty, Stone &
Ting
As Introduced December 1, 2014
Minimum Wage Fairness Act
FACT SHEET
SUMMARY
SB 3 (Leno) will increase the minimum
wage in California to $11 per hour
beginning in January 2016 and $13 per
hour in July 2017. Beginning in January
2019, the statewide minimum wage would
be increased annually based on the rate of
inflation.
BACKGROUND
According to the Congressional Research
Service, the purchasing power of the
federal minimum wage has decreased
steadily since 1968 when it was equal to
$10.77 in today’s dollars. The current
federal minimum wage of $7.25/hour
would have to be raised by 36% to equal
those levels. While federal actions to
address this problem are ongoing, the cost
of living in California remains significantly
higher than other parts of the country, and
it is imperative that our state move forward
aggressively to combat poverty beyond any
minimum federal requirements.
California has not been idle in this regard,
and has taken steps to improve the pay of
Office of Senator Mark Leno

SB 3 Fact Sheet
low wage workers. However, under current
law, California will not reach a minimum
wage of $10/hr until 2016 (still less than
the inflation adjusted purchasing power of
the minimum wage in 1968).
It is essential that California increase the
speed with which boosts in the minimum
wage will occur, and it is essential that
future annual increases be automatic and
tied to the rate of inflation in order to
protect low-wage employees’ purchasing
power.
Under current law, a California worker
employed full time, year round, will earn
$18,000 before taxes at the current rate of
$9/hr. This is simply unacceptable. No
Californian who works full time should
have to live in poverty.
FEDERAL ACTION


President Obama has announced an
executive order raising the minimum
wage to $10.10/hr for federal
contractors.
Localities have raised the minimum
wage even higher, to $12.25/hr in

Page 1
Oakland, $15/hr in San Francisco and
$15.37/hr for hotel workers in Los
Angeles.
SOLUTION


Western Regional Advocacy Project
(WRAP)
California Communities United
Institute
Contact: Danielle Lenth, 916-651-4011
Version: February 3, 2015
SB 3 will help lift Californians out of
poverty by raising the state’s minimum
wage. This bill will increase the state’s
minimum wage in two steps, starting at $11
an hour in 2016 and increasing an
additional $2 per hour in July 2017.
Beginning in 2019, the minimum wage
would be adjusted annually to the rate of
inflation.
STATUS
Introduced
SUPPORT
















Western Center on Law and Poverty
(co-sponsor)
United Food and Commercial Workers
(co-sponsor)
SEIU—CA State Council (co-sponsor)
The Women’s Foundation of California
California Partnership
City of San Francisco
City of Los Angeles
City of Oakland
California Labor Federation
CA School Employees Association
Friends Committee on Legislation
ACLU
National Employment Law Project
Sacramento Central Labor Council,
AFL-CIO
California Nonprofits
Alliance of Californians for Community
Empowerment (ACCE Action)
Office of Senator Mark Leno

SB 3 Fact Sheet

Page 2
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03/11/15 - Amended Senate
(2015-2016)
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AMENDED IN SENATE
MARCH 11, 2015
CALIFORNIA LEGISLATURE— 2015–2016 REGULAR SESSION
SENATE BILL
No. 3
Introduced by Senators Leno and Leyva
(Principal coauthor: Senator De León)
(Coauthors: Senators Hancock and McGuire)
(Coauthors: Assembly Members Gonzalez, McCarty, Mark Stone, and Ting)
December 01, 2014
An act to amend Section 1182.12 of the Labor Code, relating to wages.
LEGISLATIVE COUNSEL'S DIGEST
SB 3, as amended, Leno.
Minimum wage: adjustment.
Existing law provides that it is the continuing duty of the Industrial Welfare Commission to ascertain the wages
paid to all employees in this state, to ascertain the hours and conditions of labor and employment in the various
occupations, trades, and industries in which employees are employed in this state, and to investigate the health,
safety, and welfare of those employees. Existing law establishes the Division of Labor Standards Enforcement in
the Department of Industrial Relations for the enforcement of labor laws, including minimum wage fixed by statute
and the wage orders of the Industrial Welfare Commission. Existing law requires that, on and after July 1, 2014,
the minimum wage for all industries be not less than $9 per hour. Existing law further increases the minimum
wage, on and after January 1, 2016, to not less than $10 per hour.
This bill would increase the minimum wage, on and after January 1, 2016, to not less than $11 per hour, and on
and after July 1, 2017, to not less than $13 per hour. The bill would require require, commencing January 1,
2019, the annual automatic adjustment of the minimum wage, commencing January 1, 2019, wage
to maintain
employee purchasing power diminished by the rate of inflation during the previous year. The adjustment would be
calculated using the California Consumer Price Index, as specified. The bill would prohibit the Industrial Welfare
Commission (IWC) commission from adjusting reducing the minimum wage downward and from adjusting the
minimum wage if the average percentage of inflation for the previous year was negative. The bill would require
the IWC
Division of Labor Standards Enforcement to publicize the automatically adjusted minimum wage.
The bill would provide that its provisions not be construed to preclude an increase in the minimum wage by the
IWC
commission to an amount greater than the formula would provide, to result in a reduction in the minimum
wage, or to preclude or supersede an increase of the minimum wage by any local government or tribal
government that is greater than the state minimum wage by any local government or tribal government. wage.
The bill would apply to all industries, including public and private employment.
Vote:
majority Appropriation:
no Fiscal Committee:
yes Local Program:
no THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1182.12 of the Labor Code is amended to read:
1182.12. (a) Notwithstanding
any other provision of this part, on and after July 1, 2014, the minimum wage for all
industries shall be not less than nine dollars ($9) per hour, on and after January 1, 2016, the minimum wage for
all industries shall be not less than eleven dollars ($11) per hour, and on and after July 1, 2017, the minimum
wage for all industries shall be not less than thirteen dollars ($13) per hour.
(b) (1) Except as provided in paragraph (3), commencing on January 1, 2019, the minimum wage shall be
automatically adjusted on January 1 of each year, commencing on January 1, 2019,
year
to maintain employee
purchasing power diminished by the rate of inflation that occurred during the previous year.
(2) The minimum wage adjustment shall be made by multiplying the minimum wage in effect on December 31 of
the previous year by the percentage rate of inflation that occurred during that year, and by adding the product to
the wage in effect during that year. The resulting total shall be rounded off to the nearest five cents ($0.05). The
Industrial Welfare Commission Division of Labor Standards Enforcement shall publicize the automatically adjusted
minimum wage.
(3) The Industrial Welfare Commission shall not adjust the minimum wage pursuant to this subdivision if the
average percentage of inflation for the previous year was negative.
(4) For purposes of this subdivision:
(A) “Percentage rate of inflation” means the percentage rate of inflation specified in the California Consumer Price
Index for All Urban Consumers, as published by the Department of Industrial Relations, Office of Policy, Research
and Legislation, or its successor index.
(B) “Previous year” means the 12-month period that ends on August 31 of the calendar year prior to the
adjustment.
(c) The Industrial Welfare Commission shall not reduce the minimum wage prescribed by this section.
(d) This section shall not be construed to preclude an increase of the minimum wage by the Industrial Welfare
Commission to an amount that is greater than the rate calculated pursuant to subdivision (b) or to preclude or
supersede an increase of the minimum wage by any local government or tribal government that is greater than
the state minimum wage by any local government or tribal government. wage.
(e) This section applies to all industries, including public and private employment.
COUNCIL AGENDA: 3/10/15
ITEM: 3.4
CITY OF ~
Memorandum
SAN JOSE
CAPITAL OF SILICON VALLEY
TO: HONORABLE MAYOR
AND CITY COUNCIL
SUBJECT: SB 3 (LENO) MINIMUM WAGE
ADJUSTMENT
Approved ~~
FROM: Betsy Shotwell
DATE: February 23,2015
Date
RECOMMENDATION
Accept the staff background and analysis regarding SB 3 (Leno) Minimum Wage: Adjustment.
BACKGROUND
At the February 18, 2015 Rules and Open Government committee meeting the Committee
requested that staff bring forward to the City Council an analysis of SB 3. The measure is
currently awaiting a hearing date in the Senate Labor and Industrial Relations Committee.
ANALYSIS
Senator Mark Leno has introduced legislation which would raise the state’s minimum wage to
$11 per hour on January 1, 2016; to $13 on July 1, 2017; and beginning on January 1, 2019 and
every January 1 thereafter, the minimum wage would be adjusted by the California CPI to keep
pace with inflation. This bill, if passed and signed into law, would apply to all industries,
including public and private employment.
The following table details the status of the minimum wage at the Federal and State levels and in
the City of San Jose:
FEDERAL
STATE
SAN JOSE
$7.25 an hour
July 1, 2014, $9.00 per hour
January 1, 2016, $10.00 per hour
January 1, 2015, $10.30 per hour. Each January, San Jose’s
minimum wage is increased by the prior year’s US
DOL/Bureau of Labor Statistics CPI.
HONORABLE MAYOR AND CITY COUNCIL
February 23, 2015
Subject: SB 3 (Leno) Minimum Wage Adjustment
Page 2
SB 3 has been assigned to the Senate Labor and Industrial Relations Committee with no date set
yet for hearing. This issue is not a part of the current City Council adopted 2015 Legislative
Guiding Principles and Priorities.
COORDINATION
This memorandum was coordinated with the Public Works Department, City Attorney’s Office,
and the City’s Legislative Advocate in Sacramento.
/s/
BETSY SHOTWELL
Director, Intergovernmental Relations
For more information contact: Betsy Shotwell, Director of Intergovernmental Relations at
(408) 535-8270, or Nina Grayson, Division Manager, Pubic Works, at (408) 535-8455
Attachment:
Memorandum from Mayor Liccardo, Vice Mayor Herrera and Councilmembers Can’asco and
Peralez dated February 12, 2015
ATTACHMENT
RULES COMMITTEE: 02-18-15
ITEM: G.6
CITY OF ~
SAN JOSE
Memorandum
CAPITAL OF SILICON VALLEY
TO:
RULES & OPEN GOVERNMENT FROM:
COMMITTEE
Mayor Sam Liccardo
Vice-Mayor Rose Herrera
Councilmember Raul Peralez
Councilmember Magdalena
Carrasco
SUBJECT:
SUPPORT FOR SB 3 (LENO) MINIMUM WAGE FAIRNESS
DATE: February 12, 2015
ACT
REC OMMEND~T’ION:
Add this item to the agenda for the February 24, 2015 City Council meeting, ,
Add to our list of Key Legislative Items for 2015 - support for SB 3 (Leno), the Minimum Wage
Fairness Act.
BACKGROUND
According to the Congressional Research Service, the purchasing power of the federal minimum
wage has decreased steadily since 1968 when it was equal to $10.77/hr. in today’s dollars. Under
current law, California will not reach a minimum wage of $10/hr. until 2016. The problem of a
stagnant minimum wage is magnified in California. Using U.S. Census data, when factoring in the
cost of housing, the rate of poverty soars in California, and in particular places like Silicon Valley.
As we well know, the cost of living in San Jose is one of the highest in the nation and the gap
between rich and poor continues to widen.
While California has consistently been at the forefront of minimum wage l~gislation, it is imperative
that we take steps now to increase the rate at which future raises will occur. SB 3 proposes a
reasonable step-increase approach by raising the minimum wage in California to $11/hr. in January of
2016, $13/hr. in July of 2017, and beginning in January of 2019, an annual raise based on the rate of
inflation.
We all agree that no San Josean or Californian who works full-time should have to live in poverty.
SB 3 will help improve the living conditions for millions of Californians. Mayors from seven (7) of
the ten (10) largest cities in California (Los Angeles, San Jose, San Francisco, Oaldand, Long Beach,
Santa Ana, and Sacramento) have already expressed support for SB 3. Yet if we share concerns
about a San Jose with a widening income gap, then our hard-working families need our engagement
-- not just a Mayor’s involvement, but the entire council.
-
February 18, 2015
The Honorable Mark Leno
State Senator, 11th District
State Capitol, Room 5100
Sacramento, CA 95814
RE: SB 3: State Minimum Wage
Dear Senator Leno,
As mayors of California’s largest cities, we write in support of SB 3, which will raise the
statewide minimum wage to $13 by July 1, 2017 and index the wage to the California
Consumer Price Index.
California has the highest poverty rate in the nation with nearly 10 million Californians
living in need according to recent US Census Bureau estimations. As mayors, we see
the impact of this economic disparity first-hand. Raising the state minimum wage will
improve conditions for millions of Californians while at the same time boosting our local
economies. A statewide increase would help lift working families out of poverty and
indexing the wage to inflation insures greater stability for local businesses by ensuring
that real wages remain consistent.
For these reasons, we strongly support SB 3. Thank you for sponsoring this important
legislation.
Sincerely,
ERIC GARCETTI
Mayor of Los Angeles
ED LEE
Mayor of San Francisco
LIBBY SCHAAF
Mayor of Oakland
MIGUEL PULIDO
Mayor of Santa Ana
SAM LICCARDO
Mayor of San Jose
KEVIN JOHNSON
Mayor of Sacramento
ROBERT GARCIA
Mayor of Long Beach
Assembly Speaker Toni G. Atkins, 78th Assembly District
AB 1335 – Building Homes and Jobs Act
IN BRIEF
The Building Homes and Jobs Act establishes a
permanent funding source for affordable housing,
through a small fee on real estate transaction
documents, excluding home sales.
THE ISSUE
California has a housing affordability crisis.
 According to the Public Policy Institute of
California (PPIC), as of February 2015,
roughly 36 percent of mortgaged homeowners
and approximately 48 percent of all renters are
spending more than one-third of their
household incomes on housing.
 California continues to have the second lowest
homeownership rate in the nation and the Los
Angeles metropolitan area is now a majority
renter region. In fact, five of the eight lowest
homeownership rates in the nation are in
California metropolitan areas.
 California has 12 percent of the United States
population, but 20 percent of its homeless
population -- 63 percent of these homeless
Californians are unsheltered (the highest rate
in the nation).
 At any given time, 134,000 Californians are
homeless. California has 24% of the nation’s
homeless veterans and one-third of the
nations’ chronically homeless. The state also
has the largest numbers of unaccompanied
homeless children and youth, with 30% of the
national total.
BACKGROUND
Increasing the construction, building, and
availability of affordable housing is good for the
economy, the budget, job creation, and families:
 The Bay Area Council, the Los Angeles Area
Chamber of Commerce, the Los Angeles
Business Council, the Orange County Business
Council, and the Silicon Valley Leadership
Group agree that less affordable housing
impedes California businesses from attracting
and retaining workers.
 On average, a single homeless Californian
incurs $2,897 per month in county costs for
emergency room visits and in-patient hospital
stays, as well as the costs of arrests and
incarceration. Roughly 79% of these costs are
cut when that person has an affordable home.
 An estimated 29,000 jobs would be created
annually for every $500 million spent on
affordable housing.
THE SOLUTION
Increased and ongoing funding for affordable
housing is critical to stabilize the state’s housing
development and construction marketplace. If
developers know that there is a sustainable source
of funding available, they will take on the risk that
comes with development — and create a reliable
pipeline of well-paying construction jobs in the
process.
The Building Homes and Jobs Act will utilize a pay
as you go approach and generate hundreds of
millions of dollars annually for affordable housing
through a $75 fee on real estate recorded
documents, excluding those documents associated
with home sales. Funds generated will leverage an
additional $2 to $3 billion in federal, local, and
bank investment.
SUPPORT*
Treasurer John Chiang, Los Angeles Mayor Eric
Garcetti, San Diego Mayor Kevin L. Faulconer, San
Francisco Mayor Edwin M. Lee, and Oakland
Mayor Libby Schaaf.
San Diego Housing Federation, Housing California,
California Building Industry Association, California
Infill Federation, Bay Area Council, San Diego
Regional Chamber of Commerce, California
Housing Consortium, Silicon Valley Leadership
Group, and Western Center on Law & Poverty
*Partial list
FOR MORE INFORMATION
Zack Olmstead, Office of Speaker Toni G. Atkins
916 319 2078 | zachary.olmstead@asm.ca.gov
Factsheet for AB # 1335 (Atkins), As Introduced – Created March 6, 2015
california legislature—2015–16 regular session
ASSEMBLY BILL
No. 1335
Introduced by Assembly Member Atkins
(Principal coauthors: Assembly Members Chau, Chiu, and Gordon)
(Coauthors: Assembly Members Alejo, Bloom, Bonilla, Bonta,
Cooper, Gonzalez, Lopez, Low, McCarty, Mullin, Rendon,
Santiago, Mark Stone, Ting, and Weber)
February 27, 2015
An act to add Section 27388.1 to the Government Code, and to add
Chapter 2.5 (commencing with Section 50470) to Part 2 of Division 31
of the Health and Safety Code, relating to housing, and declaring the
urgency thereof, to take effect immediately.
legislative counsel’s digest
AB 1335, as introduced, Atkins. Building Homes and Jobs Act.
Under existing law, there are programs providing assistance for,
among other things, emergency housing, multifamily housing,
farmworker housing, home ownership for very low and low-income
households, and downpayment assistance for first-time homebuyers.
Existing law also authorizes the issuance of bonds in specified amounts
pursuant to the State General Obligation Bond Law. Existing law
requires that proceeds from the sale of these bonds be used to finance
various existing housing programs, capital outlay related to infill
development, brownfield cleanup that promotes infill development, and
housing-related parks.
This bill would enact the Building Homes and Jobs Act. The bill
would make legislative findings and declarations relating to the need
for establishing permanent, ongoing sources of funding dedicated to
affordable housing development. The bill would impose a fee, except
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AB 1335
—2—
as provided, of $75 to be paid at the time of the recording of every real
estate instrument, paper, or notice required or permitted by law to be
recorded. By imposing new duties on counties with respect to the
imposition of the recording fee, the bill would create a state-mandated
local program. The bill would require that revenues from this fee, after
deduction of any actual and necessary administrative costs incurred by
the county recorder, be sent quarterly to the Department of Housing
and Community Development for deposit in the Building Homes and
Jobs Fund, which the bill would create within the State Treasury. The
bill would provide that moneys in the fund may be expended for
supporting affordable housing, home ownership opportunities, and other
housing-related program, as specified. The bill would impose certain
auditing and reporting requirements.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the state.
Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act
for a specified reason.
This bill would declare that it is to take effect immediately as an
urgency statute.
Vote: 2⁄3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
The people of the State of California do enact as follows:
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SECTION 1. This act shall be known as the Building Homes
and Jobs Act.
SEC. 2. (a) The Legislature finds and declares that having a
healthy housing market that provides an adequate supply of homes
affordable to Californians at all income levels is critical to the
economic prosperity and quality of life in the state.
(b) The Legislature further finds and declares all of the
following:
(1) Funding approved by the state’s voters in 2002 and 2006,
as of June 2014, has financed the construction, rehabilitation, and
preservation of over 14,000 shelter spaces and 149,000 affordable
homes. These numbers include thousands of supportive homes for
people experiencing homelessness. In addition, these funds have
helped tens of thousands of families become or remain
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—3—
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homeowners. Nearly all of the voter-approved funding for
affordable housing was awarded by the beginning of 2015.
(2) The requirement in the Community Redevelopment Law
that redevelopment agencies set aside 20 percent of tax increment
for affordable housing generated roughly $1 billion per year. With
the elimination of redevelopment agencies, this funding stream
has disappeared.
(3) In 2014, the Legislature committed 10 percent of ongoing
cap-and-trade funds for affordable housing that reduces greenhouse
gas emissions and dedicated $100 million in one-time funding for
affordable multifamily and permanent supportive housing. In
addition, the people of California thoughtfully approved the
repurposing of $600 million in already committed bond funds for
the creation of affordable rental and permanent supportive housing
for veterans through the passage of Proposition 41.
(4) Despite these investments, the need in the state of California
greatly exceeds the available resources, considering 36.2 percent
of mortgaged homeowners and 47.7 percent of all renters are
spending more than 35 percent of their household incomes on
housing.
(5) California has 12 percent of the United States population,
but 20 percent of its homeless population. California has the highest
percentage of unsheltered homeless in the nation, with 63 percent
of homeless Californians not having shelter. California has 24
percent of the nation’s homeless veterans population and one-third
of the nations’ chronically homeless population. California also
has the largest populations of unaccompanied homeless children
and youth, with 30 percent of the national total.
(6) Furthermore, four of the top 10 metropolitan areas in the
country for homeless are in the following metropolitan areas in
California: San Jose-Sunnyvale-Santa Clara, Los Angeles-Long
Beach-Santa Ana, Fresno, and Stockton.
(7) California continues to have the second lowest
homeownership rate in the nation, and the Los Angeles
metropolitan area is now a majority renter area. In fact, five of the
eight lowest homeownership rates are in metropolitan areas in
California.
(8) Los Angeles and Orange Counties have been identified as
the epicenter of overcrowded housing, and numerous studies have
shown that children in crowded homes have poorer health, worse
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scores on mathematics and reading tests, and higher rates of
depression and behavioral problems—even when poverty is taken
into account.
(9) Millions of Californians are affected by the state’s chronic
housing shortage, including seniors, veterans, people experiencing
chronic homelessness, working families, people with mental,
physical, or developmental disabilities, agricultural workers, people
exiting jails, prisons, and other state institutions, survivors of
domestic violence, and former foster and transition-aged youth.
(10) Eight of the top 10 hardest hit cities by the foreclosure
crisis in the nation were in California. They include the Cities of
Stockton, Modesto, Vallejo, Riverside, San Bernardino, Merced,
Bakersfield, and Sacramento.
(11) California’s workforce continues to experience longer
commute times as persons in the workforce seek affordable housing
outside the areas in which they work. If California is unable to
support the construction of affordable housing in these areas,
congestion problems will strain the state’s transportation system
and exacerbate greenhouse gas emissions.
(12) Many economists agree that the state’s higher than average
unemployment rate is due in large part to massive shrinkage in the
construction industry from 2005 to 2009, including losses of nearly
700,000 construction-related jobs, a 60-percent decline in
construction spending, and an 83-percent reduction in residential
permits. Restoration of a healthy construction sector will
significantly reduce the state’s unemployment rate.
(13) The lack of sufficient housing impedes economic growth
and development by making it difficult for California employers
to attract and retain employees.
(14) To keep pace with continuing demand, the state should
identify and establish a permanent, ongoing source or sources of
funding dedicated to affordable housing development. Without a
reliable source of funding for housing affordable to the state’s
workforce and most vulnerable residents, the state and its local
and private housing development partners will not be able to
continue increasing the supply of housing after existing housing
bond resources are depleted.
(15) The investment will leverage billions of dollars in private
investment, lessen demands on law enforcement and dwindling
health care resources as fewer people are forced to live on the
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streets or in dangerous substandard buildings, and increase
businesses’ ability to attract and retain skilled workers.
(16) In order to promote housing and homeownership
opportunities, the recording fee imposed by this act shall not be
applied to any recording made in connection with a sale of real
property. Purchasing a home is likely the largest purchase made
by Californians, and it is the intent of this act to not increase
transaction costs associated with these transfers.
SEC. 3. Section 27388.1 is added to the Government Code, to
read:
27388.1. (a) (1) Commencing January 1, 2016, and except as
provided in paragraphs (2) and (3), in addition to any other
recording fees specified in this code, a fee of seventy-five dollars
($75) shall be paid at the time of recording of every real estate
instrument, paper, or notice required or permitted by law to be
recorded except those expressly exempted from payment of
recording fees. “Real estate instrument, paper, or notice” means a
document relating to real property, including, but not limited to,
the following: deed, grant deed, trustee’s deed, deed of trust,
reconveyance, quit claim deed, fictitious deed of trust, assignment
of deed of trust, request for notice of default, abstract of judgment,
subordination agreement, declaration of homestead, abandonment
of homestead, notice of default, release or discharge, easement,
notice of trustee sale, notice of completion, UCC financing
statement, mechanic’s lien, maps, and covenants, conditions, and
restrictions.
(2) The fee described in paragraph (1) shall not be imposed on
any real estate instrument, paper, or notice recorded in connection
with a transfer subject to the imposition of a documentary transfer
tax as defined in Section 11911 of the Revenue and Taxation Code
or on any real estate instrument, paper, or notice recorded in
connection with a transfer of real property that is a residential
dwelling to an owner-occupier.
(3) The fee described in paragraph (1) shall be reduced so that
the fee, together with any charges or recording fees that are in
effect on or before the effective date of the act adding this section,
shall not exceed a per parcel maximum charge of two hundred
twenty-five dollars ($225).
(b) The fees, after deduction of any actual and necessary
administrative costs incurred by the county recorder in carrying
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out this section, shall be remitted quarterly, on or before the last
day of the month next succeeding each calendar quarterly period,
to the Department of Housing and Community Development for
deposit in the California Homes and Jobs Trust Fund established
by Section 50470 of the Health and Safety Code, to be expended
for the purposes set forth in that section. In addition, the county
shall pay to the Department of Housing and Community
Development interest, at the legal rate, on any funds not paid to
the Controller before the last day of the month next succeeding
each quarterly period.
SEC. 4. Chapter 2.5 (commencing with Section 50470) is added
to Part 2 of Division 31 of the Health and Safety Code, to read:
Chapter 2.5. Building Homes and Jobs Act
Article 1. General Provisions
50470. (a) (1) There is hereby created in the State Treasury
the Building Homes and Jobs Trust Fund. All interest or other
increments resulting from the investment of moneys in the fund
shall be deposited in the fund, notwithstanding Section 16305.7
of the Government Code.
(2) Moneys in the Building Homes and Jobs Trust Fund shall
not be subject to transfer to any other fund pursuant to any
provision of Part 2 (commencing with Section 16300) of Division
4 of Title 2 of the Government Code, except to the Surplus Money
Investment Fund. Upon appropriation by the Legislature, moneys
in the fund may be expended for the following purposes:
(A) The development, acquisition, rehabilitation, and
preservation of rental housing that is affordable to extremely low,
very low, low- and moderate-income households, including
necessary operating subsidies.
(B) Affordable rental and ownership housing that meets the
needs of a growing workforce up to 120 percent of area median
income.
(C) Matching portions of funds placed into local or regional
housing trust funds.
(D) Matching portions of funds available through the Low and
Moderate Income Housing Asset Fund pursuant to subdivision (d)
of Section 34176 of the Health and Safety Code.
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(E) Capitalized reserves for services connected to the creation
of new permanent supportive housing, including, but not limited
to, developments funded through the Veterans Housing and
Homelessness Prevention Program.
(F) Emergency shelters, transitional housing, and rapid
rehousing.
(G) Accessibility modifications.
(H) Efforts to acquire and rehabilitate foreclosed or vacant
homes.
(I) Homeownership opportunities, including, but not limited to,
down payment assistance.
(b) Both of the following shall be paid and deposited in the
fund:
(1) Any moneys appropriated and made available by the
Legislature for purposes of the fund.
(2) Any other moneys that may be made available to the
department for the purposes of the fund from any other source or
sources.
50471. (a) In order to maximize efficiency and address
comprehensive needs, the department, in consultation with the
California Housing Finance Agency, the California Tax Credit
Allocation Committee, and the California Debt Limit Allocation
Committee, shall develop and submit to the Legislature, at the time
of the Department of Finance’s adjustments to the proposed
2015–16 fiscal year budget pursuant to subdivision (e) of Section
13308 of the Government Code, the Building Homes and Jobs
Investment Strategy. Notwithstanding Section 10231.5 of the
Government Code, commencing with the 2020–21 fiscal year, and
every five years thereafter, concurrent with the release of the
Governor’s proposed budget, the department shall update the
investment strategy and submit it to the Legislature. The investment
strategy shall do all of the following:
(1) Identify the statewide needs, goals, objectives, and outcomes
for housing for a five-year time period. Goals should include targets
of the total number of affordable homes created and preserved
with the funds.
(2) Promote a geographically balanced distribution of funds
including consideration of a direct allocation of funds to local
governments.
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(3) Emphasize investments that serve households that are at or
below 60 percent of area median income.
(4) Meet the following minimum objectives:
(A) Encourage economic development and job creation by
helping to meet the housing needs of a growing workforce up to
120 percent of area median income.
(B) Identify opportunities for coordination among state
departments and agencies to achieve greater efficiencies, increase
the amount of federal investment in production, services, and
operating costs of housing, and promote energy efficiency in
housing produced.
(C) Incentivize the use and coordination of nontraditional
funding sources including philanthropic funds, local realignment
funds, nonhousing tax increment, federal Patient Protection and
Affordable Care Act, and other resources.
(D) Incentivize innovative approaches that produce cost savings
to local and state services by reducing the instability of housing
for frequent, high-cost users of hospitals, jails, detoxification
facilities, psychiatric hospitals, and emergency shelters.
(b) Before submitting the Building Homes and Jobs Investment
Strategy to the Legislature, the department shall hold at least four
public workshops in different regions of the state to further inform
the development of the investment strategy.
(c) The department shall form an advisory body of experts and
stakeholders to help develop the Building Homes and Jobs
Investment Strategy, including, but not limited to, representatives
from the banking and financial sector, real estate sector, real estate
and housing developers, and homeless service providers.
(d) Expenditure requests contained in the Governor’s proposed
budget shall be consistent with the Building Homes and Jobs
Investment Strategy developed and submitted pursuant to this part.
Moneys in the Building Homes and Jobs Act Fund shall be
appropriated through the annual Budget Act.
(e) The Building Homes and Jobs Investment Strategy and
updates required by this section shall be submitted pursuant to
Section 9795 of the Government Code.
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AB 1335
Article 2. Audits and Reporting
50475. The California State Auditor’s Office shall conduct
periodic audits to ensure that the annual allocation to individual
programs is awarded by the department in a timely fashion
consistent with the requirements of this chapter. The first audit
shall be conducted no later than 24 months from the effective date
of this section.
50476. (a) In its annual report to the Legislature pursuant to
Section 50408, the department shall report how funds that were
made available pursuant to this chapter and allocated in the prior
year were expended, including efforts to promote a geographically
balanced distribution of funds. The report shall also assess the
impact of the investment on job creation and the economy. With
respect to any awards made specifically to house or support persons
who are homeless or at-risk of homelessness, the report shall
include an analysis of the effectiveness of the funding in allowing
these households to retain permanent housing. The department
shall make the report available to the public on its Internet Web
site.
(b) (1) In the report, the department shall make a determination
of whether any of the moneys derived from fees collected pursuant
to Section 27388.1 of the Government Code are being allocated
by the state for any purpose not authorized by Section 50470 and
shall share the information with the county recorders.
(2) If the department determines that any moneys derived from
fees collected pursuant to Section 27388.1 of the Government
Code are being allocated by the state for a purpose not authorized
by Section 50470, the county recorders shall, upon notice of the
determination, immediately cease collection of the fees imposed
by Section 27388.1 of the Government Code, and shall resume
collection of those fees only upon notice that the moneys derived
from fees collected pursuant to Section 23788.1 of the Government
Code are being allocated by the state only for a purpose authorized
by Section 50470.
SEC. 5. No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because
a local agency or school district has the authority to levy service
charges, fees, or assessments sufficient to pay for the program or
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level of service mandated by this act, within the meaning of Section
17556 of the Government Code.
SEC. 6. This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:
In order to provide affordable housing opportunities at the earliest
possible time, it is necessary for this act to take effect immediately.
O
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1400 K Street, Suite 400 • Sacramento, California 95814
Phone: 916.658.8200 Fax: 916.658.8240
www.cacities.org
March 30, 2015
The Honorable Toni G. Atkins
Speaker, California State Assembly
State Capitol, Room 219
Sacramento, CA 95814
RE: AB 1335 Building Homes and Jobs Act
NOTICE OF SUPPORT
Dear Speaker Atkins,
On behalf of the League of California Cities, I am pleased to convey our support for your AB 1335. This
bill would generate approximately $500 million per year for affordable rental or ownership housing,
supportive housing, emergency shelters, transitional housing and other housing needs via a $75
recordation fee on real estate transactions with the exception of home sales.
The League has longstanding policy supporting additional state funding for affordable housing. Cities are
eager to provide affordable housing, but with the loss of over $1 billion per year of redevelopment
housing funds they lack the resources to do so.
AB 1335 would provide an ongoing, permanent state source of funding which would allow the state to
fund existing programs at dependable levels. This is a more reliable and efficient mechanism than
occasional housing bonds. Further, the Building Homes and Jobs Act will help to leverage additional
federal, local and private investment.
We appreciate your leadership on this critical issue and look forward to working with you and other
supporters to pass this measure. If you have any questions, or if I can be of any assistance, please call me
at (916) 658-8222.
Sincerely,
Daniel Carrigg
Legislative Director
cc:
Chair and Members, Assembly Housing and Community Development Committee
Lisa Engel, Chief Consultant, Assembly Housing and Community Development Committee
William Weber, Principal Consultant, Assembly Republican Caucus
ASSEMBLY BILL 35
LOW INCOME HOUSING TAX CREDIT
ASSEMBLYMEMBER DAVID CHIU AND
ASSEMBLY SPEAKER TONI ATKINS
SUMMARY
Assembly Bill 35 (Chiu & Atkins) would increase
California’s Low Income Housing Tax Credit by $300 million
for the construction and rehabilitation of affordable housing
units across the state. It will achieve this not only by
increasing the amount of California credit, but also by
increasing the state credit percentage so that it can more
effectively maximize federal tax-exempt bond financing and
4% credits. This state investment and policy change would
leverage an estimated additional $600 million in federal 4%
tax credits and federal tax-exempt bond authority.
THE ISSUE
California is undergoing a major housing affordability crisis
with a shortfall of over 1 million affordable homes. According
to a 2014 report by the California Housing Partnership
Corporation, median rents in California have increased by
over 20%, while the median income has dropped by 8%.
State and Federal divestment in affordable housing has
exacerbated this problem. With the elimination of California’s
redevelopment agencies and the exhaustion of state housing
bonds, California has reduced its funding for the development
and preservation of affordable homes by 79% - from
approximately $1.7 billion a year to nearly nothing. There is
currently no permanent source of funding to compensate for
this loss.
The housing crisis has contributed to a growing homeless
population, increased pressure on local social safety nets, an
unstable development and construction marketplace and the
departure of tens of thousands of long-time California
residents.
BACKGROUND
The Low Income Housing Tax Credit Program was enacted
by Congress in 1986 to provide the private market with an
incentive to invest in more affordable housing through federal
tax credits. The California Tax Credit Allocation Committee
was directed to award these credits to developers of qualified
projects in the state. Developers sell these credits to investors
to raise capital for their projects, reducing the debt that the
developer would otherwise have to borrow. As a result,
property owners are able to offer lower, more affordable
pricing. In response to the high cost of developing housing in
California, the state legislature in 1987 authorized a state low-
income housing tax credit program to leverage the federal
credit program. Existing law limits the total amount of lowincome housing tax credits the state may allocate to $70
million per year, indexed for inflation. But due to increased
demand for housing development, much of the tax credit
program has been oversubscribed – leaving many high quality
developments without a secure source of funding.
However, there is an untapped federal low-income housing
tax credit that the state can still access—the 4% Federal Tax
Credit. These 4% federal credits are unlimited and remain
unused by the state. This is largely due to the fact that the 4%
credits require additional state resources to make the
development viable – resources that have been lacking under
existing law.
AB 35 would substantially bolster the existing low-income
housing tax credit program, making the state better able to
leverage an estimated $200 million more in 4% Federal Tax
Credits. Additionally, the expanded state credits under AB 35
would allow the state to more effectively leverage an
additional $400 million in federal tax exempt bond authority.
AB 35
As a part of Speaker Toni Atkin’s 2015 Affordable Housing
Legislative Package, AB 35 would increase the aggregate
housing state credit dollar amount that may be allocated
among low-income housing developments by $300 million
and allow the state to more effectively leverage federal taxexempt bond financing and 4% credits.
SUPPORT
California Housing Partnership (Co-Sponsor) | California
Housing Consortium (Co-Sponsor) | Non-Profit Housing
Association of Northern CA (Co-Sponsor) | California
Treasurer John Chiang | San Francisco Mayor Edwin M. Lee |
Los Angeles Mayor Eric Garcetti | Oakland Mayor Libby
Schaaf | San Diego Mayor Kevin L. Faulconer | CORE
Affordable Housing | Housing California | Larkin Street
Youth Services | Women Organizing Resources, Knowledge
and Services | Northern CA Community Loan Fund |
Community Housing Opportunities | Shelter Partnership | HIP
Housing | San Francisco Housing Action Coalition | California
Center for Cooperative Development | Hudson Housing
Capital | Jamboree | Satellite Affordable Housing Associates |
Highridge Costa Housing Partners LLC | HKIT Architects
* Partial List
For more information, contact: Samantha Roxas, Legislative Aide, Office of Assemblymember David Chiu
Samantha.roxas@asm.ca.gov | (916)319-2017 | Updated March 3, 2015
AMENDED IN ASSEMBLY MARCH 2, 2015
california legislature—2015–16 regular session
ASSEMBLY BILL
No. 35
Introduced by Assembly Member Chiu Assembly Members Chiu
and Atkins
December 1, 2014
An act to add Sections 17059 and 23610.6 to the Revenue and
Taxation Code, relating to taxation, to take effect immediately, tax levy.
An act to amend Sections 12206, 17058, and 23610.5 of the Revenue
and Taxation Code, relating to taxation, to take effect immediately, tax
levy.
legislative counsel’s digest
AB 35, as amended, Chiu. Taxation: income taxes: very-low and
extremely low-income housing credit. Income taxes: credits: low-income
housing: allocation increase.
Existing law establishes a low-income housing tax credit program
pursuant to which the California Tax Credit Allocation Committee
provides procedures and requirements for the allocation of state
insurance, income, and corporation tax credit amounts among
low-income housing projects based on federal law. Existing law limits
the total annual amount of the credit that the committee may allocate
to $70 million per year, as specified.
This bill, for calendar years beginning 2015, would increase the
aggregate housing credit dollar amount that may be allocated among
low-income housing projects by $300,000,000, as specified.
This bill would take effect immediately as a tax levy.
The Personal Income Tax Law and the Corporation Tax Law allow
various credits against the taxes imposed by those laws, including a
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state low-income housing tax credit, administered by the California Tax
Credit Allocation Committee, which provides procedures and
requirements for the allocation of state tax credit amounts among
low-income housing projects based on federal law, which requires a 30
% present value credit for existing buildings, with the credit claimed
over a 10-year period, as modified. Existing law generally requires the
project’s housing sponsor to have been allocated a credit for federal
income tax purposes, as specified.
This bill would allow a very low-income and extremely low-income
housing credit against those taxes for each taxable year on or after
January 1, 2015, in an amount computed and allowed in accordance
with a specified section of the Internal Revenue Code, as provided. The
bill would specify that a project is not required to have been previously
or currently allocated a credit for federal or state income tax purposes,
as specified. The bill would make the aggregate housing credit dollar
amount $40,000,000 to be allocated annually by the committee on a
first-come-first-served basis subject to certain requirements being met,
including that the project will be used exclusively for the restructuring,
including the acquisition and substantial rehabilitation, of buildings at
least 20 years old that currently serve very low-income, extremely
low-income, single room occupancy (SRO) or rural area residents. The
bill would authorize the committee and the Franchise Tax Board to
adopt regulations to carry out the purposes of this section. The bill
would make findings and declarations in this regard.
This bill would take effect immediately as a tax levy.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
The people of the State of California do enact as follows:
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SECTION 1. Section 12206 of the Revenue and Taxation Code
is amended to read:
12206. (a) (1) There shall be allowed as a credit against the
“tax” (as “tax,” as described by Section 12201) 12201, a state
low-income housing tax credit in an amount equal to the amount
determined in subdivision (c), computed in accordance with Section
42 of the Internal Revenue Code, relating to low-income housing
credit, except as otherwise provided in this section.
(2) “Taxpayer,” for purposes of this section, means the sole
owner in the case of a “C” corporation, the partners in the case of
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a partnership, and the shareholders in the case of an “S”
corporation.
(3) “Housing sponsor,” for purposes of this section, means the
sole owner in the case of a “C” corporation, the partnership in the
case of a partnership, and the “S” corporation in the case of an “S”
corporation.
(b) (1) The amount of the credit allocated to any housing
sponsor shall be authorized by the California Tax Credit Allocation
Committee, or any successor thereof, based on a project’s need
for the credit for economic feasibility in accordance with the
requirements of this section.
(A) Except for projects to provide farmworker housing, as
defined in subdivision (h) of Section 50199.7 of the Health and
Safety Code, that are allocated credits solely under the set-aside
described in subdivision (c) of Section 50199.20 of the Health and
Safety Code, the low-income housing project shall be located in
California and shall meet either of the following requirements:
(i) The project’s housing sponsor shall have has been allocated
by the California Tax Credit Allocation Committee a credit for
federal income tax purposes under Section 42 of the Internal
Revenue Code, relating to low-income housing credit.
(ii) It shall qualify qualifies for a credit under Section
42(h)(4)(B) of the Internal Revenue Code, relating to special rule
where 50 percent or more of building is financed with tax-exempt
bonds subject to volume cap.
(B) The California Tax Credit Allocation Committee shall not
require fees for the credit under this section in addition to those
fees required for applications for the tax credit pursuant to Section
42 of the Internal Revenue Code, relating to low-income housing
credit. The committee may require a fee if the application for the
credit under this section is submitted in a calendar year after the
year the application is submitted for the federal tax credit.
(C) (i) For a project that receives a preliminary reservation of
the state low-income housing tax credit, allowed pursuant to
subdivision (a), on or after January 1, 2009, and before January 1,
2016, the credit shall be allocated to the partners of a partnership
owning the project in accordance with the partnership agreement,
regardless of how the federal low-income housing tax credit with
respect to the project is allocated to the partners, or whether the
allocation of the credit under the terms of the agreement has
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substantial economic effect, within the meaning of Section 704(b)
of the Internal Revenue Code, relating to determination of
distributive share.
(ii) This subparagraph shall not apply to a project that receives
a preliminary reservation of state low-income housing tax credits
under the set-aside described in subdivision (c) of Section 50199.20
of the Health and Safety Code unless the project also receives a
preliminary reservation of federal low-income housing tax credits.
(iii) This subparagraph shall cease to be operative with respect
to any project that receives a preliminary reservation of a credit
on or after January 1, 2016.
(2) (A) The California Tax Credit Allocation Committee shall
certify to the housing sponsor the amount of tax credit under this
section allocated to the housing sponsor for each credit period.
(B) In the case of a partnership or an “S” corporation, the
housing sponsor shall provide a copy of the California Tax Credit
Allocation Committee certification to the taxpayer.
(C) The taxpayer shall attach a copy of the certification to any
return upon which a tax credit is claimed under this section.
(D) In the case of a failure to attach a copy of the certification
for the year to the return in which a tax credit is claimed under this
section, no credit under this section shall be allowed for that year
until a copy of that certification is provided.
(E) All elections made by the taxpayer pursuant to Section 42
of the Internal Revenue Code, relating to low-income housing
credit, shall apply to this section.
(F) (i) Except as described in clause (ii), for buildings located
in designated difficult development areas (DDAs) or qualified
census tracts (QCTs), as defined in Section 42(d)(5)(B) of the
Internal Revenue Code, relating to increase in credit for buildings
in high-cost areas, credits may be allocated under this section in
the amounts prescribed in subdivision (c), provided that the amount
of credit allocated under Section 42 of the Internal Revenue Code,
relating to low-income housing credit, is computed on 100 percent
of the qualified basis of the building.
(ii) Notwithstanding clause (i), the California Tax Credit
Allocation Committee may allocate the credit for buildings located
in DDAs or QCTs that are restricted to having 50 percent of its
occupants be special needs households, as defined in the California
Code of Regulations by the California Tax Credit Allocation
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Committee, even if the taxpayer receives federal credits pursuant
to Section 42(d)(5)(B) of the Internal Revenue Code, relating to
increase in credit for buildings in high-cost areas, provided that
the credit allowed under this section shall not exceed 30 percent
of the eligible basis of the building.
(G) (i) The California Tax Credit Allocation Committee may
allocate a credit under this section in exchange for a credit allocated
pursuant to Section 42(d)(5)(B) of the Internal Revenue Code,
relating to increase in credit for buildings in high-cost areas, in
amounts up to 30 percent of the eligible basis of a building if the
credits allowed under Section 42 of the Internal Revenue Code,
relating to low-income nursing credit, are reduced by an equivalent
amount.
(ii) An equivalent amount shall be determined by the California
Tax Credit Allocation Committee based upon the relative amount
required to produce an equivalent state tax credit to the taxpayer.
(c) Section 42(b) of the Internal Revenue Code, relating to
applicable percentage, shall be modified as follows:
(1) In the case of any qualified low-income building that receives
an allocation after 1989 and is a new building not federally
subsidized, the term “applicable percentage” means the following:
(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are not
federally subsidized for the taxable year, determined in accordance
with the requirements of Section 42(b)(2) of the Internal Revenue
Code, relating to temporary minimum credit rate for nonfederally
subsidized new buildings, in lieu of the percentage prescribed in
Section 42(b)(1)(A) of the Internal Revenue Code.
(B) For the fourth year, the difference between 30 percent and
the sum of the applicable percentages for the first three years.
(2) In the case of any qualified low-income building that receives
an allocation after 1989 and that is a new building that is federally
subsidized or that is an existing building that is “at risk of
conversion,” the term “applicable percentage” means the following:
(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are federally
subsidized for the taxable year.
(B) For the fourth year, the difference between 13 percent and
the sum of the applicable percentages for the first three years.
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(3) For purposes of this section, the term “at risk of conversion,”
with respect to an existing property means a property that satisfies
all of the following criteria:
(A) The property is a multifamily rental housing development
in which at least 50 percent of the units receive governmental
assistance pursuant to any of the following:
(i) New construction, substantial rehabilitation, moderate
rehabilitation, property disposition, and loan management set-aside
programs, or any other program providing project-based assistance
pursuant to Section 8 of the United States Housing Act of 1937,
Section 1437f of Title 42 of the United States Code, as amended.
(ii) The Below-Market-Interest-Rate Program pursuant to
Section 221(d)(3) of the National Housing Act, Sections
1715l(d)(3) and (5) of Title 12 of the United States Code.
(iii) Section 236 of the National Housing Act, Section 1715z-1
of Title 12 of the United States Code.
(iv) Programs for rent supplement assistance pursuant to Section
101 of the Housing and Urban Development Act of 1965, Section
1701s of Title 12 of the United States Code, as amended.
(v) Programs pursuant to Section 515 of the Housing Act of
1949, Section 1485 of Title 42 of the United States Code, as
amended.
(vi) The low-income housing credit program set forth in Section
42 of the Internal Revenue Code, relating to low-income housing
credit.
(B) The restrictions on rent and income levels will terminate or
the federal insured mortgage on the property is eligible for
prepayment any time within five years before or after the date of
application to the California Tax Credit Allocation Committee.
(C) The entity acquiring the property enters into a regulatory
agreement that requires the property to be operated in accordance
with the requirements of this section for a period equal to the
greater of 55 years or the life of the property.
(D) The property satisfies the requirements of Section 42(e) of
the Internal Revenue Code, relating to rehabilitation expenditures
treated as separate new building, regarding rehabilitation
expenditures, except that the provisions of Section
42(e)(3)(A)(ii)(I) shall not apply.
(d) The term “qualified low-income housing project” as defined
in Section 42(c)(2) of the Internal Revenue Code, relating to
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qualified low-income building, is modified by adding the following
requirements:
(1) The taxpayer shall be entitled to receive a cash distribution
from the operations of the project, after funding required reserves,
which, that, at the election of the taxpayer, is equal to:
(A) An amount not to exceed 8 percent of the lesser of:
(i) The owner equity which that shall include the amount of the
capital contributions actually paid to the housing sponsor and shall
not include any amounts until they are paid on an investor note.
(ii) Twenty percent of the adjusted basis of the building as of
the close of the first taxable year of the credit period.
(B) The amount of the cashflow from those units in the building
that are not low-income units. For purposes of computing cashflow
under this subparagraph, operating costs shall be allocated to the
low-income units using the “floor space fraction,” as defined in
Section 42 of the Internal Revenue Code, relating to low-income
housing credit.
(C) Any amount allowed to be distributed under subparagraph
(A) that is not available for distribution during the first five years
of the compliance period may accumulate and be distributed any
time during the first 15 years of the compliance period but not
thereafter.
(2) The limitation on return shall apply in the aggregate to the
partners if the housing sponsor is a partnership and in the aggregate
to the shareholders if the housing sponsor is an “S” corporation.
(3) The housing sponsor shall apply any cash available for
distribution in excess of the amount eligible to be distributed under
paragraph (1) to reduce the rent on rent-restricted units or to
increase the number of rent-restricted units subject to the tests of
Section 42(g)(1) of the Internal Revenue Code, relating to in
general.
(e) The provisions of Section 42(f) of the Internal Revenue
Code, relating to definition and special rules relating to credit
period, shall be modified as follows:
(1) The term “credit period” as defined in Section 42(f)(1) of
the Internal Revenue Code, relating to credit period defined, is
modified by substituting “four taxable years” for “10 taxable
years.”
(2) The special rule for the first taxable year of the credit period
under Section 42(f)(2) of the Internal Revenue Code, relating to
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special rule for first year of credit period, shall not apply to the
tax credit under this section.
(3) Section 42(f)(3) of the Internal Revenue Code, relating to
determination of applicable percentage with respect to increases
in qualified basis after first year of credit period, is modified to
read:
If, as of the close of any taxable year in the compliance period,
after the first year of the credit period, the qualified basis of any
building exceeds the qualified basis of that building as of the close
of the first year of the credit period, the housing sponsor, to the
extent of its tax credit allocation, shall be eligible for a credit on
the excess in an amount equal to the applicable percentage
determined pursuant to subdivision (c) for the four-year period
beginning with the later of the taxable years in which the increase
in qualified basis occurs.
(f) The provisions of Section 42(h) of the Internal Revenue
Code, relating to limitation on aggregate credit allowable with
respect to projects located in a state, shall be modified as follows:
(1) Section 42(h)(2) of the Internal Revenue Code, relating to
allocated credit amount to apply to all taxable years ending during
or after credit allocation year, shall not be applicable and instead
the following provisions shall be applicable:
The total amount for the four-year credit period of the housing
credit dollars allocated in a calendar year to any building shall
reduce the aggregate housing credit dollar amount of the California
Tax Credit Allocation Committee for the calendar year in which
the allocation is made.
(2) Paragraphs (3), (4), (5), (6)(E)(i)(II), (6)(F), (6)(G), (6)(I),
(7), and (8) of Section 42(h) of the Internal Revenue Code, relating
to limitation on aggregate credit allowable with respect to projects
located in a state, shall not be applicable.
(g) The aggregate housing credit dollar amount that may be
allocated annually by the California Tax Credit Allocation
Committee pursuant to this section, Section 17058, and Section
23610.5 shall be an amount equal to the sum of all the following:
(1) (A) Seventy million dollars ($70,000,000) for the 2001
calendar year, and, for the 2002 calendar year and each calendar
year thereafter, calendar years 2002 to 2014, inclusive, seventy
million dollars ($70,000,000) increased by the percentage, if any,
by which the Consumer Price Index for the preceding calendar
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year exceeds the Consumer Price Index for the 2001 calendar year.
For the purposes of this paragraph, the term “Consumer Price
Index” means the last Consumer Price Index for All Urban
Consumers published by the federal Department of Labor.
(B) Three hundred seventy million dollars ($370,000,000) for
the 2015 calendar year, and, for the 2016 calendar year and each
calendar year thereafter, three hundred seventy million dollars
($370,000,000) increased by the percentage, if any, by which the
Consumer Price Index for the preceding calendar year exceeds
the Consumer Price Index for the 2015 calendar year. For the
purposes of this paragraph, the term “Consumer Price Index”
means the last Consumer Price Index for All Urban Consumers
published by the federal Department of Labor.
(2) The unused housing credit ceiling, if any, for the preceding
calendar years.
(3) The amount of housing credit ceiling returned in the calendar
year. For purposes of this paragraph, the amount of housing credit
dollar amount returned in the calendar year equals the housing
credit dollar amount previously allocated to any project that does
not become a qualified low-income housing project within the
period required by this section or to any project with respect to
which an allocation is canceled by mutual consent of the California
Tax Credit Allocation Committee and the allocation recipient.
(4) Five hundred thousand dollars ($500,000) per calendar year
for projects to provide farmworker housing, as defined in
subdivision (h) of Section 50199.7 of the Health and Safety Code.
(5) The amount of any unallocated or returned credits under
former Sections 17053.14, 23608.2, and 23608.3, as those sections
read prior to January 1, 2009, until fully exhausted for projects to
provide farmworker housing, as defined in subdivision (h) of
Section 50199.7 of the Health and Safety Code.
(h) The term “compliance period” as defined in Section 42(i)(1)
of the Internal Revenue Code, relating to compliance period, is
modified to mean, with respect to any building, the period of 30
consecutive taxable years beginning with the first taxable year of
the credit period with respect thereto.
(i) (1) Section 42(j) of the Internal Revenue Code, relating to
recapture of credit, shall not be applicable and the provisions in
paragraph (2) shall be substituted in its place.
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(2) The requirements of this section shall be set forth in a
regulatory agreement between the California Tax Credit Allocation
Committee and the housing sponsor, which and this agreement
shall be subordinated, when required, to any lien or encumbrance
of any banks or other institutional lenders to the project. The
regulatory agreement entered into pursuant to subdivision (f) of
Section 50199.14 of the Health and Safety Code, shall apply,
providing the agreement includes all of the following provisions:
(A) A term not less than the compliance period.
(B) A requirement that the agreement be recorded in the official
records of the county in which the qualified low-income housing
project is located.
(C) A provision stating which state and local agencies can
enforce the regulatory agreement in the event the housing sponsor
fails to satisfy any of the requirements of this section.
(D) A provision that the regulatory agreement shall be deemed
a contract enforceable by tenants as third-party beneficiaries thereto
and which that allows individuals, whether prospective, present,
or former occupants of the building, who meet the income
limitation applicable to the building, the right to enforce the
regulatory agreement in any state court.
(E) A provision incorporating the requirements of Section 42
of the Internal Revenue Code, relating to low-income housing
credit, as modified by this section.
(F) A requirement that the housing sponsor notify the California
Tax Credit Allocation Committee or its designee and the local
agency that can enforce the regulatory agreement if there is a
determination by the Internal Revenue Service that the project is
not in compliance with Section 42(g) of the Internal Revenue Code,
relating to qualified low-income housing project.
(G) A requirement that the housing sponsor, as security for the
performance of the housing sponsor’s obligations under the
regulatory agreement, assign the housing sponsor’s interest in rents
that it receives from the project, provided that until there is a
default under the regulatory agreement, the housing sponsor is
entitled to collect and retain the rents.
(H) The remedies available in the event of a default under the
regulatory agreement that is not cured within a reasonable cure
period, include, but are not limited to, allowing any of the parties
designated to enforce the regulatory agreement to collect all rents
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AB 35
with respect to the project; taking possession of the project and
operating the project in accordance with the regulatory agreement
until the enforcer determines the housing sponsor is in a position
to operate the project in accordance with the regulatory agreement;
applying to any court for specific performance; securing the
appointment of a receiver to operate the project; or any other relief
as may be appropriate.
(j) (1) The committee shall allocate the housing credit on a
regular basis consisting of two or more periods in each calendar
year during which applications may be filed and considered. The
committee shall establish application filing deadlines, the maximum
percentage of federal and state low-income housing tax credit
ceiling that may be allocated by the committee in that period, and
the approximate date on which allocations shall be made. If the
enactment of federal or state law, the adoption of rules or
regulations, or other similar events prevent the use of two allocation
periods, the committee may reduce the number of periods and
adjust the filing deadlines, maximum percentage of credit allocated,
and the allocation dates.
(2) The committee shall adopt a qualified allocation plan, as
provided in Section 42(m)(1) of the Internal Revenue Code,
relating to plans for allocation of credit among projects. In
adopting this plan, the committee shall comply with the provisions
of Sections 42(m)(1)(B) and 42(m)(1)(C) of the Internal Revenue
Code, relating to qualified allocation plan and relating to certain
selection criteria must be used, respectively.
(3) Notwithstanding Section 42(m) of the Internal Revenue
Code, relating to responsibilities of housing credit agencies, the
California Tax Credit Allocation Committee shall allocate housing
credits in accordance with the qualified allocation plan and
regulations, which shall include the following provisions:
(A) All housing sponsors, as defined by paragraph (3) of
subdivision (a), shall demonstrate at the time the application is
filed with the committee that the project meets the following
threshold requirements:
(i) The housing sponsor shall demonstrate there is a need and
demand for low-income housing in the community or region for
which it is proposed.
(ii) The project’s proposed financing, including tax credit
proceeds, shall be sufficient to complete the project and that the
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proposed operating income shall be adequate to operate the project
for the extended use period.
(iii) The project shall have enforceable financing commitments,
either construction or permanent financing, for at least 50 percent
of the total estimated financing of the project.
(iv) The housing sponsor shall have and maintain control of the
site for the project.
(v) The housing sponsor shall demonstrate that the project
complies with all applicable local land use and zoning ordinances.
(vi) The housing sponsor shall demonstrate that the project
development team has the experience and the financial capacity
to ensure project completion and operation for the extended use
period.
(vii) The housing sponsor shall demonstrate the amount of tax
credit that is necessary for the financial feasibility of the project
and its viability as a qualified low-income housing project
throughout the extended use period, taking into account operating
expenses, a supportable debt service, reserves, funds set aside for
rental subsidies, and required equity, and a development fee that
does not exceed a specified percentage of the eligible basis of the
project prior to inclusion of the development fee in the eligible
basis, as determined by the committee.
(B) The committee shall give a preference to those projects
satisfying all of the threshold requirements of subparagraph (A)
if both of the following apply:
(i) The project serves the lowest income tenants at rents
affordable to those tenants.
(ii) The project is obligated to serve qualified tenants for the
longest period.
(C) In addition to the provisions of subparagraphs (A) and (B),
the committee shall use the following criteria in allocating housing
credits:
(i) Projects serving large families in which a substantial number,
as defined by the committee, of all residential units is comprised
of low-income units with three and more bedrooms.
(ii) Projects providing single-room occupancy units serving
very low income tenants.
(iii) Existing projects that are “at risk of conversion,” as defined
by paragraph (3) of subdivision (c).
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(iv) Projects for which a public agency provides direct or indirect
long-term financial support for at least 15 percent of the total
project development costs or projects for which the owner’s equity
constitutes at least 30 percent of the total project development
costs.
(v) Projects that provide tenant amenities not generally available
to residents of low-income housing projects.
(4) For purposes of allocating credits pursuant to this section,
the committee shall not give preference to any project by virtue
of the date of submission of its application except to break a tie
when two or more of the projects have an equal rating.
(k) Section 42(l) of the Internal Revenue Code, relating to
certifications and other reports to secretary, shall be modified as
follows:
The term “secretary” shall be replaced by the term “California
Franchise Tax Board.”
(l) In the case where the state credit allowed under this section
exceeds the “tax,” the excess may be carried over to reduce the
“tax” in the following year, and succeeding years if necessary,
until the credit has been exhausted.
(m) The provisions of Section 11407(a) of Public Law 101-508,
relating to the effective date of the extension of the low-income
housing credit, shall apply to calendar years after 1993.
(n) The provisions of Section 11407(c) of Public Law 101-508,
relating to election to accelerate credit, shall not apply.
(o) This section shall remain in effect for as long as Section 42
of the Internal Revenue Code, relating to low-income housing
credits, credit, remains in effect.
SEC. 2. Section 17058 of the Revenue and Taxation Code is
amended to read:
17058. (a) (1) There shall be allowed as a credit against the
“net tax” (as tax,” as defined in Section 17039) 17039, a state
low-income housing tax credit in an amount equal to the amount
determined in subdivision (c), computed in accordance with the
provisions of Section 42 of the Internal Revenue Code, relating
to low-income housing credit, except as otherwise provided in this
section.
(2) “Taxpayer” for purposes of this section means the sole owner
in the case of an individual, the partners in the case of a partnership,
and the shareholders in the case of an “S” corporation.
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(3) “Housing sponsor” for purposes of this section means the
sole owner in the case of an individual, the partnership in the case
of a partnership, and the “S” corporation in the case of an “S”
corporation.
(b) (1) The amount of the credit allocated to any housing
sponsor shall be authorized by the California Tax Credit Allocation
Committee, or any successor thereof, based on a project’s need
for the credit for economic feasibility in accordance with the
requirements of this section.
(A) The low-income housing project shall be located in
California and shall meet either of the following requirements:
(i) Except for projects to provide farmworker housing, as defined
in subdivision (h) of Section 50199.7 of the Health and Safety
Code, that are allocated credits solely under the set-aside described
in subdivision (c) of Section 50199.20 of the Health and Safety
Code, the project’s housing sponsor has been allocated by the
California Tax Credit Allocation Committee a credit for federal
income tax purposes under Section 42 of the Internal Revenue
Code, relating to low-income housing credit.
(ii) It qualifies for a credit under Section 42(h)(4)(B) of the
Internal Revenue Code, relating to special rule where 50 percent
or more of building is financed with tax-exempt bonds subject to
volume cap.
(B) The California Tax Credit Allocation Committee shall not
require fees for the credit under this section in addition to those
fees required for applications for the tax credit pursuant to Section
42 of the Internal Revenue Code, relating to low-income housing
credit. The committee may require a fee if the application for the
credit under this section is submitted in a calendar year after the
year the application is submitted for the federal tax credit.
(C) (i) For a project that receives a preliminary reservation of
the state low-income housing tax credit, allowed pursuant to
subdivision (a), on or after January 1, 2009, and before January 1,
2016, the credit shall be allocated to the partners of a partnership
owning the project in accordance with the partnership agreement,
regardless of how the federal low-income housing tax credit with
respect to the project is allocated to the partners, or whether the
allocation of the credit under the terms of the agreement has
substantial economic effect, within the meaning of Section 704(b)
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of the Internal Revenue Code, relating to determination of
distributive share.
(ii) To the extent the allocation of the credit to a partner under
this section lacks substantial economic effect, any loss or deduction
otherwise allowable under this part that is attributable to the sale
or other disposition of that partner’s partnership interest made prior
to the expiration of the federal credit shall not be allowed in the
taxable year in which the sale or other disposition occurs, but shall
instead be deferred until and treated as if it occurred in the first
taxable year immediately following the taxable year in which the
federal credit period expires for the project described in clause (i).
(iii) This subparagraph shall not apply to a project that receives
a preliminary reservation of state low-income housing tax credits
under the set-aside described in subdivision (c) of Section 50199.20
of the Health and Safety Code unless the project also receives a
preliminary reservation of federal low-income housing tax credits.
(iv) This subparagraph shall cease to be operative with respect
to any project that receives a preliminary reservation of a credit
on or after January 1, 2016.
(2) (A) The California Tax Credit Allocation Committee shall
certify to the housing sponsor the amount of tax credit under this
section allocated to the housing sponsor for each credit period.
(B) In the case of a partnership or an “S” corporation, the
housing sponsor shall provide a copy of the California Tax Credit
Allocation Committee certification to the taxpayer.
(C) The taxpayer shall, upon request, provide a copy of the
certification to the Franchise Tax Board.
(D) All elections made by the taxpayer pursuant to Section 42
of the Internal Revenue Code, relating to low-income housing
credit, shall apply to this section.
(E) (i) Except as described in clause (ii), for buildings located
in designated difficult development areas (DDAs) or qualified
census tracts (QCTs), as defined in Section 42(d)(5)(B) of the
Internal Revenue Code, relating to increase in credit for buildings
in high-cost areas, credits may be allocated under this section in
the amounts prescribed in subdivision (c), provided that the amount
of credit allocated under Section 42 of the Internal Revenue Code,
relating to low-income housing credit, is computed on 100 percent
of the qualified basis of the building.
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(ii) Notwithstanding clause (i), the California Tax Credit
Allocation Committee may allocate the credit for buildings located
in DDAs or QCTs that are restricted to having 50 percent of its
occupants be special needs households, as defined in the California
Code of Regulations by the California Tax Credit Allocation
Committee, even if the taxpayer receives federal credits pursuant
to Section 42(d)(5)(B) of the Internal Revenue Code, relating to
increase in credit for buildings in high-cost areas, provided that
the credit allowed under this section shall not exceed 30 percent
of the eligible basis of the building.
(G) (i) The California Tax Credit Allocation Committee may
allocate a credit under this section in exchange for a credit allocated
pursuant to Section 42(d)(5)(B) of the Internal Revenue Code,
relating to increase in credit for buildings in high-cost areas, in
amounts up to 30 percent of the eligible basis of a building if the
credits allowed under Section 42 of the Internal Revenue Code,
relating to low-income nursing credit, are reduced by an equivalent
amount.
(ii) An equivalent amount shall be determined by the California
Tax Credit Allocation Committee based upon the relative amount
required to produce an equivalent state tax credit to the taxpayer.
(c) Section 42(b) of the Internal Revenue Code, relating to
applicable percentage, shall be modified as follows:
(1) In the case of any qualified low-income building placed in
service by the housing sponsor during 1987, the term “applicable
percentage” means 9 percent for each of the first three years and
3 percent for the fourth year for new buildings (whether or not the
building is federally subsidized) and for existing buildings.
(2) In the case of any qualified low-income building that receives
an allocation after 1989 and is a new building not federally
subsidized, the term “applicable percentage” means the following:
(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are not
federally subsidized for the taxable year, determined in accordance
with the requirements of Section 42(b)(2) of the Internal Revenue
Code, relating to temporary minimum credit rate for nonfederally
subsidized new buildings, in lieu of the percentage prescribed in
Section 42(b)(1)(A) of the Internal Revenue Code.
(B) For the fourth year, the difference between 30 percent and
the sum of the applicable percentages for the first three years.
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(3) In the case of any qualified low-income building that receives
an allocation after 1989 and that is a new building that is federally
subsidized or that is an existing building that is “at risk of
conversion,” the term “applicable percentage” means the following:
(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are federally
subsidized for the taxable year.
(B) For the fourth year, the difference between 13 percent and
the sum of the applicable percentages for the first three years.
(4) For purposes of this section, the term “at risk of conversion,”
with respect to an existing property means a property that satisfies
all of the following criteria:
(A) The property is a multifamily rental housing development
in which at least 50 percent of the units receive governmental
assistance pursuant to any of the following:
(i) New construction, substantial rehabilitation, moderate
rehabilitation, property disposition, and loan management set-aside
programs, or any other program providing project-based assistance
pursuant to Section 8 of the United States Housing Act of 1937,
Section 1437f of Title 42 of the United States Code, as amended.
(ii) The Below-Market-Interest-Rate Program pursuant to
Section 221(d)(3) of the National Housing Act, Sections
1715l(d)(3) and (5) of Title 12 of the United States Code.
(iii) Section 236 of the National Housing Act, Section 1715z-1
of Title 12 of the United States Code.
(iv) Programs for rent supplement assistance pursuant to Section
101 of the Housing and Urban Development Act of 1965, Section
1701s of Title 12 of the United States Code, as amended.
(v) Programs pursuant to Section 515 of the Housing Act of
1949, Section 1485 of Title 42 of the United States Code, as
amended.
(vi) The low-income housing credit program set forth in Section
42 of the Internal Revenue Code, relating to low-income housing
credit.
(B) The restrictions on rent and income levels will terminate or
the federal federally insured mortgage on the property is eligible
for prepayment any time within five years before or after the date
of application to the California Tax Credit Allocation Committee.
(C) The entity acquiring the property enters into a regulatory
agreement that requires the property to be operated in accordance
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with the requirements of this section for a period equal to the
greater of 55 years or the life of the property.
(D) The property satisfies the requirements of Section 42(e) of
the Internal Revenue Code, relating to rehabilitation expenditures
treated as separate new building, regarding rehabilitation
expenditures, except that the provisions of Section
42(e)(3)(A)(ii)(I) shall not apply.
(d) The term “qualified low-income housing project” as defined
in Section 42(c)(2) of the Internal Revenue Code, relating to
qualified low-income building, is modified by adding the following
requirements:
(1) The taxpayer shall be entitled to receive a cash distribution
from the operations of the project, after funding required reserves,
that, at the election of the taxpayer, is equal to:
(A) An amount not to exceed 8 percent of the lesser of:
(i) The owner equity that shall include the amount of the capital
contributions actually paid to the housing sponsor and shall not
include any amounts until they are paid on an investor note.
(ii) Twenty percent of the adjusted basis of the building as of
the close of the first taxable year of the credit period.
(B) The amount of the cashflow from those units in the building
that are not low-income units. For purposes of computing cashflow
under this subparagraph, operating costs shall be allocated to the
low-income units using the “floor space fraction,” as defined in
Section 42 of the Internal Revenue Code, relating to low-income
housing credit.
(C) Any amount allowed to be distributed under subparagraph
(A) that is not available for distribution during the first five years
of the compliance period may be accumulated and distributed any
time during the first 15 years of the compliance period but not
thereafter.
(2) The limitation on return shall apply in the aggregate to the
partners if the housing sponsor is a partnership and in the aggregate
to the shareholders if the housing sponsor is an “S” corporation.
(3) The housing sponsor shall apply any cash available for
distribution in excess of the amount eligible to be distributed under
paragraph (1) to reduce the rent on rent-restricted units or to
increase the number of rent-restricted units subject to the tests of
Section 42(g)(1) of the Internal Revenue Code, relating to in
general.
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(e) The provisions of Section 42(f) of the Internal Revenue
Code, relating to definition and special rules relating to credit
period, shall be modified as follows:
(1) The term “credit period” as defined in Section 42(f)(1) of
the Internal Revenue Code, relating to credit period defined, is
modified by substituting “four taxable years” for “10 taxable
years.”
(2) The special rule for the first taxable year of the credit period
under Section 42(f)(2) of the Internal Revenue Code, relating to
special rule for first year of credit period, shall not apply to the
tax credit under this section.
(3) Section 42(f)(3) of the Internal Revenue Code, relating to
determination of applicable percentage with respect to increases
in qualified basis after first year of credit period, is modified to
read:
If, as of the close of any taxable year in the compliance period,
after the first year of the credit period, the qualified basis of any
building exceeds the qualified basis of that building as of the close
of the first year of the credit period, the housing sponsor, to the
extent of its tax credit allocation, shall be eligible for a credit on
the excess in an amount equal to the applicable percentage
determined pursuant to subdivision (c) for the four-year period
beginning with the taxable year in which the increase in qualified
basis occurs.
(f) The provisions of Section 42(h) of the Internal Revenue
Code, relating to limitation on aggregate credit allowable with
respect to projects located in a state, shall be modified as follows:
(1) Section 42(h)(2) of the Internal Revenue Code, relating to
allocated credit amount to apply to all taxable years ending during
or after credit allocation year, shall not be applicable and instead
the following provisions shall be applicable:
The total amount for the four-year credit period of the housing
credit dollars allocated in a calendar year to any building shall
reduce the aggregate housing credit dollar amount of the California
Tax Credit Allocation Committee for the calendar year in which
the allocation is made.
(2) Paragraphs (3), (4), (5), (6)(E)(i)(II), (6)(F), (6)(G), (6)(I),
(7), and (8) of Section 42(h) of the Internal Revenue Code, relating
to limitation on aggregate credit allowable with respect to projects
located in a state, shall not be applicable to this section. applicable.
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(g) The aggregate housing credit dollar amount that may be
allocated annually by the California Tax Credit Allocation
Committee pursuant to this section, Section 12206, and Section
23610.5 shall be an amount equal to the sum of all the following:
(1) (A) Seventy million dollars ($70,000,000) for the 2001
calendar year, and, for the 2002 calendar year and each calendar
year thereafter, calendar years 2002 to 2014, inclusive, seventy
million dollars ($70,000,000) increased by the percentage, if any,
by which the Consumer Price Index for the preceding calendar
year exceeds the Consumer Price Index for the 2001 calendar year.
For the purposes of this paragraph, the term “Consumer Price
Index” means the last Consumer Price Index for All Urban
Consumers published by the federal Department of Labor.
(B) Three hundred seventy million dollars ($370,000,000) for
the 2015 calendar year, and, for the 2016 calendar year and each
calendar year thereafter, three hundred seventy million dollars
($370,000,000) increased by the percentage, if any, by which the
Consumer Price Index for the preceding calendar year exceeds
the Consumer Price Index for the 2015 calendar year. For the
purposes of this paragraph, the term “Consumer Price Index”
means the last Consumer Price Index for All Urban Consumers
published by the federal Department of Labor.
(2) The unused housing credit ceiling, if any, for the preceding
calendar years.
(3) The amount of housing credit ceiling returned in the calendar
year. For purposes of this paragraph, the amount of housing credit
dollar amount returned in the calendar year equals the housing
credit dollar amount previously allocated to any project that does
not become a qualified low-income housing project within the
period required by this section or to any project with respect to
which an allocation is canceled by mutual consent of the California
Tax Credit Allocation Committee and the allocation recipient.
(4) Five hundred thousand dollars ($500,000) per calendar year
for projects to provide farmworker housing, as defined in
subdivision (h) of Section 50199.7 of the Health and Safety Code.
(5) The amount of any unallocated or returned credits under
former Sections 17053.14, 23608.2, and 23608.3, as those sections
read prior to January 1, 2009, until fully exhausted for projects to
provide farmworker housing, as defined in subdivision (h) of
Section 50199.7 of the Health and Safety Code.
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(h) The term “compliance period” as defined in Section 42(i)(1)
of the Internal Revenue Code, relating to compliance period, is
modified to mean, with respect to any building, the period of 30
consecutive taxable years beginning with the first taxable year of
the credit period with respect thereto.
(i) Section 42(j) of the Internal Revenue Code, relating to
recapture of credit, shall not be applicable and the following
requirements of this section shall be set forth in a regulatory
agreement between the California Tax Credit Allocation Committee
and the housing sponsor, which and this agreement shall be
subordinated, when required, to any lien or encumbrance of any
banks or other institutional lenders to the project. The regulatory
agreement entered into pursuant to subdivision (f) of Section
50199.14 of the Health and Safety Code shall apply, provided that
the agreement includes all of the following provisions:
(1) A term not less than the compliance period.
(2) A requirement that the agreement be recorded in the official
records of the county in which the qualified low-income housing
project is located.
(3) A provision stating which state and local agencies can
enforce the regulatory agreement in the event the housing sponsor
fails to satisfy any of the requirements of this section.
(4) A provision that the regulatory agreement shall be deemed
a contract enforceable by tenants as third-party beneficiaries thereto
and that allows individuals, whether prospective, present, or former
occupants of the building, who meet the income limitation
applicable to the building, the right to enforce the regulatory
agreement in any state court.
(5) A provision incorporating the requirements of Section 42
of the Internal Revenue Code, relating to low-income housing
credit, as modified by this section.
(6) A requirement that the housing sponsor notify the California
Tax Credit Allocation Committee or its designee if there is a
determination by the Internal Revenue Service that the project is
not in compliance with Section 42(g) of the Internal Revenue Code,
relating to qualified low-income housing project.
(7) A requirement that the housing sponsor, as security for the
performance of the housing sponsor’s obligations under the
regulatory agreement, assign the housing sponsor’s interest in rents
that it receives from the project, provided that until there is a
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default under the regulatory agreement, the housing sponsor is
entitled to collect and retain the rents.
(8) The remedies available in the event of a default under the
regulatory agreement that is not cured within a reasonable cure
period, include, but are not limited to, allowing any of the parties
designated to enforce the regulatory agreement to collect all rents
with respect to the project; taking possession of the project and
operating the project in accordance with the regulatory agreement
until the enforcer determines the housing sponsor is in a position
to operate the project in accordance with the regulatory agreement;
applying to any court for specific performance; securing the
appointment of a receiver to operate the project; or any other relief
as may be appropriate.
(j) (1) The committee shall allocate the housing credit on a
regular basis consisting of two or more periods in each calendar
year during which applications may be filed and considered. The
committee shall establish application filing deadlines, the maximum
percentage of federal and state low-income housing tax credit
ceiling that may be allocated by the committee in that period, and
the approximate date on which allocations shall be made. If the
enactment of federal or state law, the adoption of rules or
regulations, or other similar events prevent the use of two allocation
periods, the committee may reduce the number of periods and
adjust the filing deadlines, maximum percentage of credit allocated,
and the allocation dates.
(2) The committee shall adopt a qualified allocation plan, as
provided in Section 42(m)(1) of the Internal Revenue Code,
relating to plans for allocation of credit among projects. In
adopting this plan, the committee shall comply with the provisions
of Sections 42(m)(1)(B) and 42(m)(1)(C) of the Internal Revenue
Code, relating to qualified allocation plan and relating to certain
selection criteria must be used, respectively.
(3) Notwithstanding Section 42(m) of the Internal Revenue
Code, relating to responsibilities of housing credit agencies, the
California Tax Credit Allocation Committee shall allocate housing
credits in accordance with the qualified allocation plan and
regulations, which shall include the following provisions:
(A) All housing sponsors, as defined by paragraph (3) of
subdivision (a), shall demonstrate at the time the application is
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filed with the committee that the project meets the following
threshold requirements:
(i) The housing sponsor shall demonstrate there is a need and
demand for low-income housing in the community or region for
which it is proposed.
(ii) The project’s proposed financing, including tax credit
proceeds, shall be sufficient to complete the project and that the
proposed operating income shall be adequate to operate the project
for the extended use period.
(iii) The project shall have enforceable financing commitments,
either construction or permanent financing, for at least 50 percent
of the total estimated financing of the project.
(iv) The housing sponsor shall have and maintain control of the
site for the project.
(v) The housing sponsor shall demonstrate that the project
complies with all applicable local land use and zoning ordinances.
(vi) The housing sponsor shall demonstrate that the project
development team has the experience and the financial capacity
to ensure project completion and operation for the extended use
period.
(vii) The housing sponsor shall demonstrate the amount of tax
credit that is necessary for the financial feasibility of the project
and its viability as a qualified low-income housing project
throughout the extended use period, taking into account operating
expenses, a supportable debt service, reserves, funds set aside for
rental subsidies and required equity, and a development fee that
does not exceed a specified percentage of the eligible basis of the
project prior to inclusion of the development fee in the eligible
basis, as determined by the committee.
(B) The committee shall give a preference to those projects
satisfying all of the threshold requirements of subparagraph (A)
if both of the following apply:
(i) The project serves the lowest income tenants at rents
affordable to those tenants.
(ii) The project is obligated to serve qualified tenants for the
longest period.
(C) In addition to the provisions of subparagraphs (A) and (B),
the committee shall use the following criteria in allocating housing
credits:
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(i) Projects serving large families in which a substantial number,
as defined by the committee, of all residential units is comprised
of are low-income units with three and more bedrooms.
(ii) Projects providing single-room occupancy units serving
very low income tenants.
(iii) Existing projects that are “at risk of conversion,” as defined
by paragraph (4) of subdivision (c).
(iv) Projects for which a public agency provides direct or indirect
long-term financial support for at least 15 percent of the total
project development costs or projects for which the owner’s equity
constitutes at least 30 percent of the total project development
costs.
(v) Projects that provide tenant amenities not generally available
to residents of low-income housing projects.
(4) For purposes of allocating credits pursuant to this section,
the committee shall not give preference to any project by virtue
of the date of submission of its application.
(k) Section 42(l) of the Internal Revenue Code, relating to
certifications and other reports to secretary, shall be modified as
follows:
The term “secretary” shall be replaced by the term “California
Franchise Tax Board.”
(l) In the case where the credit allowed under this section
exceeds the net tax, the excess credit may be carried over to reduce
the net tax in the following year, and succeeding taxable years, if
necessary, until the credit has been exhausted.
(m) A project that received an allocation of a 1989 federal
housing credit dollar amount shall be eligible to receive an
allocation of a 1990 state housing credit dollar amount, subject to
all of the following conditions:
(1) The project was not placed in service prior to 1990.
(2) To the extent the amendments made to this section by the
Statutes of 1990 conflict with any provisions existing in this section
prior to those amendments, the prior provisions of law shall prevail.
(3) Notwithstanding paragraph (2), a project applying for an
allocation under this subdivision shall be subject to the
requirements of paragraph (3) of subdivision (j).
(n) The credit period with respect to an allocation of credit in
1989 by the California Tax Credit Allocation Committee of which
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any amount is attributable to unallocated credit from 1987 or 1988
shall not begin until after December 31, 1989.
(o) The provisions of Section 11407(a) of Public Law 101-508,
relating to the effective date of the extension of the low-income
housing credit, shall apply to calendar years after 1989.
(p) The provisions of Section 11407(c) of Public Law 101-508,
relating to election to accelerate credit, shall not apply.
(q) Any unused credit may continue to be carried forward, as
provided in subdivision (l), until the credit has been exhausted.
This section shall remain in effect on and after December 1,
1990, for as long as Section 42 of the Internal Revenue Code,
relating to low-income housing credits, credit, remains in effect.
(r) The amendments to this section made by the act adding this
subdivision Chapter 1222 of the Statutes of 1993 shall apply only
to taxable years beginning on or after January 1, 1994.
SEC. 3. Section 23610.5 of the Revenue and Taxation Code is
amended to read:
23610.5. (a) (1) There shall be allowed as a credit against the
“tax” (as “tax,” as defined by Section 23036) 23036, a state
low-income housing tax credit in an amount equal to the amount
determined in subdivision (c), computed in accordance with Section
42 of the Internal Revenue Code of 1986, relating to low-income
housing credit, except as otherwise provided in this section.
(2) “Taxpayer,” for purposes of this section, means the sole
owner in the case of a “C” corporation, the partners in the case of
a partnership, and the shareholders in the case of an “S”
corporation.
(3) “Housing sponsor,” for purposes of this section, means the
sole owner in the case of a “C” corporation, the partnership in the
case of a partnership, and the “S” corporation in the case of an “S”
corporation.
(b) (1) The amount of the credit allocated to any housing
sponsor shall be authorized by the California Tax Credit Allocation
Committee, or any successor thereof, based on a project’s need
for the credit for economic feasibility in accordance with the
requirements of this section.
(A) The low-income housing project shall be located in
California and shall meet either of the following requirements:
(i) Except for projects to provide farmworker housing, as defined
in subdivision (h) of Section 50199.7 of the Health and Safety
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Code, that are allocated credits solely under the set-aside described
in subdivision (c) of Section 50199.20 of the Health and Safety
Code, the project’s housing sponsor has been allocated by the
California Tax Credit Allocation Committee a credit for federal
income tax purposes under Section 42 of the Internal Revenue
Code, relating to low-income housing credit.
(ii) It qualifies for a credit under Section 42(h)(4)(B) of the
Internal Revenue Code, relating to special rule where 50 percent
or more of building is financed with tax-exempt bonds subject to
volume cap.
(B) The California Tax Credit Allocation Committee shall not
require fees for the credit under this section in addition to those
fees required for applications for the tax credit pursuant to Section
42 of the Internal Revenue Code, relating to low-income housing
credit. The committee may require a fee if the application for the
credit under this section is submitted in a calendar year after the
year the application is submitted for the federal tax credit.
(C) (i) For a project that receives a preliminary reservation of
the state low-income housing tax credit, allowed pursuant to
subdivision (a), on or after January 1, 2009, and before January 1,
2016, the credit shall be allocated to the partners of a partnership
owning the project in accordance with the partnership agreement,
regardless of how the federal low-income housing tax credit with
respect to the project is allocated to the partners, or whether the
allocation of the credit under the terms of the agreement has
substantial economic effect, within the meaning of Section 704(b)
of the Internal Revenue Code, relating to determination of
distributive share.
(ii) To the extent the allocation of the credit to a partner under
this section lacks substantial economic effect, any loss or deduction
otherwise allowable under this part that is attributable to the sale
or other disposition of that partner’s partnership interest made prior
to the expiration of the federal credit shall not be allowed in the
taxable year in which the sale or other disposition occurs, but shall
instead be deferred until and treated as if it occurred in the first
taxable year immediately following the taxable year in which the
federal credit period expires for the project described in clause (i).
(iii) This subparagraph shall not apply to a project that receives
a preliminary reservation of state low-income housing tax credits
under the set-aside described in subdivision (c) of Section 50199.20
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of the Health and Safety Code unless the project also receives a
preliminary reservation of federal low-income housing tax credits.
(iv) This subparagraph shall cease to be operative with respect
to any project that receives a preliminary reservation of a credit
on or after January 1, 2016.
(2) (A) The California Tax Credit Allocation Committee shall
certify to the housing sponsor the amount of tax credit under this
section allocated to the housing sponsor for each credit period.
(B) In the case of a partnership or an “S” corporation, the
housing sponsor shall provide a copy of the California Tax Credit
Allocation Committee certification to the taxpayer.
(C) The taxpayer shall, upon request, provide a copy of the
certification to the Franchise Tax Board.
(D) All elections made by the taxpayer pursuant to Section 42
of the Internal Revenue Code, relating to low-income housing
credit, shall apply to this section.
(E) (i) Except as described in clause (ii), for buildings located
in designated difficult development areas (DDAs) or qualified
census tracts (QCTs), as defined in Section 42(d)(5)(B) of the
Internal Revenue Code, relating to increase in credit for buildings
in high-cost areas, credits may be allocated under this section in
the amounts prescribed in subdivision (c), provided that the amount
of credit allocated under Section 42 of the Internal Revenue Code,
relating to low-income housing credit, is computed on 100 percent
of the qualified basis of the building.
(ii) Notwithstanding clause (i), the California Tax Credit
Allocation Committee may allocate the credit for buildings located
in DDAs or QCTs that are restricted to having 50 percent of its
occupants be special needs households, as defined in the California
Code of Regulations by the California Tax Credit Allocation
Committee, even if the taxpayer receives federal credits pursuant
to Section 42(d)(5)(B) of the Internal Revenue Code, relating to
increase in credit for buildings in high-cost areas, provided that
the credit allowed under this section shall not exceed 30 percent
of the eligible basis of the building.
(G) (i) The California Tax Credit Allocation Committee may
allocate a credit under this section in exchange for a credit allocated
pursuant to Section 42(d)(5)(B) of the Internal Revenue Code,
relating to increase in credit for buildings in high-cost areas, in
amounts up to 30 percent of the eligible basis of a building if the
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credits allowed under Section 42 of the Internal Revenue Code are
reduced by an equivalent amount.
(ii) An equivalent amount shall be determined by the California
Tax Credit Allocation Committee based upon the relative amount
required to produce an equivalent state tax credit to the taxpayer.
(c) Section 42(b) of the Internal Revenue Code, relating to
applicable percentage, shall be modified as follows:
(1) In the case of any qualified low-income building placed in
service by the housing sponsor during 1987, the term “applicable
percentage” means 9 percent for each of the first three years and
3 percent for the fourth year for new buildings (whether or not the
building is federally subsidized) and for existing buildings.
(2) In the case of any qualified low-income building that receives
an allocation after 1989 and is a new building not federally
subsidized, the term “applicable percentage” means the following:
(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are not
federally subsidized for the taxable year, determined in accordance
with the requirements of Section 42(b)(2) of the Internal Revenue
Code, relating to temporary minimum credit rate for nonfederally
subsidized new buildings, in lieu of the percentage prescribed in
Section 42(b)(1)(A) of the Internal Revenue Code.
(B) For the fourth year, the difference between 30 percent and
the sum of the applicable percentages for the first three years.
(3) In the case of any qualified low-income building that receives
an allocation after 1989 and that is a new building that is federally
subsidized or that is an existing building that is “at risk of
conversion,” the term “applicable percentage” means the following:
(A) For each of the first three years, the percentage prescribed
by the Secretary of the Treasury for new buildings that are federally
subsidized for the taxable year.
(B) For the fourth year, the difference between 13 percent and
the sum of the applicable percentages for the first three years.
(4) For purposes of this section, the term “at risk of conversion,”
with respect to an existing property means a property that satisfies
all of the following criteria:
(A) The property is a multifamily rental housing development
in which at least 50 percent of the units receive governmental
assistance pursuant to any of the following:
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(i) New construction, substantial rehabilitation, moderate
rehabilitation, property disposition, and loan management set-aside
programs, or any other program providing project-based assistance
pursuant to Section 8 of the United States Housing Act of 1937,
Section 1437f of Title 42 of the United States Code, as amended.
(ii) The Below-Market-Interest-Rate Program pursuant to
Section 221(d)(3) of the National Housing Act, Sections
1715l(d)(3) and (5) of Title 12 of the United States Code.
(iii) Section 236 of the National Housing Act, Section 1715z-1
of Title 12 of the United States Code.
(iv) Programs for rent supplement assistance pursuant to Section
101 of the Housing and Urban Development Act of 1965, Section
1701s of Title 12 of the United States Code, as amended.
(v) Programs pursuant to Section 515 of the Housing Act of
1949, Section 1485 of Title 42 of the United States Code, as
amended.
(vi) The low-income housing credit program set forth in Section
42 of the Internal Revenue Code, relating to low-income housing
credit.
(B) The restrictions on rent and income levels will terminate or
the federally insured mortgage on the property is eligible for
prepayment any time within five years before or after the date of
application to the California Tax Credit Allocation Committee.
(C) The entity acquiring the property enters into a regulatory
agreement that requires the property to be operated in accordance
with the requirements of this section for a period equal to the
greater of 55 years or the life of the property.
(D) The property satisfies the requirements of Section 42(e) of
the Internal Revenue Code, relating to rehabilitation expenditures
treated as separate new building, regarding rehabilitation
expenditures, except that the provisions of Section
42(e)(3)(A)(ii)(I) shall not apply.
(d) The term “qualified low-income housing project” as defined
in Section 42(c)(2) of the Internal Revenue Code, relating to
qualified low-income building, is modified by adding the following
requirements:
(1) The taxpayer shall be entitled to receive a cash distribution
from the operations of the project, after funding required reserves,
that at the election of the taxpayer, is equal to:
(A) An amount not to exceed 8 percent of the lesser of:
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(i) The owner equity, that shall include the amount of the capital
contributions actually paid to the housing sponsor and shall not
include any amounts until they are paid on an investor note.
(ii) Twenty percent of the adjusted basis of the building as of
the close of the first taxable year of the credit period.
(B) The amount of the cashflow from those units in the building
that are not low-income units. For purposes of computing cashflow
under this subparagraph, operating costs shall be allocated to the
low-income units using the “floor space fraction,” as defined in
Section 42 of the Internal Revenue Code, relating to low-income
housing credit.
(C) Any amount allowed to be distributed under subparagraph
(A) that is not available for distribution during the first five years
of the compliance period may be accumulated and distributed any
time during the first 15 years of the compliance period but not
thereafter.
(2) The limitation on return shall apply in the aggregate to the
partners if the housing sponsor is a partnership and in the aggregate
to the shareholders if the housing sponsor is an “S” corporation.
(3) The housing sponsor shall apply any cash available for
distribution in excess of the amount eligible to be distributed under
paragraph (1) to reduce the rent on rent-restricted units or to
increase the number of rent-restricted units subject to the tests of
Section 42(g)(1) of the Internal Revenue Code, relating to in
general.
(e) The provisions of Section 42(f) of the Internal Revenue
Code, relating to definition and special rules relating to credit
period, shall be modified as follows:
(1) The term “credit period” as defined in Section 42(f)(1) of
the Internal Revenue Code, relating to credit period defined, is
modified by substituting “four taxable years” for “10 taxable
years.”
(2) The special rule for the first taxable year of the credit period
under Section 42(f)(2) of the Internal Revenue Code, relating to
special rule for first year of credit period, shall not apply to the
tax credit under this section.
(3) Section 42(f)(3) of the Internal Revenue Code, relating to
determination of applicable percentage with respect to increases
in qualified basis after first year of credit period, is modified to
read:
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If, as of the close of any taxable year in the compliance period,
after the first year of the credit period, the qualified basis of any
building exceeds the qualified basis of that building as of the close
of the first year of the credit period, the housing sponsor, to the
extent of its tax credit allocation, shall be eligible for a credit on
the excess in an amount equal to the applicable percentage
determined pursuant to subdivision (c) for the four-year period
beginning with the later of the taxable years in which the increase
in qualified basis occurs.
(f) The provisions of Section 42(h) of the Internal Revenue
Code, relating to limitation on aggregate credit allowable with
respect to projects located in a state, shall be modified as follows:
(1) Section 42(h)(2) of the Internal Revenue Code, relating to
allocated credit amount to apply to all taxable years ending during
or after credit allocation year, shall not be applicable and instead
the following provisions shall be applicable:
The total amount for the four-year credit period of the housing
credit dollars allocated in a calendar year to any building shall
reduce the aggregate housing credit dollar amount of the California
Tax Credit Allocation Committee for the calendar year in which
the allocation is made.
(2) Paragraphs (3), (4), (5), (6)(E)(i)(II), (6)(F), (6)(G), (6)(I),
(7), and (8) of Section 42(h) of the Internal Revenue Code, relating
to limitation on aggregate credit allowable with respect to projects
located in a state, shall not be applicable.
(g) The aggregate housing credit dollar amount that may be
allocated annually by the California Tax Credit Allocation
Committee pursuant to this section, Section 12206, and Section
17058 shall be an amount equal to the sum of all the following:
(1) (A) Seventy million dollars ($70,000,000) for the 2001
calendar year, and, for the 2002 calendar year and each calendar
year thereafter, calendar years 2002 to 2014, inclusive, seventy
million dollars ($70,000,000) increased by the percentage, if any,
by which the Consumer Price Index for the preceding calendar
year exceeds the Consumer Price Index for the 2001 calendar year.
For the purposes of this paragraph, the term “Consumer Price
Index” means the last Consumer Price Index for All Urban
Consumers published by the federal Department of Labor.
(B) Three hundred seventy million dollars ($370,000,000) for
the 2015 calendar year, and, for the 2016 calendar year and each
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calendar year thereafter, three hundred seventy million dollars
($370,000,000) increased by the percentage, if any, by which the
Consumer Price Index for the preceding calendar year exceeds
the Consumer Price Index for the 2015 calendar year. For the
purposes of this paragraph, the term “Consumer Price Index”
means the last Consumer Price Index for All Urban Consumers
published by the federal Department of Labor.
(2) The unused housing credit ceiling, if any, for the preceding
calendar years.
(3) The amount of housing credit ceiling returned in the calendar
year. For purposes of this paragraph, the amount of housing credit
dollar amount returned in the calendar year equals the housing
credit dollar amount previously allocated to any project that does
not become a qualified low-income housing project within the
period required by this section or to any project with respect to
which an allocation is canceled by mutual consent of the California
Tax Credit Allocation Committee and the allocation recipient.
(4) Five hundred thousand dollars ($500,000) per calendar year
for projects to provide farmworker housing, as defined in
subdivision (h) of Section 50199.7 of the Health and Safety Code.
(5) The amount of any unallocated or returned credits under
former Sections 17053.14, 23608.2, and 23608.3, as those sections
read prior to January 1, 2009, until fully exhausted for projects to
provide farmworker housing, as defined in subdivision (h) of
Section 50199.7 of the Health and Safety Code.
(h) The term “compliance period” as defined in Section 42(i)(1)
of the Internal Revenue Code, relating to compliance period, is
modified to mean, with respect to any building, the period of 30
consecutive taxable years beginning with the first taxable year of
the credit period with respect thereto.
(i) Section 42(j) of the Internal Revenue Code, relating to
recapture of credit, shall not be applicable and the following shall
be substituted in its place:
The requirements of this section shall be set forth in a regulatory
agreement between the California Tax Credit Allocation Committee
and the housing sponsor, and this agreement shall be subordinated,
when required, to any lien or encumbrance of any banks or other
institutional lenders to the project. The regulatory agreement
entered into pursuant to subdivision (f) of Section 50199.14 of the
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Health and Safety Code shall apply, provided that the agreement
includes all of the following provisions:
(1) A term not less than the compliance period.
(2) A requirement that the agreement be recorded in the official
records of the county in which the qualified low-income housing
project is located.
(3) A provision stating which state and local agencies can
enforce the regulatory agreement in the event the housing sponsor
fails to satisfy any of the requirements of this section.
(4) A provision that the regulatory agreement shall be deemed
a contract enforceable by tenants as third-party beneficiaries
thereto, and that allows individuals, whether prospective, present,
or former occupants of the building, who meet the income
limitation applicable to the building, the right to enforce the
regulatory agreement in any state court.
(5) A provision incorporating the requirements of Section 42
of the Internal Revenue Code, relating to low-income housing
credit, as modified by this section.
(6) A requirement that the housing sponsor notify the California
Tax Credit Allocation Committee or its designee if there is a
determination by the Internal Revenue Service that the project is
not in compliance with Section 42(g) of the Internal Revenue Code,
relating to qualified low-income housing project.
(7) A requirement that the housing sponsor, as security for the
performance of the housing sponsor’s obligations under the
regulatory agreement, assign the housing sponsor’s interest in rents
that it receives from the project, provided that until there is a
default under the regulatory agreement, the housing sponsor is
entitled to collect and retain the rents.
(8) A provision that the The remedies available in the event of
a default under the regulatory agreement that is not cured within
a reasonable cure period include, but are not limited to, allowing
any of the parties designated to enforce the regulatory agreement
to collect all rents with respect to the project; taking possession of
the project and operating the project in accordance with the
regulatory agreement until the enforcer determines the housing
sponsor is in a position to operate the project in accordance with
the regulatory agreement; applying to any court for specific
performance; securing the appointment of a receiver to operate
the project; or any other relief as may be appropriate.
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(j) (1) The committee shall allocate the housing credit on a
regular basis consisting of two or more periods in each calendar
year during which applications may be filed and considered. The
committee shall establish application filing deadlines, the maximum
percentage of federal and state low-income housing tax credit
ceiling that may be allocated by the committee in that period, and
the approximate date on which allocations shall be made. If the
enactment of federal or state law, the adoption of rules or
regulations, or other similar events prevent the use of two allocation
periods, the committee may reduce the number of periods and
adjust the filing deadlines, maximum percentage of credit allocated,
and allocation dates.
(2) The committee shall adopt a qualified allocation plan, as
provided in Section 42(m)(1) of the Internal Revenue Code,
relating to plans for allocation of credit among projects. In
adopting this plan, the committee shall comply with the provisions
of Sections 42(m)(1)(B) and 42(m)(1)(C) of the Internal Revenue
Code, relating to qualified allocation plan and relating to certain
selection criteria must be used, respectively.
(3) Notwithstanding Section 42(m) of the Internal Revenue
Code, relating to responsibilities of housing credit agencies, the
California Tax Credit Allocation Committee shall allocate housing
credits in accordance with the qualified allocation plan and
regulations, which shall include the following provisions:
(A) All housing sponsors, as defined by paragraph (3) of
subdivision (a), shall demonstrate at the time the application is
filed with the committee that the project meets the following
threshold requirements:
(i) The housing sponsor shall demonstrate that there is a need
for low-income housing in the community or region for which it
is proposed.
(ii) The project’s proposed financing, including tax credit
proceeds, shall be sufficient to complete the project and shall be
adequate to operate the project for the extended use period.
(iii) The project shall have enforceable financing commitments,
either construction or permanent financing, for at least 50 percent
of the total estimated financing of the project.
(iv) The housing sponsor shall have and maintain control of the
site for the project.
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(v) The housing sponsor shall demonstrate that the project
complies with all applicable local land use and zoning ordinances.
(vi) The housing sponsor shall demonstrate that the project
development team has the experience and the financial capacity
to ensure project completion and operation for the extended use
period.
(vii) The housing sponsor shall demonstrate the amount of tax
credit that is necessary for the financial feasibility of the project
and its viability as a qualified low-income housing project
throughout the extended use period, taking into account operating
expenses, a supportable debt service, reserves, funds set aside for
rental subsidies and required equity, and a development fee that
does not exceed a specified percentage of the eligible basis of the
project prior to inclusion of the development fee in the eligible
basis, as determined by the committee.
(B) The committee shall give a preference to those projects
satisfying all of the threshold requirements of subparagraph (A)
if both of the following apply:
(i) The project serves the lowest income tenants at rents
affordable to those tenants.
(ii) The project is obligated to serve qualified tenants for the
longest period.
(C) In addition to the provisions of subparagraphs (A) and (B),
the committee shall use the following criteria in allocating housing
credits:
(i) Projects serving large families in which a substantial number,
as defined by the committee, of all residential units are low-income
units with three and more bedrooms.
(ii) Projects providing single-room occupancy units serving
very low income tenants.
(iii) Existing projects that are “at risk of conversion,” as defined
by paragraph (4) of subdivision (c).
(iv) Projects for which a public agency provides direct or indirect
long-term financial support for at least 15 percent of the total
project development costs or projects for which the owner’s equity
constitutes at least 30 percent of the total project development
costs.
(v) Projects that provide tenant amenities not generally available
to residents of low-income housing projects.
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(4) For purposes of allocating credits pursuant to this section,
the committee shall not give preference to any project by virtue
of the date of submission of its application except to break a tie
when two or more of the projects have an equal rating.
(5) Not less than 20 percent of the low-income housing tax
credits available annually under this section, Section 12206, and
Section 17058 shall be set aside for allocation to rural areas as
defined in Section 50199.21 of the Health and Safety Code. Any
amount of credit set aside for rural areas remaining on or after
October 31 of any calendar year shall be available for allocation
to any eligible project. No amount of credit set aside for rural areas
shall be considered available for any eligible project so long as
there are eligible rural applications pending on October 31.
(k) Section 42(l) of the Internal Revenue Code, relating to
certifications and other reports to secretary, shall be modified as
follows:
The term “secretary” shall be replaced by the term “California
Franchise Tax Board.”
(l) In the case where the state credit allowed under this section
exceeds the “tax,” the excess may be carried over to reduce the
“tax” in the following year, and succeeding taxable years if
necessary, until the credit has been exhausted.
(m) A project that received an allocation of a 1989 federal
housing credit dollar amount shall be eligible to receive an
allocation of a 1990 state housing credit dollar amount, subject to
all of the following conditions:
(1) The project was not placed in service prior to 1990.
(2) To the extent the amendments made to this section by the
Statutes of 1990 conflict with any provisions existing in this section
prior to those amendments, the prior provisions of law shall prevail.
(3) Notwithstanding paragraph (2), a project applying for an
allocation under this subdivision shall be subject to the
requirements of paragraph (3) of subdivision (j).
(n) The credit period with respect to an allocation of credit in
1989 by the California Tax Credit Allocation Committee of which
any amount is attributable to unallocated credit from 1987 or 1988
shall not begin until after December 31, 1989.
(o) The provisions of Section 11407(a) of Public Law 101-508,
relating to the effective date of the extension of the low-income
housing credit, shall apply to calendar years after 1989.
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(p) The provisions of Section 11407(c) of Public Law 101-508,
relating to election to accelerate credit, shall not apply.
(q) (1) A corporation may elect to assign any portion of any
credit allowed under this section to one or more affiliated
corporations for each taxable year in which the credit is allowed.
For purposes of this subdivision, “affiliated corporation” has the
meaning provided in subdivision (b) of Section 25110, as that
section was amended by Chapter 881 of the Statutes of 1993, as
of the last day of the taxable year in which the credit is allowed,
except that “100 percent” is substituted for “more than 50 percent”
wherever it appears in the section, as that section was amended by
Chapter 881 of the Statutes of 1993, and “voting common stock”
is substituted for “voting stock” wherever it appears in the section,
as that section was amended by Chapter 881 of the Statutes of
1993.
(2) The election provided in paragraph (1):
(A) May be based on any method selected by the corporation
that originally receives the credit.
(B) Shall be irrevocable for the taxable year the credit is allowed,
once made.
(C) May be changed for any subsequent taxable year if the
election to make the assignment is expressly shown on each of the
returns of the affiliated corporations that assign and receive the
credits.
(r) Any unused credit may continue to be carried forward, as
provided in subdivision (l), until the credit has been exhausted.
This section shall remain in effect on and after December 1,
1990, for as long as Section 42 of the Internal Revenue Code,
relating to low-income housing credits, credit, remains in effect.
(s) The amendments to this section made by the act adding this
subdivision Chapter 1222 of the Statutes of 1993 shall apply only
to taxable years beginning on or after January 1, 1994, except that
paragraph (1) of subdivision (q), as amended, shall apply to taxable
years beginning on or after January 1, 1993.
SEC. 4. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.
SECTION 1. (a) The Legislature finds and declares all of the
following:
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(1) The preservation and rehabilitation of existing affordable
housing stock initially created through public investment is a
critical strategy to address the affordable housing crisis in our state.
(2) It is particularly important that older single room occupancy
(SRO), special needs, and other buildings with deeply
income-targeted rents be preserved and refurbished for low-income
tenants and the public investment protected.
(3) However, currently, most properties that are being
recapitalized and resyndicated through the California Tax Credit
Allocation Committee system for substantial rehabilitation tend
to have higher rents and shallower income targeting because they
appraise well and generate significant acquisition credits.
(4) Unfortunately, the deeply targeted mostly SRO, special
needs, and rural projects that very much need to capitalize are
largely shut out of this opportunity precisely because they have
agreed to very deep income-targeting which excludes them from
acquisition credits.
(b) Therefore, it is the intent of the Legislature to create a new
source of investment and a pipeline for these older but very
valuable public assets, which are often in the greatest need of
rehabilitation.
SEC. 2. Section 17059 is added to the Revenue and Taxation
Code, to read:
17059. (a) For each taxable year beginning on or after January
1, 2015, there shall be allowed as a credit against the “net tax,” as
defined in Section 17039, a very low-income and extremely
low-income housing credit in an amount computed in accordance
with Section 42 of the Internal Revenue Code, except as otherwise
provided in this section.
(b) For the purposes of this section, the following definitions
shall apply:
(1) “Taxpayer” means the sole owner in the case of an
individual, the partners in the case of a partnership, and the
shareholders in the case of an “S” corporation.
(2) “Housing sponsor” means the sole owner in the case of an
individual, the partnership in the case of a partnership, and the “S”
corporation in the case of an “S” corporation.
(3) “Very low-income” has the same meaning as in Section
50053 of the Health and Safety Code.
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(4) “Extremely low-income” has the same meaning as in Section
50053 of the Health and Safety Code.
(5) “SRO” means single room occupancy.
(6) “Rural area resident” means a resident of a rural area as
defined in Section 50199.21 of the Health and Safety Code.
(7) “Committee” means the California Tax Credit Allocation
Committee.
(c) (1) The amount of the credit allocated to any housing
sponsor shall be authorized by the committee, or any successor
thereof, based on a project’s need for the credit in accordance with
paragraph (2) of subdivision (e).
(A) The very low-income or extremely low-income housing
project shall be located in California.
(B) Nothing in this section shall be construed to require a
housing sponsor to have been previously or currently allocated a
credit for federal income tax purposes under Section 42 of the
Internal Revenue Code or for state income tax purposes under
Section 17058.
(2) (A) The committee shall certify to the housing sponsor the
amount of tax credit under this section allocated to the housing
sponsor for each credit period.
(B) In the case of a partnership or an “S” corporation, the
housing sponsor shall provide a copy of the committee certification
to the taxpayer.
(C) The taxpayer shall, upon request, provide a copy of the
certification to the Franchise Tax Board.
(d) The aggregate housing credit dollar amount that may be
allocated annually by the committee pursuant to this section and
Section 23610.6 shall be an amount equal to the sum of all of the
following:
(1) Forty million dollars ($40,000,000).
(2) The unused allocation credit amount, if any, for the preceding
fiscal year.
(3) The amount of housing credits returned in the calendar year.
(e) (1) Subject to subdivision (c), the committee shall allocate
the housing credit on a regular basis consisting of two or more
periods in each calendar year during which applications may be
filed and considered. The committee shall establish application
filing deadlines, the maximum amounts of state very low-income
and extremely low-income housing tax credits that may be
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allocated by the committee in that period, and the approximate
date on which allocations shall be made. If the enactment of federal
or state law, the adoption of rules or regulations, or other similar
events prevent the use of two allocation periods, the committee
may reduce the number of periods and adjust the filing deadlines,
maximum percentage of credit allocated, and the allocation dates.
(2) The committee shall, on a first-come-first-served basis,
allocate the very low-income and extremely low-income housing
credit in accordance with the following provisions:
(A) All housing sponsors shall demonstrate at the time the
application is filed with the committee that the project meets the
following threshold requirements:
(B) The housing sponsor shall demonstrate that the project will
be used exclusively for the restructuring, including the acquisition
and substantial rehabilitation, of buildings at least 20 years old
and that currently serve very low-income, extremely low-income,
SRO, or rural area residents. No new construction shall be eligible
for a credit under this section.
(C) The housing sponsor shall demonstrate that acquisition
credits that would be received as part of the restructuring through
the existing state credit program described in Section 17058 would
be insufficient to complete substantial rehabilitation due to a low
appraised fair market value.
(D) The housing sponsor shall demonstrate that the project is
currently subsidized, but may or may not currently be “at risk” for
conversion to market rate.
(E) There is no requirement that the project previously received
federal or state tax credits when originally constructed.
(f) In the case where the credit allowed under this section
exceeds the “net tax,” the excess may be carried over to reduce
the “net tax” in the following year, and succeeding taxable years,
if necessary, until the credit is exhausted.
(g) A deduction otherwise allowed under this part for any
amount paid or incurred by the qualified taxpayer upon which the
credit is based shall be reduced by the amount of the credit allowed
by this section.
(h) Credit under this section shall be allowed only for credits
claimed on a timely filed original return of the qualified taxpayer.
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(i) (1) The committee and the Franchise Tax Board may adopt
regulations, rules, guidelines, or procedures necessary or
appropriate to carry out the purposes of this section.
(2) The Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code) shall apply to any regulation, rule,
guideline, or procedure adopted pursuant to this section.
SEC. 3. Section 23610.6 is added to the Revenue and Taxation
Code, to read:
23610.6. (a) For each taxable year beginning on or after
January 1, 2015, there shall be allowed as a credit against the “tax,”
as defined in Section 23036, a very low-income and extremely
low-income housing credit in an amount computed in accordance
with Section 42 of the Internal Revenue Code, except as otherwise
provided in this section.
(b) For the purposes of this section, the following definitions
shall apply:
(1) “Taxpayer” means the sole owner in the case of a “C”
corporation, the partners in the case of a partnership, and the
shareholders in the case of an “S” corporation.
(2) “Housing sponsor” means the sole owner in the case of a
“C” corporation, the partnership in the case of a partnership, and
the “S” corporation in the case of an “S” corporation.
(3) “Very low-income” has the same meaning as in Section
50053 of the Health and Safety Code.
(4) “Extremely low-income” has the same meaning as in Section
50053 of the Health and Safety Code.
(5) “SRO” means single room occupancy.
(6) “Rural area resident” means a resident of a rural area as
defined in Section 50199.21 of the Health and Safety Code.
(7) “Committee” means the California Tax Credit Allocation
Committee.
(c) (1) The amount of the credit allocated to any housing
sponsor shall be authorized by the committee, or any successor
thereof, based on a project’s need for the credit in accordance with
paragraph (2) of subdivision (e).
(A) The very low-income or extremely low-income housing
project shall be located in California.
(B) Nothing in this section shall be construed to require a
housing sponsor to have been previously or currently allocated a
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credit for federal income tax purposes under Section 42 of the
Internal Revenue Code or for state income tax purposes under
Section 23610.5.
(2) (A) The committee shall certify to the housing sponsor the
amount of tax credit under this section allocated to the housing
sponsor for each credit period.
(B) In the case of a partnership or an “S” corporation, the
housing sponsor shall provide a copy of the committee certification
to the taxpayer.
(C) The taxpayer shall, upon request, provide a copy of the
certification to the Franchise Tax Board.
(d) (1) The aggregate housing credit dollar amount that may
be allocated annually by the committee pursuant to this section
and Section 17059 shall be an amount equal to the sum of all of
the following:
(1) Forty million dollars ($40,000,000).
(2) The unused allocation credit amount, if any, for the preceding
fiscal year.
(3) The amount of housing credits returned in the calendar year.
(e) (1) Subject to subdivision (c), the committee shall allocate
the housing credit on a regular basis consisting of two or more
periods in each calendar year during which applications may be
filed and considered. The committee shall establish application
filing deadlines, the maximum amounts of state very low-income
and extremely low-income housing tax credits that may be
allocated by the committee in that period, and the approximate
date on which allocations shall be made. If the enactment of federal
or state law, the adoption of rules or regulations, or other similar
events prevent the use of two allocation periods, the committee
may reduce the number of periods and adjust the filing deadlines,
maximum percentage of credit allocated, and the allocation dates.
(2) The committee shall, on a first-come-first-served basis,
allocate the very low-income and extremely low-income housing
credit in accordance with the following provisions:
(A) All housing sponsors shall demonstrate at the time the
application is filed with the committee that the project meets the
following threshold requirements:
(B) The housing sponsor shall demonstrate that the project will
be used exclusively for the restructuring, including the acquisition
and substantial rehabilitation, of buildings at least 20 years old
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and that currently serve very low-income, extremely low-income,
SRO, or rural area residents. No new construction shall be eligible
for a credit under this section.
(C) The housing sponsor shall demonstrate that acquisition
credits that would be received as part of the restructuring through
the existing state credit program described in Section 23610.5
would be insufficient to complete substantial rehabilitation due to
a low appraised fair market value.
(D) The housing sponsor shall demonstrate that the project is
currently subsidized, but may or may not currently be “at risk” for
conversion to market rate.
(E) There is no requirement that the project previously received
federal or state tax credits when originally constructed.
(f) (1) A corporation may elect to assign any portion of any
credit allowed under this section to one or more affiliated
corporations for each taxable year in which the credit is allowed.
For purposes of this subdivision, “affiliated corporation” has the
meaning provided in subdivision (b) of Section 25110, as of the
last day of the taxable year in which the credit is allowed, except
that “100 percent” is substituted for “more than 50 percent”
wherever it appears in the section, and “voting common stock” is
substituted for “voting stock” wherever it appears in the section.
(2) The election provided in paragraph (1):
(A) May be based on any method selected by the corporation
that originally receives the credit.
(B) Shall be irrevocable for the taxable year the credit is allowed,
once made.
(C) May be changed for any subsequent taxable year if the
election to make the assignment is expressly shown on each of the
returns of the affiliated corporations that assign and receive the
credits.
(g) In the case where the credit allowed under this section
exceeds the “tax,” the excess may be carried over to reduce the
“tax” in the following year, and succeeding taxable years, if
necessary, until the credit is exhausted.
(h) A deduction otherwise allowed under this part for any
amount paid or incurred by the qualified taxpayer upon which the
credit is based shall be reduced by the amount of the credit allowed
by this section.
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(i) Credit under this section shall be allowed only for credits
claimed on a timely filed original return of the qualified taxpayer.
(j) (1) The committee and the Franchise Tax Board may adopt
regulations, rules, guidelines, or procedures necessary or
appropriate to carry out the purposes of this section.
(2) The Administrative Procedure Act (Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code) shall apply to any regulation, rule,
guideline, or procedure adopted pursuant to this section.
SEC. 4. In order to comply with the requirements of Section
41 of the Revenue and Taxation Code, it is the intent of the
Legislature that the California Tax Credit Allocation Committee
provide the information required by that section to the Legislature.
SEC. 5. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.
O
98
1400 K Street, Suite 400 • Sacramento, California 95814
Phone: 916.658.8200 Fax: 916.658.8240
www.cacities.org
March 24, 2015
The Honorable David Chiu
California State Assembly
State Capitol, Room 2196
Sacramento, CA 95814
RE: AB 35 (Chiu and Atkins) Housing Tax Credits
NOTICE OF SUPPORT (As amended March 2, 2015)
Dear Assembly Member Chiu:
On behalf of the League of California Cities, I am pleased to inform you of our support for your AB 35,
which would increase the state’s Low Income Housing Tax Credit by $300 million to build and
rehabilitate affordable housing.
The League has longstanding policy supporting additional state funding for affordable housing. The
challenges of funding affordable housing development, however, have increased significantly with the
loss of over $1 billion per year of redevelopment housing funds.
Increasing available state tax credits for low-income housing is a great step in beginning to reassemble
affordable housing funding streams in California. These credits will leverage additional federal tax
credits and tax exempt bond authority and help build many additional units. The additional jobs and
economic activity will also contribute to state and local tax revenues.
We appreciate your leadership on this issue and look forward to working with you and other supporters to
enact AB 35. If you have any questions, or if I can be of any assistance, please call me at (916) 658-8222.
Sincerely,
Daniel Carrigg
Legislative Director
Cc:
Assembly Speaker Toni Atkins
Chair and Members, Assembly Housing and Community Development Committee
Chair and Members, Assembly Committee on Revenue and Taxation
Lisa Engel, Chief Consultant, Assembly Housing and Community Development Committee
William Weber, Principal Consultant, Assembly Republican Caucus
Anthony Archie, Senior Consultant, Assembly Republican Caucus
Assembly Speaker Toni G. Atkins, 78th Assembly District
AB 1056 – Second Chance Program for Community Re-entry
IN BRIEF
AB 1056 creates the Second Chance Program for
Community Re-entry and directs a portion of the
Proposition 47 savings toward providing evidencebased post-incarceration supportive housing
opportunities.
BACKGROUND
Upon their release from incarceration, many parolees
find themselves at a very increased risk of housing
instability and insecurity. Simply put, individuals
released from our state’s prisons and jails either find
themselves homeless on their very first night out of a
correctional institution or only being able to secure
temporary housing.
Securing adequate, stable housing for formerly
incarcerated individuals has been documented as a
serious challenge for local and state governments to
overcome. The existing systems are fragmented and
no particular agency or entity is responsible for
helping secure housing for individuals leaving the
state’s prisons and jails. Historically, correctional
departments have viewed the provision of long-term
housing for released prisoners as outside their
agencies’ mission or purview.
THE ISSUE
The lack of available housing is cited as one of the
most significant barriers to re-entry and a main driver
of recidivism for the formerly incarcerated. Their
criminal history locks them out of many state and
federal programs that would otherwise help individuals
in their situation.
Securing employment, maintaining sobriety, or even
participating in recidivism prevention programs and
activities is made that more difficult without a stable
housing situation.
While the issue of housing for the formerly
incarcerated is not a new problem, the need for such
housing is growing dramatically as increasing
numbers of formerly incarcerated individuals are
returning to our communities in a response to prison
overcrowding directives as well as recent public safety
reforms such as AB 109 and Proposition 47
THE SOLUTION
Housing the formerly incarcerated can serve as the
literal and figurative foundation for successful re-entry
and reintegration for released adults. It allows them to
seek employment, pursue educational opportunities,
and participate in anti-recidivism programs without the
fear of not having a place to sleep. Having a place to
live for these individuals also lessens the likelihood that
they will interact with law enforcement personnel
stemming from reasons of homelessness.
AB 1056 provides housing supports for the formerly
incarcerated utilizing evidence-based models, including
those established in the federal Department of Housing
and Urban Development’s Homeless Prevention and
Rapid Re-Housing Program.
Such supports include, but are not limited to: (a)
financial assistance, including rental assistance, security
deposits, utility payments, moving cost assistance, and
motel and hotel vouchers; (b) housing stabilization and
relocation, including outreach and engagement,
landlord recruitment, case management, housing search
and placement, legal services, and credit repair; and (c)
mental health, substance abuse, and employment
services as indicated by individual needs assessments.
SUPPORT
National Center for Youth Law
Californians for Safety and Justice
Legal Services for Prisoners with Children
Drug Policy Alliance
OPPOSITION
None on file
FOR MORE INFORMATION
Ken Spence, Office of Speaker Toni Atkins
916-319-2274 | ken.spence@asm.ca.gov
Factsheet for AB 1056 (Atkins), As Introduced – Created
BILL NUMBER: AB 313
BILL TEXT
INTRODUCED BY
INTRODUCED
Assembly Member Atkins
FEBRUARY 12, 2015
An act to amend Sections 53398.52, 53398.56, 53398.57, 53398.62,
53398.63, 53398.66, 53398.67, 53398.68, 53398.69, and 53398.75 of,
and to repeal and add Section 53398.74 of, the Government Code,
relating to enhanced infrastructure financing districts.
LEGISLATIVE COUNSEL'S DIGEST
AB 313, as introduced, Atkins. Enhanced infrastructure financing
districts.
Existing law authorizes the legislative body of a city or a
county, defined to include a city and county, to establish an
enhanced infrastructure financing district to finance public capital
facilities or other specified projects of communitywide significance,
including, but not limited to, the acquisition, construction, or
rehabilitation of housing for persons of low and moderate income for
rent or purchase. Existing law requires proceedings for the
establishment of a district to be instituted by the adoption of a
resolution of intention to establish the proposed district, and
imposes specified duties on the legislative body with respect to the
preparation, proposal, and adoption of an infrastructure financing
plan after that resolution of intent is adopted.
Existing law also requires the legislative body to establish a
public financing authority, defined as the governing board of the
enhanced infrastructure financing authority, prior to the adoption of
a resolution to form an enhanced infrastructure district and
infrastructure financing plan.
This bill would require, after the adoption of a resolution of
intention to establish the proposed district, the legislative body to
send a copy of the resolution to the public financing authority.
This bill would revise the duties of the public financing authority
after the resolution of intention to establish the proposed district
has been adopted, so that the public financing authority, instead of
the legislative body, will perform the specified duties related to
the preparation, proposal, and adoption of the infrastructure
financing plan and the adoption of the formation of the district.
This bill would provide that if a resolution is adopted to abandon
proceedings to adopt the infrastructure financing plan, then the
public financing authority ceases to exist and the legislative body
is prohibited from enacting a resolution of intent to establish a
district that includes the same geographic area within one year of
the date of the resolution abandoning the proceedings.
This bill would authorize the enhanced infrastructure financing
district to finance the acquisition, construction, or rehabilitation
of housing for persons of very low income for rent or purchase, as
provided.
Existing law authorizes an enhanced infrastructure financing
district to utilize any powers under the Polanco Redevelopment Act,
which authorizes a redevelopment agency to take action to remedy or
remove a release of hazardous substances on, under, or from property,
subject to specified conditions. Existing law also authorizes a
local agency to take any action similar to that authorized under the
Polanco Redevelopment Act.
This bill would instead authorize an enhanced infrastructure
financing district to utilize any powers under either law.
Existing law requires the infrastructure financing plan to
provided for specific actions if any dwelling units are proposed to
be removed or destroyed in the course of private development or
public works construction within the area of the district, including,
but not limited to, causing or requiring the construction or
rehabilitation, for rent or sale to persons or families of low or
moderate income, of an equal number of replacement dwelling units at
affordable housing cost within the territory of the district and
providing relocation assistance to persons displaced by any public or
private development occurring within the territory of the district.
This bill would revise and recast those provisions, and would
require the infrastructure financing plan to contain those provisions
if any dwelling units are proposed to be removed or destroyed either
in the course of private development that is financed by the
district or by public works construction resulting from the
infrastructure financing plan.
Article XIIIB of the California Constitution (Article XIII B)
prohibits the annual appropriations subject to limitation of a local
government, defined to include a special district, from exceeding its
annual appropriations limit, but allows for that appropriations
limit to be established or changed by the electors of that entity in
conformity with existing constitutional and statutory laws. Article
XIII B defines "appropriations subject to limitation" as any
authorization to expend during a fiscal year the proceeds of taxes
levied by or for that entity. Existing law allows the public
financing authority to submit a proposition to establish or change
the appropriations limit of an enhanced infrastructure financing
district to the qualified electors of a proposed or established
district, which is effective if approved by the qualified electors.
Existing law also authorizes an enhanced infrastructure financing
district to fund infrastructure projects through tax increment
financing, pursuant to the infrastructure financing plan and the
agreement of affected taxing entities, as defined.
This bill would repeal those provisions allowing the public
financing authority to submit a proposition to establish or change
the appropriations limit of the district, and instead provide that
the allocation and payment to an enhanced infrastructure district of
tax increment for the purpose of paying specified amounts incurred by
the district is not the receipt by a district of proceeds of taxes
levied by or on behalf of the district within the meaning or for the
purposes of Article XIII B, and is not the receipt of proceeds of
taxes by, or an appropriation subject to limitation of, any other
public body within the meaning or for purposes of Article XIII B.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 53398.52 of the Government Code is amended to
read:
53398.52. (a) (1) A district may finance any of the following:
(A) The purchase, construction, expansion, improvement, seismic
retrofit, or rehabilitation of any real or other tangible property
with an estimated useful life of 15 years or longer that satisfies
the requirements of subdivision (b).
(B) The planning and design work that is directly related to the
purchase, construction, expansion, or rehabilitation of property.
(C) The costs described in Sections 53398.56 and 53398.57.
(2) The facilities need not be physically located within the
boundaries of the district. However, any facilities financed outside
of a district must have a tangible connection to the work of the
district, as detailed in the infrastructure financing plan adopted
pursuant to Section 53398.69.
(3) A district may not finance routine maintenance, repair work,
or the costs of an ongoing operation or providing services of any
kind.
(b) The district shall finance only public capital facilities or
other specified projects of communitywide significance that provide
significant benefits to the district or the surrounding community,
including, but not limited to, all of the following:
(1) Highways, interchanges, ramps and bridges, arterial streets,
parking facilities, and transit facilities.
(2) Sewage treatment and water reclamation plants and interceptor
pipes.
(3) Facilities for the collection and treatment of water for urban
uses.
(4) Flood control levees and dams, retention basins, and drainage
channels.
(5) Child care facilities.
(6) Libraries.
(7) Parks, recreational facilities, and open space.
(8) Facilities for the transfer and disposal of solid waste,
including transfer stations and vehicles.
(9) Brownfield restoration and other environmental mitigation.
(10) The development of projects on a former military base,
provided that the projects are consistent with the military base
authority reuse plan and are approved by the military base reuse
authority, if applicable.
(11) The repayment of the transfer of funds to a military base
reuse authority pursuant to Section 67851 that occurred on or after
the creation of the district.
(12) The acquisition, construction, or rehabilitation of housing
for persons of low
very low, low, and
moderate income, as defined in Section
Sections 50105 and 50093 of the Health and Safety Code, for
rent or purchase.
(13) Acquisition, construction, or repair of industrial structures
for private use.
(14) Transit priority projects, as defined in Section 21155 of the
Public Resources Code, that are located within a transit priority
project area. For purposes of this paragraph, a transit priority
project area may include a military base reuse plan that meets the
definition of a transit priority project area and it may include a
contaminated site within a transit priority project area.
(15) Projects that implement a sustainable communities strategy,
when the State Air Resources Board, pursuant to Chapter 2.5
(commencing with Section 65080) of Division 2 of Title 7, has
accepted a metropolitan planning organization's determination that
the sustainable communities strategy or the alternative planning
strategy would, if implemented, achieve the greenhouse gas emission
reduction targets.
(c) The district shall require, by recorded covenants or
restrictions, that housing units built pursuant to this section shall
remain available at affordable housing costs to, and occupied by,
persons and families of lowvery low, low,
or moderate-income households for the longest feasible time,
but for not less than 55 years for rental units and 45 years for
owner-occupied units.
(d) The district may finance mixed-income housing developments,
but may finance only those units in such a development that are
restricted to occupancy by persons of low
very low, low, or moderate incomes as defined in
Section
Sections 50105 and 50093 of the Health
and Safety Code, and those onsite facilities for child care,
after-school care, and social services that are integrally linked to
the tenants of the restricted units.
(e) A district may utilize any powers under either the
Polanco Redevelopment Act (Article 12.5 (commencing with Section
33459) of Chapter 4 of Part 1 of Division 24 of the Health and Safety
Code) or Chapter 6.10 (commencing with Section 25403) of
Division 20 of the Health and Safety Code , and finance any
action necessary to implement that act.
SEC. 2. Section 53398.56 of the Government Code is amended to
read:
53398.56. It is the intent of the Legislature that the creation
of the districts should not ordinarily lead to the removal of
existing dwelling units. If, however, any dwelling units are proposed
to be removed or destroyed in the course of private development
that is financed by the district or public works construction
within the area of the district,
as a result
of the infrastructure financing plan adopted pursuant to
Section 53398.69 , then that infrastructure financing plan
shall contain provisions to do all of the following:
(a) Within two years of the removal or destruction, cause or
require the construction or rehabilitation, for rent or sale to
persons or families of low or moderate income, of an equal number of
replacement dwelling units at affordable housing cost, as defined in
Section 50052.5 of the Health and Safety Code, within the territory
of the district if the dwelling units removed were inhabited by
persons or families of low or moderate income, as defined in Section
50093 of the Health and Safety Code.
(b) Within two years of the removal or destruction, cause or
require the construction or rehabilitation, for rent or sale to
persons of low or moderate income, a number of dwelling units that is
at least one unit but not less than 25 percent of the total dwelling
units removed at affordable housing cost, as defined in Section
50052.5 of the Health and Safety Code, within the territory of the
district if the dwelling units removed or destroyed were not
inhabited by persons of low or moderate income, as defined in Section
50093 of the Health and Safety Code.
(c) Provide relocation assistance and make all the payments
required by Chapter 16 (commencing with Section 7260) of Division 7
of Title 1, to persons displaced by any public or private development
occurring within the territory of the district. This displacement
shall be deemed to be the result of public action.
(d) Ensure that removal or destruction of any dwelling units
occupied by persons or families of low or moderate income not take
place unless and until there are suitable housing units, at
comparable cost to the units from which the persons or families were
displaced, available and ready for occupancy by the residents of the
units at the time of their displacement. The housing units shall be
suitable to the needs of these displaced persons or families, and
shall be decent, safe, sanitary, and otherwise standard dwellings.
(a) If the dwelling units to be removed or destroyed are or were
inhabited by persons or families of very low, low, or moderate
income, as defined in Sections 50105 and 50093 of the Health and
Safety Code, at any time within five years prior to establishment of
the district, cause or require the construction or rehabilitation of
an equal number of replacement dwelling units, within one-half mile
of the location of the units to be removed or destroyed, that have an
equal or greater number of bedrooms as those removed or destroyed
units, within two years of the removal or destruction of the dwelling
units. The replacement dwelling units shall be available for rent or
sale to persons or families of very low, low, or moderate income, at
affordable rent, as defined in Section 50053 of the Health and
Safety Code, or at affordable housing cost, as defined in Section
50052.5 of the Health and Safety Code, to persons in the same or a
lower income category (extremely low, very low, low, or moderate), as
the persons displaced from, or who last occupied, the removed or
destroyed dwelling units.
(b) If the dwelling units to be removed or destroyed were not
inhabited by persons of low or moderate income within the period of
time specified in subdivision (a), cause or require the construction
or rehabilitation within one-half mile of the location of the units
to be removed or destroyed of at least one unit but not less than 25
percent of the total dwelling units removed or destroyed, within two
years of the removal or destruction of the dwelling units. The units
constructed or rehabilitated pursuant to this subdivision shall be of
equivalent size and type to the units to be removed or destroyed. An
equal percentage of the replacement dwelling units constructed or
rehabilitated pursuant to this subdivision shall be available for
rent or sale at affordable rent, as defined in Section 50053 of the
Health and Safety Code, or affordable housing cost, as defined in
Section 50052.5 of the Health and Safety Code, to extremely low and
very low income persons or families, as defined in Sections 50106 and
50105 of the Health and Safety Code.
(c) Comply with all relocation assistance requirements of Chapter
16 (commencing with Section 7260) of Division 7 of Title 1, for
persons displaced from dwelling units by any public or private action
occurring as a result of the infrastructure financing plan adopted
pursuant to Section 53398.69. The displacement of any persons from a
dwelling unit as a result of the plan shall be deemed to be the
result of public action.
(d) Ensure that removal or destruction of any dwelling units
occupied by persons or families of low or moderate income not take
place unless and until there has been full compliance with the
relocation assistance requirements of this section, Section 53398.63,
and Chapter 16 (commencing with Section 7260) of Division 7 of Title
1.
(e) (1) The district shall require, by recorded covenants or
restrictions, that housing
all dwelling
units built
constructed or rehabilitated
pursuant to this section shall remain available at affordable
rent or housing costs
cost
to, and occupied by, persons and families of low- or
moderate-income households
the same income categories
as required by subdivision
(a) or (b), as applicable,
for the longest feasible time, but for not less than 55 years
for rental units and 45 years for owner-occupied units.
(2) In lieu of a 45-year covenant or restriction, the district may
subject owner-occupied units to an equity sharing agreement
described in paragraph (2) of subdivision (c) of Section 65915.
(2) The district may permit sales of owner-occupied units prior to
the expiration of the 45-year period for a price in excess of that
otherwise permitted under this subdivision pursuant to an adopted
program which protects the district's investment of moneys in the
unit or units, including, but not limited to, an equity sharing
program, not in conflict with another public funding source or law,
which establishes a schedule of equity sharing that permits retention
by the seller of a portion of those excess proceeds based on the
length of occupancy. For purposes of this paragraph, the terms of the
equity sharing program shall be consistent with the provisions of
paragraph (2) of subdivision (c) of Section 65915, provided, however,
that the program shall require any amounts recaptured by the
district to be used within five years for any of the affordable
housing purposes described in Section 34176.1 of the Health and
Safety Code.
SEC. 3. Section 53398.57 of the Government Code is amended to
read:
53398.57. Any action or proceeding to attack, review, set aside,
void, or annul the creation of a district, adoption of an
infrastructure financing plan, including a division of taxes
thereunder, or an election pursuant to this chapter shall be
commenced within 30 days after the enactment of the resolution
creating the district pursuant to Section 53398.69. Consistent with
the time limitations of this section, such an action or proceeding
with respect to a division of taxes under this chapter may be brought
pursuant to Chapter 9 (commencing with Section 860) of Title 10 of
Part 2 of the Code of Civil Procedure, except that Section
869 of the Code of Civil Procedure shall not apply.
Procedure.
SEC. 4. Section 53398.62 of the Government Code is amended to
read:
53398.62. After adopting the resolution pursuant to Section
53398.59, the legislative body shall send a copy of the
resolution to the public financing authority. The public financing
authority shall designate and direct the city or county
engineer or other appropriate official to prepare an infrastructure
plan pursuant to Section 53398.63.
SEC. 5. Section 53398.63 of the Government Code is amended to
read:
53398.63. After receipt of a copy of the resolution of intention
to establish a district, the official designated pursuant to Section
53395.62 shall prepare a proposed infrastructure financing plan. The
infrastructure financing plan shall be consistent with the general
plan of the city or county within which the district is located and
shall include all of the following:
(a) A map and legal description of the proposed district, which
may include all or a portion of the district designated by the
legislative body in its resolution of intention.
(b) A description of the public facilities and other forms of
development or financial assistance that is proposed in the area of
the district, including those to be provided by the private sector,
those to be provided by governmental entities without assistance
under this chapter, those public improvements and facilities to be
financed with assistance from the proposed district, and those to be
provided jointly. The description shall include the proposed
location, timing, and costs of the development and financial
assistance.
(c) If funding from affected taxing entities is incorporated into
the financing plan, a finding that the development and financial
assistance are of communitywide significance and provide significant
benefits to an area larger than the area of the district.
(d) A financing section, which shall contain all of the following
information:
(1) A specification of the maximum portion of the incremental tax
revenue of the city or county and of each affected taxing entity
proposed to be committed to the district for each year during which
the district will receive incremental tax revenue. The portion need
not be the same for all affected taxing entities. The portion may
change over time.
(2) A projection of the amount of tax revenues expected to be
received by the district in each year during which the district will
receive tax revenues, including an estimate of the amount of tax
revenues attributable to each affected taxing entity for each year.
(3) A plan for financing the public facilities to be assisted by
the district, including a detailed description of any intention to
incur debt.
(4) A limit on the total number of dollars of taxes that may be
allocated to the district pursuant to the plan.
(5) A date on which the district will cease to exist, by which
time all tax allocation to the district will end. The date shall not
be more than 45 years from the date on which the issuance of bonds is
approved pursuant to subdivision (a) of Section 53398.81, or the
issuance of a loan is approved by the governing board of a local
agency pursuant to Section 53398.87.
(6) An analysis of the costs to the city or county of providing
facilities and services to the area of the district while the area is
being developed and after the area is developed. The plan shall also
include an analysis of the tax, fee, charge, and other revenues
expected to be received by the city or county as a result of expected
development in the area of the district.
(7) An analysis of the projected fiscal impact of the district and
the associated development upon each affected taxing entity.
(8) A plan for financing any potential costs that may be incurred
by reimbursing a developer of a project that is both located entirely
within the boundaries of that district and qualifies for the Transit
Priority Project Program, pursuant to Section 65470, including any
permit and affordable housing expenses related to the project.
(e) If any dwelling units occupied by persons or families
within the territory of the district are
proposed to be removed or destroyed in the course of private
development or public works construction within the area
territory of the district, a plan providing for
replacement of those units and relocation of those persons or
families consistent with the requirements of Section 53398.56.
(f) The goals the district proposes to achieve for each project
financed pursuant to Section 53398.52.
SEC. 6. Section 53398.66 of the Government Code is amended to
read:
53398.66. The legislative body
public
financing authority shall conduct a public hearing prior to
adopting the proposed infrastructure financing plan. The public
hearing shall be called no sooner than 60 days after the plan has
been sent to each affected taxing entity. In addition to the notice
given to landowners and affected taxing entities pursuant to Sections
53398.60 and 53398.61, notice of the public hearing shall be given
by publication not less than once a week for four successive weeks in
a newspaper of general circulation published in the city or county
in which the proposed district is located. The notice shall state
that the district will be used to finance public facilities or
development, briefly describe the public facilities or development,
briefly describe the proposed financial arrangements, including the
proposed commitment of incremental tax revenue, describe the
boundaries of the proposed district and state the day, hour, and
place when and where any persons having any objections to the
proposed infrastructure financing plan, or the regularity of any of
the prior proceedings, may appear before the legislative
body
public financing authority and object to
the adoption of the proposed plan by the legislative body
public financing authority .
SEC. 7. Section 53398.67 of the Government Code is amended to
read:
53398.67. At the hour set in the required notices, the
legislative body
public financing authority
shall proceed to hear and pass upon all written and oral objections.
The hearing may be continued from time to time. The
legislative body
public financing authority
shall consider the recommendations, if any, of affected taxing
entities, and all evidence and testimony for and against the adoption
of the plan. The legislative body
public
financing authority may modify the plan by eliminating or
reducing the size and cost of proposed facilities or development, by
reducing the amount of proposed debt, or by reducing the portion,
amount, or duration of incremental tax revenues to be committed to
the district.
SEC. 8. Section 53398.68 of the Government Code is amended to
read:
53398.68. (a) The legislative body
public
financing authority shall not enact a resolution proposing
formation of a district and providing for the division of taxes of
any affected taxing entity pursuant to Article 3 (commencing with
Section 53398.75) unless a resolution approving the plan has been
adopted by the governing body of each affected taxing entity which is
proposed to be subject to division of taxes pursuant to Article 3
(commencing with Section 53398.75) and has been filed with the
legislative body at or prior to the time of the hearing.
(b) Nothing in this section shall be construed to prevent the
legislative body
public financing authority
from amending its infrastructure financing plan and adopting a
resolution proposing formation of the enhanced infrastructure
financing district without allocation of the tax revenues of any
affected taxing entity that has not approved the infrastructure
financing plan by resolution of the governing body of the affected
taxing entity.
SEC. 9. Section 53398.69 of the Government Code is amended to
read:
53398.69. (a) At the conclusion of the hearing, the
legislative body
public financing authority may
adopt a resolution proposing adoption of the infrastructure financing
plan, as modified, and formation of the enhanced infrastructure
financing district in a manner consistent with Section 53398.68, or
it may abandon
adopt a resolution abandoning
the proceedings. If the
proceedings are
abandoned, then the public financing authority shall cease to exist
by operation of this section with no further action required of the
legislative body and the legislative body may not enact a resolution
of intention to establish a district that includes the same
geographic area within one year of the date of the resolution
abandoning the proceedings.
(b) The infrastructure financing plan and the formation
of the enhanced infrastructure financing district shall
take effect upon the legislative body's adoption
of the resolution. The infrastructure financing plan shall specify if
the district shall be funded solely through the district's share of
tax increment, governmental or private loans, grants, bonds,
assessments, fees, or some combination thereof. However, the public
financing authority may not issue bonds or levy assessments or fees
that may be included in the infrastructure financing plan prior to
one or more of the following:
(1) An affirmative vote, pursuant to subdivision (a) of Section
53398.81, to issue bonds to finance the infrastructure financing
plan.
(2) Without compliance
Compliance
with the procedures required in subdivision (f) of Section 53398.75,
to levy assessments or fees to finance the infrastructure financing
plan.
(c) In addition the district may expend up to 10 percent of any
accrued tax increment in the first two years of the effective date of
the enhanced infrastructure financing district on planning and
dissemination of information to the residents within the district's
boundaries about the infrastructure financing plan and planned
activities to be funded by the district.
SEC. 10. Section 53398.74 of the Government Code is repealed.
53398.74. The public financing authority may submit a proposition
to establish or change the appropriations limit, as defined by
subdivision (h) of Section 8 of Article XIII B of the California
Constitution, of a district to the qualified electors of a proposed
or established district. The proposition establishing or changing the
appropriations limit shall become effective if approved by the
qualified electors voting on the proposition and shall be adjusted
for changes in the cost of living and changes in populations, as
defined by subdivisions (b) and (c) of Section 7901, except that the
change in population may be estimated by the legislative body in the
absence of an estimate by the Department of Finance, and in
accordance with Section 1 of Article XIII B of the California
Constitution. For purposes of adjusting for changes in population,
the population of the district shall be deemed to be at least one
person during each calendar year. Any election held pursuant to this
section may be combined with any election held pursuant to Section
53398.80 in any convenient manner.
SEC. 11. Section 53398.74 is added to the Government Code, to
read:
53398.74. This section implements and fulfills the intent of this
chapter and of Article XIII B of the California Constitution. The
allocation and payment to a district of the portion of taxes
specified in Section 53398.75 for the purpose of paying principal of,
or interest on, loans, advances, or indebtedness incurred by the
district pursuant to this chapter, shall not be deemed the receipt by
a district of proceeds of taxes levied by or on behalf of the
district within the meaning or for the purposes of Article XIII B of
the California Constitution, nor shall that portion of taxes be
deemed receipt of proceeds of taxes by, or an appropriation subject
to limitation of, any other public body within the meaning or for
purposes of Article XIII B of the California Constitution or any
statutory provision enacted in implementation of Article XIII B of
the California Constitution.
SEC. 12. Section 53398.75 of the Government Code is amended to
read:
53398.75. (a) Any infrastructure financing plan may contain a
provision that taxes, if any, levied upon taxable property in the
area included within the enhanced infrastructure financing district
each year by or for the benefit of the State of California, or any
affected taxing entity after the effective date of the ordinance
adopted pursuant to Section 53398.69 to create the district, shall be
divided as follows:
(1) That portion of the taxes that would be produced by the rate
upon which the tax is levied each year by or for each of the affected
taxing entities upon the total sum of the assessed value of the
taxable property in the district as shown upon the assessment roll
used in connection with the taxation of the property by the affected
taxing entity, last equalized prior to the effective date of the
ordinance adopted pursuant to Section
53398.69 to create the district, shall be allocated to,
and when collected shall be paid to, the respective affected taxing
entities as taxes by or for the affected taxing entities on all other
property are paid.
(2) That portion of the levied taxes each year specified in the
adopted infrastructure financing plan for the city or county and each
affected taxing entity that has agreed to participate pursuant to
Section 53398.68 in excess of the amount specified in paragraph
(1) of subdivision (a) shall be allocated to, and when
collected shall be paid into a special fund of, the district for all
lawful purposes of the district. Unless and until the total assessed
valuation of the taxable property in a district exceeds the total
assessed value of the taxable property in the district as shown by
the last equalized assessment roll referred to in paragraph (1)
of subdivision (a), all of the taxes levied and collected upon
the taxable property in the district shall be paid to the respective
affected taxing entities. When the district ceases to exist pursuant
to the adopted infrastructure financing plan, all moneys thereafter
received from taxes upon the taxable property in the district shall
be paid to the respective affected taxing entities as taxes on all
other property are paid.
(b) Notwithstanding subdivision (a), where any district boundaries
overlap with the boundaries of any former redevelopment project
area, any debt or obligation of a district shall be subordinate to
any and all enforceable obligations of the former redevelopment
agency, as approved by the Oversight Board and the Department of
Finance. For the purposes of this chapter, the division of taxes
allocated to the district pursuant to subdivision (a) of this section
or of subdivision (b) of Section 53396 shall not include any taxes
required to be deposited by the county auditor-controller into the
Redevelopment Property Tax Trust Fund created pursuant to subdivision
(b) of Section 34170.5 of the Health and Safety Code.
(c) The legislative body of the city or county forming the
district may choose to dedicate any portion of its net available
revenue to the district through the financing plan described in
Section 53398.63.
(d) For the purposes of this section, "net available revenue"
means periodic distributions to the city or county from the
Redevelopment Property Tax Trust Fund, created pursuant to Section
34170.5 of the Health and Safety Code, that are available to the city
or county after all preexisting legal commitments and statutory
obligations funded from that revenue are made pursuant to Part 1.85
(commencing with Section 34170) of Division 24 of the Health and
Safety Code. "Net available revenue" shall not include any funds
deposited by the county auditor-controller into the Redevelopment
Property Tax Trust Fund or funds remaining in the Redevelopment
Property Tax Trust Fund prior to distribution. Net available revenues
shall not include any moneys payable to a school district that
maintains kindergarten and grades 1 to 12, inclusive, community
college districts, county office of education, or to the Educational
Revenue Augmentation Fund, pursuant to paragraph (4) of subdivision
(a) of Section 34183 of the Health and Safety Code.
(e) (1) That portion of any ad valorem property tax revenue
annually allocated to a city or county pursuant to Section 97.70 of
the Revenue and Taxation Code that is specified in the adopted
infrastructure financing plan for the city or county that has agreed
to participate pursuant to Section 53398.68, and that corresponds to
the increase in the assessed valuation of taxable property shall be
allocated to, and when collected shall be apportioned to a special
fund of the district for all lawful purposes of the district.
(2) When the district ceases to exist pursuant to the adopted
infrastructure financing plan, the revenues described in this
subdivision shall be allocated to, and when collected, shall be
apportioned to the respective city or county.
(f) This section shall not be construed to prevent a district from
utilizing revenues from any of the following sources to support its
activities provided that the applicable voter approval has been
obtained, and the infrastructure financing plan has been approved
pursuant to Section 53398.69:
(1) The Improvement Act of 1911 (Division 7 (commencing with
Section 5000) of the Streets and Highways Code).
(2) The Municipal Improvement Act of 1913 (Division 12 (commencing
with Section 10000) of the Streets and Highways Code).
(3) The Improvement Bond Act of 1915 (Division 10 (commencing with
Section 8500) of the Streets and Highways Code).
(4) The Landscaping and Lighting Act of 1972 (Part 2 (commencing
with Section 22500) of Division 15 of the Streets and Highways Code).
(5) The Vehicle Parking District Law of 1943 (Part 1 (commencing
with Section 31500) of Division 18 of the Streets and Highways Code).
(6) The Parking District Law of 1951 (Part 4 (commencing with
Section 35100) of Division 18 of the Streets and Highways Code).
(7) The Park and Playground Act of 1909 (Chapter 7 (commencing
with Section 38000) of Part 2 of Division 3 of Title 4 of this code).
(8) The Mello-Roos Community Facilities Act of 1982 (Chapter 2.5
(commencing with Section 53311) of Part 1 of Division 2 of this
title).
(9) The Benefit Assessment Act of 1982 (Chapter 6.4 (commencing
with Section 54703) of Part 1 of Division 2 of this title).
(10) The so-called facilities benefit assessment levied by the
charter city of San Diego or any substantially similar assessment
levied for the same purpose by any other charter city pursuant to any
ordinance or charter provision.
SB 9 (Beall)
Transit and Intercity Rail Capital Program
Fact Sheet
ISSUE
Transportation funding available under the State’s
Transit and Intercity Rail Capital Program should be
invested in projects that maximize reductions in
greenhouse gas (GHG) emissions to ensure California
meets its climate goals set forth by AB 32.
BACKGROUND
The California Global Warming Solutions Act of 2006
(AB 32) authorizes the California Air Resources Board to
create a market mechanism to help reach the state’s GHG
emissions reduction goals as stated in AB 32.
With this authorization, CARB created the cap-and-trade
auction revenue program. In this program, CARB auctions
off emission credits to covered entities that must comply
with a cap on GHG emissions. California receives the
revenue derived from the auctions, and is directed to
spend these funds on GHG emission reduction projects.
Last year, SB 862, established the Transit and Intercity
Rail Capital Program to be administered by the California
State Transit Agency (CalSTA). This competitive
program was created within the Cap and Trade framework
to fund transit projects, which are critical to reaching
California’s environmental and economic goals for the
future.
THIS BILL
SB 9 seeks to address a major issue facing the legislature
this year - how to ensure CalSTA effectively grants
funding to transportation projects that will result in
significant reductions of GHG emissions.
More specifically, this bill addresses this question by
doing the following:

Clarifies that the program will be for large,
transformative capital projects that will
reduce greenhouse gas emissions.

Adds co-benefits and other factors that
CalSTA must consider when evaluating grant
applications.

Specifies that a project sponsor can submit a
grant application to fund a project over
multiple fiscal years, and that CalSTA can
make multi-year funding commitments for
such projects.

Clarifies that funding from this program can
be used for project development work, as well
as for construction.

Requires CalSTA to do a multi-year
programming process and authorizes CalSTA
to enter into multi-year funding agreements
with project sponsors.

Allows for the use of Letters of No Prejudice
(LONPs) so that project sponsors can advance
their projects with local money and then get
reimbursed with state dollars when they
become available, which is a common
industry tool used at both the federal and state
levels.
SB 9 will ensure that Cap and Trade funding is invested
responsibly in projects that maximize GHG reductions and
meet the goals of AB 32.
STATUS/VOTES
Referred to Senate Committee on Environmental Quality
and Senate Committee on Transportation and Housing
SUPPORT
Northern California Carpenters Regional Council
FOR MORE INFORMATION
Staff Contact: Alicia Priego
Alicia.Priego@sen.ca.gov (916) 651-4015
______________________________________________________________________________________________________________
BILL ANALYSIS
Ó
SENATE COMMITTEE ON ENVIRONMENTAL QUALITY
Senator Wieckowski, Chair
2015 - 2016 Regular
Bill No:
SB 9
----------------------------------------------------------------|Author: |Beall
|
----------------------------------------------------------------|-----------+---------------------+-------------+-----------------|
|Version: |12/1/2014
|Hearing
|3/18/2015
|
|
|
|Date:
|
|
|-----------+---------------------+-------------+-----------------|
|Urgency: |No
|Fiscal:
|Yes
|
--------------------------------------------------------------------------------------------------------------------------------|Consultant:|Rebecca Newhouse
|
|
|
|
----------------------------------------------------------------Subject: Greenhouse Gas Reduction Fund: Transit and Intercity
Rail Capital Program
ANALYSIS:
Existing law:
1. Under the California Global Warming Solutions Act of 2006,
requires the Air Resources Board (ARB) to determine the 1990
statewide greenhouse gas (GHG) emissions level and approve a
statewide GHG emissions limit that is equivalent to that
level, to be achieved by 2020, and to adopt GHG emissions
reductions measures by regulation. ARB is authorized to
include the use of market-based mechanisms to comply with
these regulations. (Health and Safety Code §38500 et seq.)
2. Establishes the Greenhouse Gas Reduction Fund (GGRF) in the
State Treasury, requires all moneys, except for fines and
penalties, collected pursuant to a market-based mechanism be
deposited in the fund, and requires the Department of
Finance, in consultation with the state board and any other
relevant state agency, to develop, as specified, a three-year
investment plan for the moneys deposited in the GGRF.
(Government Code §16428.8)
3. Requires moneys from the GGRF be used to facilitate the
achievement of
reductions of GHG emissions in this state consistent with the
SB 9 (Beall)
of ?
Page 2
California Global Warming Solutions Act of 2006, and
authorizes those
funds to be allocated for the purpose of reducing greenhouse
gas emissions. Annual budget appropriations of GGRF funds are
required to be consistent with the investment plan. (HSC
§39712)
4. Requires the GGRF investment plan to allocate, at a minimum,
25% of the funds to benefit disadvantaged communities, and to
allocate 10% of GGRF monies within disadvantaged communities.
(HSC §39713)
5. Requires the ARB, in consultation with the California
Environmental Protection Agency (CalEPA), to develop funding
guidelines for all agencies that are appropriated monies from
the GGRF. These guidelines must include a component for how
administering agencies should maximize benefits for
disadvantaged communities. (HSC §39715)
6. Requires agencies, prior to expending any GGRF monies, to
prepare an expenditure record describing the expenditure, and
to make other specified determinations. The ARB is required
to develop guidance on reporting and quantification methods
for state agencies expending GGRF to comply with the
expenditure record requirements. (HSC §16428.9)
7. Establishes the Transit and Intercity Rail Capital Program,
funded through a continuous appropriation of the GGRF, to
fund capital improvements and operational investments that
reduce GHG emissions and modernize California's intercity,
commuter, and urban rail systems to achieve specified goals.
The program establishes a programmatic goal to provide at
least 25% of available funding to projects that provide a
direct, meaningful, and assured benefit to disadvantaged
communities, and among other things, requires:
A. That eligible projects demonstrate they will achieve
greenhouse gas emissions reductions.
B. The California State Transportation Agency (CalSTA),
in evaluating grant applications for funding, consider:
(1)
Specified cobenefits, including reduction of
auto vehicles miles traveled, promotion of housing
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development near rail stations, expanding existing
rail and transit systems, implementation of clean
vehicle technology, promotion of active
transportation, and improvements to public health.
(2)
The project priorities developed through the
collaboration of two or more rail operators and any
memoranda of understanding between state agencies and
local or regional rail operators.
(3)
(4)
Geographic equity.
Consistency with the adopted sustainable
communities strategies and the recommendations of
regional agencies.
C. Applications for grants be submitted to the CalSTA
for evaluation in accordance with procedures and program
guidelines adopted by the agency and requires CalSTA to
submit a list of recommended projects to the California
Transportation Commission (CTC) for awarding grants.
D. CalSTA to develop draft program guidelines containing
selection criteria prior to adoption and specifies public
participation and notice requirements.
This bill:
1. Modifies the objective of the program to fund large
transformative capital improvements, instead of operational
investments, with a total cost exceeding one hundred million
dollars.
2. Requires CalSTA to consider the extent to which a project
reduces GHG emissions for prioritizing and recommending
projects for funding.
3. Removes the requirement for CalSTA, when considering an
applicant's consistency with adopted sustainable community
strategies, to also consider recommendations from regional
agencies.
4. Requires CalSTA to additionally consider the following when
evaluating grant applications:
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A. Other cobenefits including enhanced connectivity,
integration and coordination of state and local transit
systems, and whether the project provides a direct
connection to the high-speed rail system.
B. The extent to which a project has supplemental funding
from non-state sources.
C.
The extent to which a project will increase ridership.
5. Authorizes an eligible applicant to submit a multiyear
funding application and authorizes CalSTA to make multiyear
funding commitments for projects.
6. Requires applicants:
A. Make determinations regarding project purpose, intended
scope, intended funding sources and project completion
schedule;
B. Specify the phases of work for which they are seeking
allocation;
C. Identify the sources and timing of all funds required
to undertake and complete any phase of a project, and
describe intended sources and timing of funds to complete
subsequent phases of the project.
7. Requires CalSTA, by July 1, 2016, to develop a five-year
estimate of revenues of the program in annual increments and
adopt an initial program of projects for those five years,
and requires CalSTA to adopt subsequent programs of projects,
as a statement of intent for allocation and expenditure, no
later than April 1 of each even-numbered year.
8. Requires CalSTA to enter into and execute a multiyear funding
agreement with an eligible applicant for a multiyear project,
and requires the agreement to include a proposed schedule of
funds expected by year, and authorizes that agreement to
extend beyond the five fiscal years covered by the program of
projects.
9. Authorizes a lead applicant agency to apply to CTC for a
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letter of no prejudice in order to allow the lead applicant
to expend their own funds for the project and be eligible for
future reimbursement from the GGRF.
10.Requires the lead applicant agency, if their letter of no
prejudice is granted by CTC, to be reimbursed for funds they
have expended for the project, under specified conditions.
11.Authorizes CTC, in consultation with other specified
entities, to develop guidelines to implement the no prejudice
provisions.
Background
Cap-and-trade auction revenue. ARB conducted nine cap-and-trade
auctions between November 2012 and November 2014, generating a
total of $970 million in proceeds to the state. A tenth auction
was held jointly with Quebec in February of this year, but the
proceeds have not yet been published.
Several bills in 2012, and one in 2014, provided legislative
direction for the expenditure of auction proceeds including SB
535 (de León) Chapter 830, Statutes of 2012, AB 1532 (J. Pérez)
Chapter 807, Statutes of 2012, SB 1018 (Budget Committee)
Chapter 39, Statutes 2012, and SB 862 (Budget Committee) Chapter
36, Statutes of 2014.
SB 535 (de León) Chapter 830, Statutes of 2012, requires that
25% of auction revenue be used to benefit disadvantaged
communities and requires that 10% of auction revenue be invested
in disadvantaged communities.
AB 1532 (J. Pérez) Chapter 807, Statutes of 2012, directs the
Department of Finance to develop and periodically update a
three-year investment plan that identifies feasible and
cost-effective GHG emission reduction investments to be funded
with cap-and-trade auction revenues. AB 1532 specifies that
reduction of greenhouse gas emissions through strategic planning
and development of sustainable infrastructure projects, are
eligible investments of GGRF.
SB 1018 (Budget Committee) Chapter 39, Statutes of 2012, created
the GGRF, into which all auction revenue is to be deposited. The
legislation requires that before departments can spend monies
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from the GGRF, they must prepare a record specifying: (1) how
the expenditures will be used, (2) how the expenditures will
further the purposes of AB 32 (Nuñez, Pavley) Chapter 488,
Statutes of 2006, (3) how the expenditures will achieve GHG
emission reductions, (4) how the department considered other
non-GHG-related objectives, and (5) how the department will
document the results of the expenditures.
SB 862 (Budget Committee) Chapter 36, Statutes of 2014, requires
the ARB to develop guidelines on maximizing benefits for
disadvantaged communities by agencies administering GGRF funds,
and guidance for administering agencies on GHG emission
reduction reporting and quantification methods.
Legal consideration of cap-and-trade auction revenues. The
2012-13 budget analysis of cap-and-trade auction revenue by the
Legislative Analyst's Office noted that, based on an opinion
from the Office of Legislative Counsel, the auction revenues
should be considered mitigation fee revenues, and their use
requires that a clear nexus exist between an activity for which
a mitigation fee is used and the adverse effects related to the
activity on which that fee is levied. Therefore, in order for
their use to be valid as mitigation fees, revenues from the
cap-and-trade auction must be used to mitigate GHG emissions or
the harms caused by GHG emissions.
In 2012, the California Chamber of Commerce filed a lawsuit
against the ARB claiming that cap-and-trade auction revenues
constitute illegal tax revenue. In November 2013, the superior
court ruling declined to hold the auction a tax, concluding that
it's more akin to a regulatory fee.
AB 32 auction revenue investment plan. The first three-year
investment plan for cap-and-trade auction proceeds, submitted by
Department of Finance, in consultation with ARB and other state
agencies in May of 2013, identified sustainable communities and
clean transportation as one of the key sectors that provide the
best opportunities for achieving the legislative goals and
supporting the purposes of AB 32. The plan recommended the
aforementioned sector receive the largest allocation of funds
from the GGRF, but did not specify a monetary amount.
Budget allocations. The 2014-15 budget allocates $832 million in
GGRF revenues to a variety of transportation, energy, and
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resources programs aimed at reducing GHG emissions. Various
agencies are in the process of implementing this funding. The
budget agreement specifies how the state will allocate most
cap-and-trade auction revenues in 2015-16 and beyond. For all
future revenues, the legislation appropriates 25% for the
state's high-speed rail project, 20% for affordable housing and
sustainable communities grants, 10% to intercity capital rail
projects, and 5% for low-carbon transit operations. The
remaining 40% is available for annual appropriation by the
Legislature.
The Governor's proposed 2015-16 budget assumes the receipt of
$650 million in cap-and-trade auction revenues in 2014-15 and $1
billion in 2015-16. The Governor's proposed 2015-16
cap-and-trade expenditures are largely the same as the 2014-15
plan, albeit with larger amounts allocated for affordable
housing and sustainable communities grants, the transit and
intercity rail capital program, and the low-carbon transit
operations.
SB 862 (Budget Committee), Chapter 36, Statutes of 2014, created
several statutory programs to implement the budget
appropriations, including the Transit and Intercity Rail Capital
Program and the Low-Carbon Transit Operations Program.
Low Carbon Transit Operations Program. This program provides
operating and capital assistance to transit agencies to reduce
GHG emissions and improve mobility, with a priority on serving
disadvantaged communities. Eligible projects include expanded,
new, or enhanced transit services; conversion or retrofit of
transit vehicles and equipment to zero-emission; expanded
intermodal transit facilities; and infrastructure to support
zero-emission or plug-in hybrid vehicles. The 2014-15 budget
provides for a continuous appropriation of 5% of cap-and-trade
funds for this program beginning in 2015-16. The California
Department of Transportation (Caltrans) and ARB are currently
reviewing applications. The Low Carbon Transit Operations
Program is not a competitive program, but based on project
eligibility according to statute and program guidelines and an
established transportation funding formula.
The Transit and Intercity Rail Capital Program. The Transit and
Intercity Rail Capital Program funds capital improvements for
GHG emission reductions that expand and improve rail service,
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and integrate state and local rail and other transit systems,
including the high-speed rail system. The 2014-15 budget
provided for a continuous appropriation of 10%, or $25 million,
of cap-and-trade funds to this program beginning in 2015-16.
With these funds, as well as the 10% of GGRF projected for the
2015-16 budget, CalSTA is currently soliciting applications for
almost $125 million in grants for the Transit and Intercity Rail
Capital Program. CalSTA is required to evaluate applications,
and then prepare a list of projects recommended for funding to
be used by the California Transportation Commission in awarding
grant monies.
CalSTA released draft guidelines for the program in December
2014, and finalized them on February 6th. The guidelines
describe the policy, standards, criteria, and procedures for the
development, adoption and management of the Transit and
Intercity Rail Capital Program.
The guidelines have project applications due to Caltrans by
April 10, of this year. By late August, CalSTA will present a
project list to the CTC for subsequent funding.
The guidelines state that it is CalSTA's intent to adopt an
initial multiyear program of projects covering a minimum of two
years of estimated funding.
The Division of Transportation Programming at Caltrans describes
"programming" as "the commitment of transportation funds to be
available over a period of several years to particular
projects." Given that transportation projects take a number of
years to develop and build, a multiyear program of projects
provides some level of predictability to allow agencies to plan
their projects. Thus, a program of projects is fairly common in
the world of transportation.
The guidelines also note that "CalSTA will also make some
funding available for demonstration projects that are smaller
scale efforts with great potential to be expanded. These may
include projects such as a novel approach to attracting new
riders or a test of a concept related to integrated ticketing,
as well as intercity rail or transit effectiveness or
operational studies that are expected to have elements that can
be implemented with little or no capital investment (such
studies must result in a reduction in net greenhouse gas
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emission)."
SB 862 establishes a goal for the Transit and Intercity Rail
Capital Program of providing at least 25% of available funding
to projects that provide a direct, meaningful, and assured
benefit to disadvantaged communities. SB 862 also requires the
ARB, in consultation with CalEPA, to develop funding guidelines
for all agencies that are appropriated monies from the GGRF.
These guidelines must include a component for how administering
agencies should maximize benefits for disadvantaged communities.
ARB draft SB 535 guidelines. ARB released a revised draft of
these SB 535 guidelines in August of last year. ARB guidance for
the Transit and Intercity Rail Capital Program specify criteria
for evaluating whether projects provide benefits to or within
disadvantaged communities. New transit lines, more frequent
service, greater capacity on existing lines that are nearing
capacity, improved reliability for routes in disadvantaged
communities, as well as bus rapid service for disadvantaged
community residents, all count towards the 10% of GGRF monies
that must be spent within disadvantaged communities.
The guidelines also specify criteria for determining whether
projects "provide benefits to disadvantaged communities." Some
of these criteria include whether projects provide improved
local bus transit service or improved connectivity for riders
using stations or stops that are accessible by walking within
onehalf mile of a disadvantaged community, or if the project
will increase intercity rail, commuter bus or rail transit
ridership, with at least 25% of new riders from disadvantaged
communities; or whether projects result in at least 25% of
project work hours performed by residents of a disadvantaged
community.
Comments
1. Purpose of Bill. According to the author, "Transportation
funding available under the Transit and Intercity Rail
Capital Program should be invested in projects that maximize
reductions in greenhouse gas emissions to ensure California
meets its climate goals set forth by AB 32.
"If California is to be successful in achieving significant
greenhouse gas emissions reductions from the transportation
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sector, a necessary outcome since the transportation sector
accounts for roughly 40% of these emissions, it is important
to ensure that cap-and-trade auction proceeds can be invested
in transit capital expansion projects that will have the most
impact. SB 9 is intended to focus the Transit and Intercity
Rail Capital Program on funding a smaller number of
large-scale transit expansion projects that would result in
substantial reductions in greenhouse gas emissions. The
changes proposed in SB 9 would result in a more desirable
outcome for the Transit and Intercity Rail Capital Program,
as opposed to scattering small amounts of money around to a
very large number of projects-an approach that typically gets
used for transportation competitive grant programs, but would
not be effective in the case of expending cap-and-trade
dollars, given the emphasis on reducing greenhouse gas
emissions.
"SB 9 would allow the Transit and Intercity Rail Capital
Program to accommodate large-scale transit expansion projects
seeking more substantive sums of cap-and-trade dollars by
enabling CalSTA to program, commit and allocate funding over
multiple fiscal years. Accommodating such projects would not
be possible if CalSTA were to initiate a new competitive
process for the Transit and Intercity Rail Capital Program
every single fiscal year and program only one year's worth of
funding at a time because a public transit agency would have
to resubmit an application for the same project and compete
year after year in order to obtain the amount of
cap-and-trade that it needs. In turn, this uncertainty would
not allow a public transit agency to use cap-and-trade
revenues to leverage federal dollars or to secure financing
for its large-scale project."
2. Prioritizing GHG emissions reductions. The program currently
requires that eligible projects require GHG emission
reductions. SB 9 expands on this requirement by ensuring that
CalSTA prioritizes projects for funding based on the extent
to which they will reduce GHG emission reductions.
3. Shifting the focus: larger, multiyear grants, but fewer
projects. According to the CalSTA guidelines, CalSTA intends
to fund a small number of transformational projects that
improve the statewide transportation network in the first
programming cycle. These may include, for example, both
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lowercost pr4.ojects focused on integration, reliability and
enhancement of service, and highercost capital expansion
projects. SB 9 shifts the focus away from lower-cost, smaller
projects, since the bill requires eligible projects be over
$100,000,000, and requires CalSTA to develop five-year plans
for the allocation and expenditure of funds. These amendments
are designed to concentrate funds among a few, large,
"transformative" projects, and to further differentiate the
program from the Low Carbon Transit Operations Program that
awards grants to reduce GHG emissions through operating and
capital assistance for transit agencies. Indeed, the $100
million threshold established by SB 9 would significantly
reduce the number of projects that can be funded with monies
available to the program through cap-and-trade auction
revenue (currently $125 million from the 2014-15 budget
appropriation and the 2015-16 budget proposal).
However, not all transformative projects to improve or
modernize intercity rail or transit may exceed $100,000,000.
Does the minimum expenditure requirement unnecessarily
disqualify less expensive, competitive projects that may
achieve the goals of the Transit and Intercity Rail Capital
Program, result in improved transit experiences, and
significantly reduce GHG emissions?
According to the author, they are currently in discussions
with stakeholders to address this concern.
5. Authorize, instead of require, multiyear funding. The bill
requires CalSTA to enter into and execute a multiyear funding
agreement with an eligible applicant for a multiyear project
from the five-year program of projects developed by CalSTA
(page 6, line 14). As this requirement does not allow for any
agency discretion, the Committee may wish to amend the bill
to authorize, not require, CalSTA to award multiyear funding
agreements for these projects.
6. Technical Amendment. An amendment is needed to correct a
drafting error on page 2, line 6, that incorrectly refers to
one hundred million dollars as $1,000,000.
Related/Prior Legislation
SB 862 (Committee on Budget, Chapter 36, Statutes of 2014)
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established requirements for ARB to develop guidelines for
agencies administering GGRF funds.
SOURCE:
Author
SUPPORT:
Northern California Carpenters Regional Council
Santa Clara Valley Transportation Authority
Silicon Valley Leadership Council
OPPOSITION:
TransForm
ARGUMENTS IN SUPPORT: Supporters note that SB 9 would allow
CalSTA to accommodate larger-scale projects by programming and
allocating their funding over multiple fiscal years, and that
these types of projects could not be accommodated if CalSTA were
to initiate a new competitive process every single fiscal year
and program only one year's worth of funding at a time. They
also note that these larger scale projects would result greater
GHG emission reductions than the current design of the program,
which they describe as spreading a small amount of money around
to a large number of projects.
ARGUMENTS IN OPPOSITION: Opponents fear that requiring the
funds go to projects over $100 million, and giving priority to
nonstate funding will eliminate from eligibility many projects
within disadvantaged communities who currently lack the funding
for even smaller projects that target high propensity riders and
provide desperately needed transportation choices. They also
note that these changes would significantly alter the program,
and they urge the inclusion of a robust public process akin to
the process that took place when enacting the current program.
-- END --
Assembly Speaker Toni G. Atkins, 78th Assembly District
AB 313 – Enhanced Infrastructure Financing Districts
IN BRIEF
AB 313 adds provisions to the Enhanced
Infrastructure Financing District (EIFD) laws to
clarify the procedures that should be followed when
replacing dwelling units that are removed or
destroyed within a district. AB 313 clarifies that the
EFIDs are public financing authorities separate and
apart from the legislative bodies which created
them.
BACKGROUND
Existing law, created by SB 628 (Beall) [Chapter
785, Statutes of 2014], allows local agencies to
create enhanced infrastructure financing districts
(EIFDs) to fund specified infrastructure projects and
facilities.
AB 313 provides the clarity needed in both of these
issue areas and ensures that when this tool is used
by local governments, the implementation
requirements are clear. Moreover, AB 313 will
ensure that any residents that are displaced by work
done in an EIFD will receive adequate support and
that any units lost will be replaced by those of a
similar type of unit and available to residents of the
same income levels as before.
SUPPORT
FOR MORE INFORMATION
Katie Kolitsos (916) 319-2240
katie.kolitsos@asm.ca.gov
SB 628, among other things:

Created a “public financing authority” to
govern the EIFD.

Specified that housing paid for by the EIFD
must be for low and moderate income
housing (GC 50093).

Required that housing that is replacing units
torn down during the course of work done
by and EIFD must be done within two years
after demolition and if none of the units
removed were for affordable housing then
replacement work must increase the number
of replacement units with at least 25%
affordable.
THE ISSUE
However, after further review of the language it was
found that some clarification of the provisions
related to replacement housing and a few other
related issues were necessary. Also, to ensure that
the EIFD public financing authority has its own
separate legal standing and spending capacity
required more clarity as well.
Factsheet for AB 313 (Atkins), as introduced Enhanced Infrastructure Financing Districts – Created 02/17/2015